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Economic and trade relations between the United States and India have experienced a number of ups and downs since India's independence in 1947. During much of the 1950s and early 1960s, the United States was a leading trading partner for India, providing the nation with about a third of its imports. However, those economic ties quickly subsided when India fostered closer ties with the Soviet Union following the Indo-Pakistani War of 1965. For the next 40 years, political and economic relations between India and the United States were rather cool. Since 2004, Washington and New Delhi have been pursuing a "strategic partnership" based on numerous shared values and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly. According to official U.S. trade statistics, bilateral merchandise trade with India has grown from under $10 billion in 1996 to nearly $31 billion in 2006—a trebling in a decade. In 1996, India was the 32 nd largest market for U.S. exports and the 25 th largest source of imports. By 2006, India had risen to be 21 st biggest export market for the United States and the 18 th biggest supplier of imports. The United States' total trade with India in 2006 exceeded that with Israel, Nigeria, and Thailand. Both governments appear to be committed to improving trade relations. On March 2, 2006, President George W. Bush and Indian Prime Minister Manmohan Singh endorsed the goal of doubling bilateral trade in three years. On December 18, 2006, President Bush signed into law H.R. 5682 , the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 ( P.L. 109-401 ), signaling an intent to waive restrictions on civil nuclear cooperation with India. Despite the growth in bilateral trade and the improvement in trade relations, there are still a number of economic and trade issues between India and the United States. Both nations seek greater market access to the other's domestic markets, as well as the lowering of perceived trade barriers. In addition, both India and the United States would like to see changes in the other nation's legal and regulatory policies to help protect and promote exports and foreign direct investment. Moreover, there are significant differences in the stances of the two countries in various multilateral trade fora, including the current Doha Round of negotiations. For Congress, resolution of some of the key economic and trade issues may involve alterations in current federal law. In particular, changes in laws pertaining to agricultural goods, pharmaceuticals, nuclear and dual-use technology, and immigration may be considered as part of an effort to foster closer trade relations with India. Plus, Congress may consider heightened oversight of U.S.-India trade relations. This report provides a summary of India's current political climate (with a focus on its effects on the nation's economic and trade policies), its economic condition and policies, the recent trends in bilateral trade and foreign direct investment, and key economic and trade issues between India and the United States. Where suitable, the report also compares India to China to provide a different perspective on U.S. relations with both nations. India is the world's most populous democracy and remains firmly committed to representative government and the rule of law. With a robust and working democratic system, India is a federal republic where the bulk of executive power rests with the prime minister and his or her cabinet (the Indian president is a ceremonial chief of state with limited executive powers). As a nation-state, India presents a vast mosaic of hundreds of different ethnic groups, religious sects, and social castes. Most of India's prime ministers have come from the country's Hindi-speaking northern regions and all but two have been upper-caste Hindus. Larger than Alaska, Texas, and California combined, India is a land of great demographic, geographic, and climatological variety. From stark deserts in the west to thick jungles in the northeast, the towering Himalaya mountains of the north to the vast tableland of the Deccan Plateau of the south, and with the fertile Indo-Gangetic plain between, India dominates the Asian Subcontinent and shares long borders with its six other continental states. About one-third of the population lives in urban areas; an overwhelming majority of the remainder is engaged in the agricultural sector. Most of India's people inhabit either the alluvial soil of the Indo-Gangetic plain across the north, or the eastern and western coasts of the southern Deccan Peninsula. About 290 million Indians live in the densely-populated northern states of Uttar Pradesh and Bihar; another 100 million live in the western state of Maharashtra. These three states account for more than one-third of the country's total population. The 543-seat Lok Sabha (People's House) is the locus of national political power, with directly elected representatives from each of the country's 28 states and 7 union territories. A smaller upper house, the Rajya Sabha (Council of States), may review, but not veto, most legislation, and has no power over the prime minister or the cabinet. Although India's political stage is crowded with numerous regional and caste-based parties, recent years have seen an increasingly dyadic battle between two major parties that vie for smaller allies in a system that now requires coalitional politics. No party has won a national election outright since 1984. India has one of the largest and fastest growing economies in the world. India's real gross domestic product (GDP) rose by 9.2% in 2006—a growth rate second only to China among Asian nations. The strong GDP performance in 2006 capped five years of rapid economic expansion, transforming India into the third largest economy in Asia (after Japan and China). Its recent economic success is generally attributed to a combination of internal and external factors. Internally, a series of economic reforms (begun when the current prime minister was finance minister) have stimulated solid growth of India's manufacturing and service sectors. Externally, a relatively strong global economy, combined with India's trade and investment liberalization policies, have stimulated increased trade and investment flows to and from India. Despite the recent growth, India's economy confronts several challenges to its future prosperity. First, although the nation's manufacturing and services sectors have grown rapidly, there has been relatively little job creation. Second, its agricultural sector has experienced relatively slow growth for many years. With more than half of Indian households still reliant on agriculture for their income, the standard of living for much of the country's population remains relatively low. There are indications that most of the Indian populace remains untouched by and thus unimpressed with the country's widely touted economic boom. Third, the standard of living of India's rural and urban poor is being threatened by an emerging economic challenge—inflationary pressures. After seven years of modest inflation at or below 4% per year, inflation in 2006 was nearly 7% and has risen to about 8% in the first part of 2007. India's poor have been especially hard hit by major increases in the cost of food in recent years. In the longer run, India faces three additional barriers to economic growth—lack of infrastructure, bureaucratic obstacles, and environmental degradation. India's economy is already hindered by its inadequate transportation system and electricity shortage. Similarly, India's complex and entrenched bureaucracy frequently creates a barrier to implementing new economic policies and programs. At the same time, its large population and recent rise in industrial output are putting more and more pressure on India's environment, exacerbating existing problems in providing its people with clean, potable water, as well as clean air. Even with the continued strength of the economy and the Singh government's attempt to balance its economic policies, many analysts see India facing a number of economic challenges and believe there are still several important economic reforms that India should make to increase the benefits generated by its restructured economy. In particular, critics of the current economic policies point to the unequal distribution of the benefits of the economic reforms, noting that the rapid economic growth has not brought a corresponding reduction in poverty in India, particularly in rural areas. For some, the solution is to press forward more aggressively with the economic reforms by greater liberalization of India's domestic economic and international trade policies. For others, the solution is reverse elements of the reform and refocus agriculture and India's rural population. In March 2007, Prime Minister Singh addressed a roundtable hosted by the Economist magazine. In his remarks, Prime Minister Singh provided a fairly comprehensive overview of his administration's view of the current status of the Indian economy, arguing that India's economy will probably continue its rapid growth for another decade or more. However, Singh also pointed out India's need for additional reforms, including changes to its banking and financial system, its labor markets, and its "public service delivery mechanisms." In light of India's past and planned reforms, he stated, "I find it surprising when I continue to hear complaints about our economy still being a relatively inward-looking economy." The Bush Administration seems to hold a different view of India's economic conditions, maintaining that the Singh government ought to push forward more actively with its economic reforms. In September 2006, U.S. Ambassador to India, David Mulford, said to an audience in New Delhi: Today's business environment in India is more favorable to trade and investment. But there are signs of a pause in the reform process in recent months. Privatizations have stopped, and political reality suggests that reform of other key sectors and policies of central interest to investors will take longer than envisioned. It is important to bear in mind there are serious economic costs to any loss of momentum on the reform front.... The solution to attracting much greater private sector investment in energy and infrastructure development is a blend of policies that includes better governance, market sensitive regulatory regimes, continued liberalization of the financial sector that enables foreign and domestic private capital to finance major projects, and the timely resolution of investor-state disputes. One U.S. trade official opined that it is only through meaningful reforms in India's vast and poorly performing agricultural sector that the country's true economic potential can be realized. This, he says, will require rural infrastructural improvements, land reform, and changes that will allow foreign direct investment in the farm sector. A review of India's economic and trade policies over the last 60 years reveals a pattern of conceptual economic theory moderated by pragmatic political and economic considerations. Major shifts in economic policy were typically initiated with significant changes and then followed by a period of gradual adjustments. Following its independence in 1947, the government of Prime Minister Jawaharlal Nehru of the Indian National Congress Party (INC) adopted an economic policy emphasizing rapid industrialization, import substitution, and relatively high levels of government participation in economic production. Monopolies were granted to state enterprises in a number of industries considered of economic or strategic importance. Private companies in other industries were often subject to licensing requirements and legally constrained in their size of operation. The agricultural sector was a key focus of the First Five Year Plan, with the implementation of various subsidy programs, food price controls, and restrictions on the transport of agricultural crops. Labor laws provided workers with protection from managerial misconduct, but also significantly reduced labor mobility. Both exports and imports were controlled by licenses and tariffs. Foreign direct investment was also severely restricted both by industry and size. Successive Indian governments, still headed by Prime Minister Nehru, remained relatively true to these policies for both its First and Second Five Year Plans (1951-56 and 1956-61) with moderately successful results. Real GDP grew at an average annual rate of 3.6% for the First Five Year Plan, and 2.5% for the Second Five Year Plan. Agricultural production rose 44% and manufacturing output increased 144%. However, the economic policies were also leading to growing merchandise trade and current account deficits that were depleting India's foreign reserves. For the Third Five Year Plan (1961-66), Prime Minister Nehru and the INC made an adjustment in its economic policies, shifting focus away from "rapid industrialization" over to a program of "self sustained growth." At the same time, India's trade policy shifted from "import substitution" to "efficient substitution of imports," which in effect opened up new trade opportunities for goods considered crucial to economic growth and development. This adjusted economic policy remained in effect until the end of the Seventh Five Year Plan in 1990. In 1990 and 1991, India was struck by a number of political and economic shocks. On the political side, the INC refused to form a coalition government following a poor showing in the elections of 1989. The next largest party, the Janata Dal, was able to form a coalition government, headed by Prime Minister V.P. Singh, but it proved unstable and collapsed in December 1990. During the election campaign of 1991, ex-Prime Minister Rajiv Gandhi was assassinated, and P.V. Narasimha Rao was selected as the new leader for the INC. Following the INC's success in the 1991 elections, Rao became prime minister. During the political tumult of 1990 and 1991, the combined effects of rise in oil prices (precipitated by Operation Desert Storm in the Persian Gulf) and the demise of the Soviet Union, a major trading partner and a key source of foreign aid, led to a rapid devaluation of the rupee, a depletion of India's international reserves, and fears of an impending severe recession. In response, Prime Minister Rao made a major and controversial change in economic policies designed to restore faith in the rupee, replenish the nation's international reserves, and stimulate economic growth. These reforms were overseen by his finance minister, Manmohan Singh. The initial round of reforms included several elements. First, efforts were made to reduce India's perpetual fiscal deficits at both the federal and state levels. Second, the number of sectors reserved solely for the public sector were reduced from 18 industries to just three—military aircraft and warships, nuclear energy generation, and railway transport. Third, India liberalized international trade by reducing import tariffs, eliminating import restrictions, and opening up India to foreign direct investment. Fourth, India liberalized its financial markets, by dismantling its interest rate controls, reducing government regulations and permitting greater competition. Following the initial round of economic reforms, India's real GDP growth rate accelerated from around 3-4% per year in the 1980s to 5-7% during the early 1990s. However, toward the end of the decade, India's economic growth began to slow. Some analysts attributed the economic slowdown to a failure of the federal government to continue and to complete the economic reforms initiated at the beginning of the decade. Other analysts argued that economic problems generated by the reforms were creating structural barriers to continued growth. The ensuing debate over the merits of the 1991 reforms contributed to a second period of gradual economic reform in the second half of the 1990s and into the current decade. Since 1991, India has made a number of significant changes in the structure of its economy, including: The termination of state monopolies for all but three industries; The elimination of the "License Raj"—prior to the reforms, there was a rather elaborate system of licenses and regulations governing the establishment of a business in India, making it a very timely and expensive process to start a new concern; The abolition of import licenses for most commodities; A major reduction in average and peak tariff rates for imports; A reduction in domestic price controls for key consumer goods; and A restructuring of many of the nation's various subsidy programs. However, some analysts argue that many Indians are skeptical about economic reforms in general, thus posing a "marketing" problem for the government in a democratic system. Some suggest that even segments of the private sector oppose reform efforts. Still, representatives of the Indian business community insist that all of New Delhi's progress in economic reform has been voluntary and is not made under external pressure, and that the general path of liberalization will continue to be followed regardless of what party or coalition is in power. New Delhi's current ruling United Progressive Alliance (UPA) coalition was seated in May 2004, when the INC, long associated with the Nehru-Gandhi families, won 145 of the Lok Sabha's 543 seats and built a ruling coalition with the support of 14 smaller parties. The election unseated a National Democratic Alliance (NDA) coalition led by the Bharatiya Janata Party (BJP), which had been in power under Prime Minister Atal Vajpayee since 1998. Some analysts saw in the election results a rejection of the BJP's neo-liberal economic reform program. INC President Sonia Gandhi surprised supporters and opponents alike by declining to assume the office of prime minister, instead nominating her lieutenant, Manmohan Singh, a former finance minister. The May 2004 poll results were notable for the best-ever national showing of a leftist alliance—commonly known as the Left Front—led by the Communist Party of India (Marxist) (CPI-M). Although this Left Front is not part of the UPA coalition, it provides crucial parliamentary support from the outside and was described as being "militant" in its opposition to the BJP's privatization efforts. The CPI-M seated the third largest number of parliamentarians in 2004 (43), but its vote bank is almost wholly limited to the states of West Bengal and Kerala. Immediately following the election, investor fears that a coalition government including communists might curtail or halt India's economic reform and liberalization process apparently led to huge losses in the country's stock markets. Market recovery began when INC leaders quickly offered assurances that the new government would be "pro-growth, pro-savings, and pro-investment." Indian industrial leaders also sought to assure foreign investors that Left Front members are not "Cuba-style communists," but could be expected to support the UPA reform agenda. The Chief Minister of West Bengal, Buddhadeb Bhattacharya, a CPI-M member, has himself actively sought corporate investment in his state. However, since coming to power, the Congress-led coalition has slowed certain aspects of its economic reform program, including suspending major disinvestment and special economic zone initiatives. These moves are widely viewed as gestures to the Left Front. While there are indications that both Prime Minister Singh and party chief Gandhi remain fairly popular figures in India, February 2007 state elections in Punjab and Uttaranchal saw INC candidates decisively defeated by the main opposition BJP and its allies, causing some pundits to suggest that national economic policies and rising inflation may be damaging the ruling coalition's standing. Some analysts saw the "neoliberal policies" of the UPA as harming its electoral position. In June, eight regional parties formally launched a new "Third Front" that might emerge as a national alternative to the UPA and NDA. Well-known Tamil Nadu leader Jayalalithaa is likely to lead. August 2007 political wrangling between the UPA and its Left Front allies over planned U.S.-India civil nuclear cooperation (the leftists oppose the plan) has added to political instability in New Delhi and led some to foresee early national polls if Singh's coalition loses Left Front support. Several governmental figures and trade-related institutions wield influence over India's economic policies. The following is a selected listing of key economic players in the current government: Prime Minister Manmohan Singh , INC member and widely-respected Oxford-educated economist who, as finance minister from 1991-1995, was the architect of a comprehensive set of national economic reforms; INC President Sonia Gandhi , the Italian-born widow of former Prime Minister Rajiv Gandhi, while not formally a member of the central government, oversaw the UPA's 2004 poll victory and wields considerable influence over the coalition's policy making; Finance Minister Palaniappan Chidambaram , a Harvard-educated lawyer from the southern state of Tamil Nadu (and member a regional affiliate of the INC) who served as finance minister in the late1990s, is considered to be a highly-competent, pro-market fiscal manager; Commerce and Industry Minister Kamal Nath , an INC stalwart from the east-central Madhya Pradesh state, has launched major trade policy initiatives and is a key interlocutor for the U.S. government; Planning Commission Deputy Chairman Montek Singh Ahluwalia , a widely-respected, Oxford-educated economist who works directly under Prime Minister Singh and has close ties to Washington; Oil Minister Murli Deora , INC member and former mayor of Mumbai who was appointed in 2006, by some accounts due to pressures for a more pro-business, pro-U.S. oil minister; Power Minister Sushilkumar Shinde , an INC stalwart and former Chief Minister of Maharashtra; CPI-M General Secretary Prakash Karat , a vocal critic of many economic reforms and of India's warming relations with the United States, is the most notable leader of the UPA-supporting Left Front; BJP President Rajnath Singh , a Hindu nationalist from the Uttar Pradesh state who served in the government of former Prime Minister Vajpayee, is seen as a new-generation leader for India's main opposition party and has been critical of the UPA for slowing the process of economic reform; The Federation of Indian Chambers of Commerce and Industry (FICCI) , a nationwide grouping of corporations, chambers of commerce, and business associations that claims to speak directly or indirectly for more than 250,000 Indian business units; and The Confederation of Indian Industry (CII) , a nongovernmental industry group with a membership of more than 6,300 private and public sector organizations that employs advisory and consultative processes aimed at improving India's business climate. For many years, political power in India was monopolized by the Indian National Congress. However, starting in the 1970s, INC dominance was challenged by the emergence of other, increasingly influential political parties. In 1977, nearly 30 years after independence, the Janata Dal Party's Morarji Desai became India's first-ever non-INC prime minister. Later, in the 1980s, political party fragmentation in India led to an era of coalition governments, variously led by the INC, the Janata Dal, or the BJP. As noted above, no party has won a national election outright since 1984. India's political landscape offers no clear division between proponents and opponents of economic reform. Prime Minister Nehru and the INC oversaw decades of centralized economic planning—and today the UPA coalition relies on leftist forces that strongly oppose liberalizing policies—yet it was also later INC governments that launched India's major reform and liberalization programs. At the same time, the main opposition BJP accelerated "second generation" economic reforms during its time in power from 1998 to 2004, even as the BJP is home to some Hindu nationalist and " swadeshi " (self-reliance) forces that maintain a deep scepticism of neo-liberal economic systems. Generally perceived as being a center-left coalition, the UPA is an alliance among the INC and 14 smaller regional parties, including the Bihar-based Rashtriya Janata Dal (RJD) and the Dravida Munnetra Kazhagam (DMK) of Tamil Nadu. INC members hold about two-thirds of the coalition's 219 Lok Sabha seats, as well as all of the four major cabinet posts (External Affairs, Defense, Home, and Commerce). In forming a government, the UPA coalition created a "Common Minimum Program," a document providing the basic principles of governance that would guide the UPA, along with a policy framework for specific issue-areas. Left Front support for the UPA—which is necessary for the coalition to maintain majority status in the Parliament—has been predicated on government strategies that were seen as compatible with the provisions of the Common Minimum Program. In addition to taking credit for India's dramatic economic growth during the 1990s and criticizing the BJP for "mismanaging" the economy in general and reform efforts specifically, the INC's economic agenda for the 2004 elections, entitled "An Expanding Economy, A Just Society," called for achieving up to 10% annual GDP growth, while also seeking a shift of emphasis from a rapid rate of growth to "a specific pattern of growth" that would benefit all segments of the population, with ambitious (and far from realized) promises to "abolish" an array of societal ills, including hunger, unemployment, poverty, and illiteracy. A major aspect of this proposed effort would involve creating "a congenial atmosphere" for both domestic and foreign investment. The INC also blamed the BJP-led government for abject failure in the agricultural sector (which employs more than two-thirds of India's workforce), vowing major public investments in rural infrastructure. The right-leaning NDA, which held power in New Delhi from 1998-2004, is dominated by the BJP, which holds nearly three-quarters of the alliance's 189 Lok Sabha seats (12 smaller regional parties hold the remainder). The surprise emergence of the BJP as a national political force in the early 1990s gave voice to a repudiation not only of the Nehru-INC secular version of Indian nationalism, but also of its concepts of state-directed economic planning. Instead, the BJP called for major liberalization efforts, including abolition of India's complex system of permits and licenses, as well as a selling off of most public sector enterprises. Many early BJP economic policy recommendations were, in fact, adopted by Prime Minister Rao's INC government in the early 1990s. However, the BJP subsequently moderated some of its liberalization policies, and also had to deal with tensions between Hindu nationalism and the entry into India of major multinational corporations, which some feared would lead to an erosion of "Hindu culture." This led to measured support for trade protectionism and what the party called "calibrated globalization." While also asserting a goal of "complete eradication of poverty and unemployment," the BJP's 2004 economic agenda was more enthusiastic about unfettered continuation of economic reform efforts and did not place the same degree of emphasis on "social justice" as did the INC. The NDA's premier statement in 2004 promised an energetic continuation of economic reforms across a multitude of sectors. BJP leaders subsequently have been critical of the INC-led government for significantly slowing the reform process, sometimes accusing the UPA of buckling under pressure from leftist parties. Moreover, the BJP has been critical of the way in which the Singh government has entered into an agreement on civil nuclear cooperation with the United States, claiming that provisions of such an agreement will constrain India's nuclear weapons program. Organized resistance to proposed economic reforms has come from Hindu nationalist groups that were influential under the BJP government from 1998 to 2004. As a "sister organization" to the Rashtriya Swayamsevak Sangh—a leading Hindu nationalist organization—the Swadeshi Jagaran Manch (SJM) has taken the lead in efforts to forward the swadeshi (self-reliance) cause. According to the SJM, "The Western notion of a global market does not fit into the swadeshi approach," nor does the "Western notion of individual freedom, which fragments and compartmentalizes family, economy, culture, and social values...." Such anti-globalization policies continue to enjoy limited, but still substantial backing among Indians. The swadeshi lobby did, however, welcome the UPA's Common Minimum Program document in 2004. Long-time and bitter rivals of the INC, India's major communist parties now provide outside support to the INC-led ruling coalition as part of their mutual efforts to keep the BJP from power. The current Left Front alliance is dominated by the CPI-M and, secondarily, the Communist Party of India, which combine to account for about 85% of its 60 Lok Sabha seats. During the 1950s—and in correspondence with growing Soviet support for the new Indian state—India's various communist groups resolved to abjure revolutionary ideology and work within the parliamentary system. These parties, however, remain proponents of government-directed economic and industrial development, moderate land reform programs, and strong labor protection laws. Initially and still nominally opposed to the essence of New Delhi's reform and liberalization efforts since 1991, communist party leaders in their stronghold of West Bengal have continuously sought both domestic and international investments in their state, thus demonstrating a willingness to compromise in some areas of economic policy. Still, such leaders maintain an intensive focus on caste-based and poverty issues, styling themselves as the champions of minority groups and farmers, along with a deep-seated scepticism about the intentions and goals of U.S. and Western political, military, and economic interests in India. On economic policy, the Left Front has taken firm stands against raising limits of foreign direct investment, against government efforts to privatize public sector enterprises, and against the government's initial plans to launch hundreds of Special Economic Zones in India. Along with its considerable influence at the national level, the Left Front wields administrative power in the states of Kerala and West Bengal, where important trade unions have caused disruption in the course of major strikes and protests over inflation and unemployment. Since 2004, the Left Front has accused the UPA government of "serious violations" of the Common Minimum Program, including its planned disinvestment from a major public sector undertaking (PSU) in the summer of 2006. Communist parties characterize such moves as "anti-working class, neoliberal" policies being pushed by the UPA coalition. Moreover, these parties view New Delhi's apparent pro-U.S. foreign policy tilt as accentuating such neoliberal initiatives. It is the Left Front's opposition to "alliance" with the United States that is at the root of its vehement opposition to planned U.S.-India civil nuclear cooperation. India's political and economic situation is complicated by sharp regional contrasts in its economy. While some cities and states are relatively prosperous and modern, many others are seriously underdeveloped with significant poverty. These regional disparities not only have substantive impact on economic policies, they also influence the nation's politics. What follows is a brief summary of India's major geographic regions. (See Figure 14 , "Map of India.") Western India is a relatively prosperous region of the country. The state of Maharashtra, home to Mumbai (formerly Bombay)—a megacity, the world's third most populous and India's business and entertainment capital—is among the most urbanized of states, with some 42% of its citizens living in cities, more than half of these in slums. Despite an abundance of urban poor, the state ranks relatively high in measures of health, education, and infrastructure, and Mumbai itself has some of the world's highest real estate prices. Further to the west, the state of Gujarat has a particularly productive agricultural sector and is said to be the region's most lucrative investment environment, with social and infrastructure measures nearing those of Maharashtra. Other western states of Rajasthan and Madhya Pradesh rank in the middle-range on such measures. In the southwest, the small state of Goa—a former Portuguese colony—has the country's highest per capita income. The Delhi National Capital Territory is another Indian megacity. It is also the most affluent of India's administrative districts, with a per capita income double the national average. In fact, along with Delhi, the medium-sized northern states of Punjab, Himachal Pradesh, and Haryana form India's most prosperous region, as well as its largest market for many products and services. However, immediately to the east, Uttar Pradesh is the most populous and among the poorest of Indian states, consistently ranking low in development measures. Further to the north and isolated by mountainous terrain is the Jammu and Kashmir state, which has been suffering the effects of a religious-based insurgency since 1989. Still, "J&K" has relatively low poverty rates. Much of the recent global attention on India has focused on its fast-growing states of Karnataka and Andhra Pradesh, which (along with Delhi) have been at the forefront of the country's widely-touted software and information technology boom. Their respective capital cities—Bangalore and Hyderabad—have earned fame as emerging hubs for high-technology research and services, as well as for business process outsourcing (BPO) centers which serve many of the world's largest corporations. Other major southern states are Kerala, known for its social infrastructure and a 91% literacy rate, and Tamil Nadu, with its major commercial and industrial capital of Chennai (formerly Madras), said by some to be India's best-governed state. Despite the massive infrastructural and environmental problems caused by the rapid growth of its cities, India's southern region has been dubbed the country's most livable by India Today magazine. The numerous states of India's east and northeast face historical and geographical disadvantages that include inaccessibility and several ongoing armed insurgencies. This region thus continues to be India's least developed and its infrastructure remains quite poor. Bihar, India's poorest state, consistently ranks at or near the bottom of most development indices, and Orissa, Jharkhand, and Chhattisgarh are similarly challenged. West Bengal, with the megacity and former British colonial capital of Calcutta (now officially called Kolkata) is eastern India's fastest-growing and most important commercial and industrial center, even as jute and tea represent major cash crops. A stronghold of India's communist parties, West Bengal was also the site of major and lethal March 2007 protests against the establishment of a new special economic zone (SEZ). The "Seven Sisters"—smaller northeastern states connected to the rest of India by a 20-mile-wide "Chicken Neck"—are relatively sparsely populated and are distinguished by considerable religious and ethnic diversity. One result has been armed tribal and separatist conflicts, some of which pre-date Indian independence, that present major obstacles to economic development. India suffers from an increasingly lethal and disruptive conflict with "Naxalites"—Maoist insurgents ostensibly engaged in violent struggle on behalf of landless laborers and tribals. As many as 20,000 armed rebels, active mainly in inland areas of southern, eastern, and central India, claim to be battling oppression and exploitation in order to create a classless society. Their opponents call them terrorists and extortionists. The groups get their name from Naxalbari, a West Bengal village and site of a militant peasant uprising in 1967. In 2006, Prime Minister Singh identified a worsening Maoist insurgency as "the single biggest internal security challenge" ever faced by India, saying it threatened India's democracy and "way of life." The U.S. State Department's Country Reports on Terrorism 2006 warned that actions of the Maoist insurgents "grew in sophistication and lethality" during 2006. Naxalites now operate in about half of India's 28 states; Andhra Pradesh and, more recently, Chhattisgarh have been particularly hard hit (Naxalites were behind a 2003 landmine attack that nearly killed the chief minster of Andhra Pradesh). Related violence caused more than 700 deaths in 2006, including nearly 300 civilians, and has not waned in 2007. The insurgents are seen to have a detrimental effect on economic development in some regions of India. During his first visit to Hyderabad in 2005, U.S. Ambassador to India David Mulford reportedly said that he and potential U.S. investors had been concerned about Maoist violence in Andhra Pradesh, but received "good answers" about the investment climate from area business leaders. Still, Maoist attacks on roads, railways, and other infrastructure targets can retard development in affected areas, and the rebels are most active in those Indian states that contain the great bulk of the country's coal supplies, raising a further threat to energy security. Over the last five years, India has been one of Asia's fastest growing economies. Figure 1 shows India's nominal gross domestic product (GDP) for the years 2002 to 2007. In nominal terms, India's GDP grew from 24.5 trillion rupees in 2002 to 40.3 trillion rupees in 2006—an increase of 64% in four years—and is projected to reach 45.6 trillion rupees in 2007. When converted into "real" GDP using a purchasing power parity conversion, India's GDP rose from $3.2 trillion in 2002 to $4.4 trillion in 2006, and is projected to increase to $4.7 trillion in 2007. Much of India's economic growth has been the result of the expansion of its manufacturing and service sectors. Table 1 provides a sectoral breakdown of India's real GDP for fiscal years 1996, 2001, and 2006. Although the value of all three sectors increased, growth in the services sector exceeded that of the manufacturing sector, and the manufacturing sector grew faster than the agricultural sector. As a result, the portion of GDP contributed by the agricultural sector fell, the share of the manufacturing sector declined slightly, and the contribution of the services sector rose. The dominance of the services sector in India's GDP hides the continued importance of agriculture to the Indian population. An estimated 71% of India's population in 2006 lived in rural areas, with over half of those people living in villages of less than 5,000 people. While there has been growth in non-agricultural employment in India, about two-thirds of India's male population in 2004 continued to work primarily in agricultural activities. Another worrying aspect of the recent restructuring of India's economy has been a surprising lack of job creation. In other nations, when the economy exhibited rapid economic growth, along with a shift from agriculture to manufacturing to services, there was a corresponding rise in manufacturing and service employment. However, in India's case, the level of job creation has been low. According to a recent International Monetary Fund country study of India, "employment in the organized sector has remained roughly unchanged at about 27 million over the past decade and a half." Some analysts attribute this to the nature of the manufacturing and services that dominate India's economic growth, claiming that they are typically higher-skilled, professional jobs in contrast to the low-skill work generated in nations that previously experienced rapid economic growth. Others point to India's restrictive labor laws as being a major barrier to job creation. The living conditions for much of India's rural population have improved, but conditions for many remain quite meager. As of 2002, only 27% of India's rural households had access to tap water; over half relied on tube wells or hand pumps for water. Nearly half of India's rural household do not have electricity for lighting, and less than 10% possess a telephone, either landline or cell phone. One government study found that 77% of Indians—more than 830 million people—live on less than 20 rupees (about 50 cents) per day. The U.N. Development Program ranked India 126 th out of 177 countries on its 2006 human development index (between Namibia and Cambodia), up from 127 th in 2005. At the other end of the income scale, India has a substantial number of wealthy people and a large and growing urban middle class. A byproduct of India's growth is the emergence of a relatively prosperous and substantial middle class. India has long had a small wealthy sub-population in both its urban centers and rural communities. In a notable indicator of its growing wealth, India in 2007 beat out Japan as the home of the most billionaires in Asia, with 36. However, its middle class was comparatively small in number. According to one estimate, India's middle class in the mid-1980s constituted less than 10% of the population. Since the implementation of economic reforms, India's middle class has grown in size and affluence. Current estimates vary, but most studies indicate that less than 20% of India's households are in the middle class. The sectoral shift of India's domestic economy is partially driven by the rapid growth in the nation's trade in goods and services. Figure 2 shows the increase in both merchandise and service trade from 1990 to 2005. Between 1990 and 1999, India's total merchandise trade doubled in value and its trade in services trebled in value. Since 1999, India's international trade growth has accelerated. Between 1999 and 2005, India's total merchandise trade and imports of services nearly tripled in value, and its exports of services quadrupled in value. The overall growth of international trade has also created a potential economic problem—a growing trade and current account deficit (see Figure 3 ). From fiscal year (FY) 1997 to 2004, India's merchandise trade balance—exports minus imports—generally ran a deficit of less than $20 billion. However, since FY2004, India's merchandise trade deficit has grown from $13.7 billion to a projected $63.7 billion in FY2007. Along with this rise in India's balance of trade deficit, its current account balance has gone from a surplus of $14.1 billion in FY2004 to an estimated deficit of $14.1 billion in FY2007. The recent rise in India's merchandise exports has been led by the production of oil, ores, metals, motor vehicles, and machinery (see Table 2 ). In 2006, oil displaced jewelry as India's top exported commodity. Nearly three-quarters of India's oil exports in 2006 were high-speed diesel and other fuels. Also, India's exports of ores, slag, and ash increased from less than $500 million in 2000 to almost $4.6 billion in 2006, when more than four-fifths of the value came from exports of iron ore, and more than 86% of these iron ore exports went to China. The buildup in India's exports of motor vehicles and parts has several elements. Nearly a third of the exports—$1.257 billion in 2006—are automotive parts, with the United States as the largest export market, purchasing almost $340 million. The second segment of India's chapter 87 exports are automobiles, worth $1.501 billion in 2006, and shipped principally to Europe. In addition, India also exported a large amount of motorcycles—nearly $319 million worth in 2006. Another notable aspect of India's recent export growth is the relatively poor performance of its past leading exports—jewelry and clothing. In 2000, India's top four exports were jewelry (HS Chapter 71), non-knit clothing (HS chapter 62), cotton cloth and yarn (HS Chapter 52), and knit clothing (HS Chapter 61). By 2006, non-knit clothing had slid to third place and knit clothing had dropped to ninth, despite the expiration of the quotas under WTO Agreement on Textiles and Clothing on January 1, 2005. Despite the rise and fall of other commodities, jewelry remained India's top export in 2006. Within jewelry, India continues to be primarily an exporter of diamonds. In 2006, two-thirds of India's jewelry exports were cut, unmounted diamonds. India's top markets for its diamonds were, in order: Hong Kong ($3.2 billion), the United States ($2.5 billion), Belgium ($1.4 billion), and the United Arab Emirates ($1.2 billion). In contrast to exports, India's top 10 merchandise imports remained relatively stable between 2000 and 2006 (see Table 3 ). Oil was and remains India's top import, and over three-quarters of its oil imports are crude oil. Jewelry remains India's second biggest import, consisting of nearly equal amounts of gold and diamonds to be used by India's jewelry manufacturing industry. The next two top import categories—machinery and electrical machinery—incorporate both consumer goods (televisions, telephones, and computers) and intermediate goods (hard disc drives and integrated circuits). Finally, the fastest growing import category among the top ten, iron and steel, was more than 90% copper imports. The rapid rise in India's merchandise trade has been outdone by even faster growth in trade in services. The value of India's services exports increased 250% between 2000 and 2005, while the value of its services imports increased 176%. In 2005, the total value of India's services trade was $108.3 billion, or nearly half the size of its total merchandise trade. India's services trade surplus in 2005 was $3.9 billion. Figure 4 shows the sharp increase in India's services exports from 1990 to 2005. Although both transportation and travel services experienced strong growth over this time period, much of the rapid expansion in services exports occurred in other service sectors. Over the 15 years in question, India's services exports increased from $4.6 billion in 1990 to $56.1 billion in 2005—more than a 12-fold increase in size. Figure 5 presents the growth in India's services imports between 1990 and 2005. The sectoral composition of growth for services imports is similar to that of exports—transportation services and travel services both increased, but the greatest growth was in the import of other commercial services. Between 1990 and 2005, the value of India's services imports grew almost nine-fold, from $5.9 billion in 1990 to $52.2 billion in 2005. The structural changes in India's economy, the decline in poverty, the emerging middle class and the rapid growth in foreign trade are all seen as stoking the engines of economic growth in India. In fact, there is rising concern that India's economy may be growing too fast, raising fears of that its recent success may soon be followed by a sharp economic downturn. Commentators often point to India's rising rate of inflation as evidence that its economy is growing too fast. After several years of very modest inflation—about 4% per year—the consumer price index (CPI) in India topped 7% in 2006 and remained high in the first half of 2007. In May 2007, the CPI for industrial workers was up 6.6% over the previous month, and the CPI for agricultural workers was up 8.2%. The official government target is to bring inflation down to 4.0-4.5% in 2007, but some analysts project that the consumer price index will stay above 6%. While Reserve Bank of India (RBI) increased interest rates and raised reserve requirements to dampening inflationary pressures in 2006 and 2007, the efforts apparently have not significantly slowed economic growth. The United Nations Economic and Social Survey of Asia and the Pacific project India's economy would grow by 9.0% in 2007, down only 0.2% from its 2006 growth rate. In 2007, the International Monetary Fund (IMF) projected India's GDP would grow by 8.4% in 2007 and 7.8% in 2008. IMF recommendations on how to reduce the risk of the economy overheating focus on lowering the public debt (currently about 80% of GDP), continuing to reduce the general government deficit, and promoting greater job growth. Where the anti-inflationary efforts of the RBI may have affected the economy is India's exports. According to some economists, the higher interest rates have contributed to a significant appreciation of the rupee against the U.S. dollar and the Euro. The stronger rupee, these analysts maintain, is making India's exports less competitive. As will be discussed later in this report, the strength of the rupee is supposedly hitting India's jewelry and clothing exports especially hard. The UPA coalition came into office promising sustained economic growth "in a manner that generates employment." It set out to enact guaranteed employment (for minimum 100-day periods), and major public investment in social programs and in the agricultural and rural sectors. The UPA also vowed to give a high priority to the development of physical infrastructure such as roads, ports, power, railways, water supply, sewage treatment, and sanitation, even offering "explicit" subsidies to bring private sector participation in this area. Economic reforms were to be continued, but with a "human face": The UPA reiterates its abiding commitment to economic reforms with a human face, that stimulates growth, investment, and employment. Further reforms are needed and will be carried out in agriculture, industry, and services. The UPA's economic reforms will be oriented primarily to spreading and deepening rural prosperity, to significantly improving the quality of public systems and delivery of public services, to bringing about a visible and tangible difference in the quality of life of ordinary citizens of our country. The UPA economic priorities were largely welcomed by analysts calling for India to "get over its obsession" with GDP growth and FDI so as to better attend to the needs of common citizens, especially those in the rural, agricultural economies. These observers warn that a single-minded focus on economic expansion facilitates significant damage to the environment and to human health, as well as encouraging corruption. The UPA economic program also addresses many of the economic challenges listed in a July 2006 World Bank report. According to the World Bank, India's most pressing economic issues are: improving the delivery of core public services such as healthcare, education, and power and water supply for all India's citizens; making growth more inclusive by diminishing existing disparities, accelerating agricultural growth, improving the job market, and helping lagging states grow faster; sustaining growth by addressing its fiscal and trade deficits, and pushing ahead with reforms that facilitate growth; and addressing HIV/AIDS before the epidemic spreads to the general public. Prime Minister Singh took office in 2004 insisting that development would be a central priority of the UPA government, with reforms aimed at reducing poverty and increasing employment. He also emphasized that privatization was not part of UPA ideology and that major public sector concerns would not be sold off. The appointment of Harvard-educated lawyer and economic reformer Palaniappan Chidambaram to head the Finance Ministry, and a UPA Common Minimum Program emphasizing economic growth and increased investment, were welcomed by most business interests, even if the pace of privatization and labor reform efforts was expected to slow. In brief, from the start, the Singh government has attempted to walk a tightrope of economic policies designed to maintain its informal coalition government. Any sharp shift, either to the left or the right, might bring about sufficient political opposition from coalition members to destabilize the government. As a result, economic policies over the last three years have been characterized as being modest in scope and uneven in implementation. Eighteen months after taking power, for example, the UPA government was coming under fire for not pushing through a single major economic reform initiative. Many analysts have attributed the government's sidelining of reform initiatives to the influence of the Left Front, yet resistance to economic reform may run deep among a broader spectrum of ordinary Indians, many of whom are distrustful of the motives of an oftentimes corrupt political class. This pattern of fitful gradualism is demonstrable by reviewing the key areas where the Singh government has attempted to make substantive changes in the Indian economy. Because India's government continues to be a major economic force even after the economic reforms of the 1990s, the federal budget is an important indicator of government priorities. In FY2006/2007, the federal expenditures were 11.2% of GDP, and the fiscal deficit was 3.8% of GDP. By comparison, U.S. government expenditures for FY2006/2007 were 19.9% of GDP, and the fiscal deficit was 1.3% of GDP. The UPA's first budget, released in July 2004, generally was lauded by Indian industrial groups as "progressive and forward-looking." Subsequent budgets were similarly greeted by business interests, even as the prime minister and finance minister were seen to be tempering some of their more reformist instincts with heavy social and anti-poverty spending. India's federal budget for FY2007/2008 is an apparent response to the criticisms of economic reforms from both ends of the political spectrum. In part, the budget continues the past program of liberalization, while also giving greater attention to the agricultural sector and efforts to provide more assistance to India's poor. Such efforts are still viewed by the Left Front as being insufficient; this faction accuses the Singh government of prioritizing expenditure reduction over services for the poor. Meanwhile, opposition BJP leaders have criticized UPA budgets for slowing or even abandoning economic reform programs. One of the more difficult components of the government's budget is its efforts on poverty reduction. In August 2005, the lower house of India's Parliament passed a $9 billion jobs bill promising guaranteed work for up to 25 million of India's poorer citizens. Some critics called the initiative the kind of "socialism" that diverts scarce resources to efforts that have failed in the past, with most funding being lost to administrative costs and corruption. Yet the World Bank supported the policy, predicting it would help sustain growth. Having rebuffed the previous critics, in February 2006 the Singh government formally launched the country's most ambitious anti-poverty initiative that would provide guaranteed jobs for one member of each of India's 60 million rural households. Another chronic budgetary problem is balancing needs with resources. As described below, India has seriously underinvested in infrastructure for decades. However, a culture of tax evasion limits funds for public services. One report has only 30 million Indians paying any taxes and only 15% of federal government revenue coming from tax collection. India continues to retain remnants of its pre-reform "democratic socialist" economy. Three strategic sectors of the economy—railroads, nuclear power, and military aircraft and warships—remain state monopolies and closed to the private sector. However, the Singh government is continuing the privatization policies of its predecessor, but at a more gradual pace. Within the government, the Department of Disinvestment of the Ministry of Finance oversees India's privatization program. The privatization slowdown has not proven to be acceptable to elements of the UPA coalition. In July 2006, Prime Minister Singh announced that all government disinvestment decisions would be put on hold following opposition from the DMK party, a powerful Tamil Nadu-based member of the ruling coalition. The move was criticized by industrial groups. Barely a month later, the Singh government announced that it was abandoning plans to sell more than a dozen state-owned companies in what many analysts saw as a gesture to the Left Front parties which support the ruling coalition in New Delhi. However, the government appeared to be renewing its efforts in 2007 with a February decision to join a disinvestment process involving three publicly-owned power companies. Domestic business interests and potential foreign investors complain that India's labor laws are biased against employers and often prevent them from making high-risk investments. A culture of strict government oversight of the labor market is illustrated by the existence of 47 national laws and nearly 180 state-level laws meant to monitor its functioning. Work stoppages cause millions of lost human-days of labor each year and the country's courts are clogged by hundreds of thousands of pending labor disputes. In February 2005, Prime Minister Singh unveiled a blueprint for labor sector reforms. Singh later admitted that Indian labor laws were "rigid," reportedly saying, "We cannot move straightforward to the Western or the American model of hire and fire, quite frankly. I don't see that there is today a climate of opinion which will go to that extreme." More than two years after it was announced, and despite the prime minister's efforts to create a working consensus on the issue, the reform initiative has been effectively stalled by the UPA's Left Front allies. The urgent need for extensive investment in India's infrastructure is rarely questioned. The premiere report of the U.S.-India CEO Forum from March 2006 identified India's poor infrastructure as one of two key impediments to increased bilateral trade and investment relations (the other being India's dense bureaucracy). At a 2005 Economic Summit in New Delhi, Finance Minister Chidambaram acknowledged the problem, telling an audience of international business leaders and policy makers that India needs major investments in infrastructure such as roads, ports, and electricity generation. He asserted that a more liberal policy on bringing in foreign capital would be a key to this endeavor. Electricity shortages are especially acute and are widely believed to be seriously hindering the country's economic potential. Reports indicate that massive flooding in Mumbai in the summer of 2005 further exposed what was called India's economic "Achilles heel" (poor infrastructure). Another representative story describes the "utter chaos" common at New Delhi's international airport and the deterrent effect this can have on foreign visitors. The Singh government is attempting to address decades of underinvestment in infrastructure, but financing problems continue to hinder this effort. New Delhi estimates that the country will need up to $350 billion in infrastructure investment over the next five years. Some of this funding may come from India's record-high pool of foreign exchange reserves, and Indian officials hope that as much as one-quarter will come from foreign investors. Further reform in India's financial sector may be key to raising capital for infrastructure projects. In FY2007/2008, the central government plans to spend more than $46 billion on infrastructure development. According to the Indian Planning Commission's Committee on Infrastructure (created in August 2004), current initiatives include a 15-year, multi-billion-dollar project to widen and pave 40,000 miles of national highways; a $5 billion plan to build a dedicated freight railway; extensive renovation of 276 seaports, including bringing 12 major ports up to "world-class standards"; the modernization and expansion of the New Delhi and Mumbai airports (which were privatized in 2006), along with other major airports such as those in Kolkata and Chennai; further expansion of telecommunication networks; and large-scale investment in new power plants. Some of these efforts are not without their opposition from well-entrenched stakeholders, however. One of the more controversial elements of India's recent economic reforms are the special economic zones (SEZs) across the country. Modeled in part after China's SEZs, the goal was to develop new industrial areas near India's rural population to create alternatives to agricultural employment. Firms operating in the SEZs are expected to be net foreign exchange earners. Investment may come from public or private companies; foreign companies may also operate in the SEZs. There are a number of tax, tariff, and regulatory incentives offered to companies that operate in the SEZs. At the time of this writing, a total of 234 SEZs have been approved by the Indian government. The most controversial aspect of the SEZ policy is the acquisition of land. Indian law grants the Indian states the power of eminent domain over land, with relatively little recourse for the land owner to appeal the compensation for appropriated land. In some cases, the land acquired for the SEZs was take from local farmers, rather than from fallow areas. Some farmers have complained about their displacement from the land, which they viewed as a source of economic stability and their primary store of wealth. The SEZ policy has elicited energetic opposition from interest groups representing the political left and right, alike. Some critics says that building SEZs on fertile agricultural land will impoverish farmers without adequate compensation. Even INC chief Sonia Gandhi openly opposed exposing farmers to "unscrupulous developers." Other opponents, including India's finance minister, warn that the government will be denied billions of dollars in tax revenues lost due to special concessions offered to participating firms. In October 2006, the Left Front parties demanded extensive curbs on the SEZ initiative. There have been a number of violent protests and deaths associated with the establishment of SEZs in India. In January 2007, at least seven people were killed during protests about the establishment of an SEZ in Nandigram, West Bengal. Reports implicate the local police and supporters of the ruling CPI-M Party in the deaths. Then, on March 14, at least 11 more protesters were killed in Nandigram, again during demonstrations against the SEZ. As a result of the continued protests and violence, the SEZ policy has been put on hold by Prime Minister Singh. India's trade policies have generally been coordinated with its overall economic policies. Prior to the economic reforms of the 1990s, India utilized a fairly comprehensive import licensing system to control the import of goods. The import of a number of products was banned and over 1,400 products faced quantitative restrictions. With the advent of the economic reforms, India started a gradual process of transforming its import control mechanisms from quantitative restrictions to a tariff-based system that favored the import of some types of products, but deterred the import of other types of products. In some cases, tariff rates were significantly raised when the import restrictions were lifted. A side effect of the change in trade policy was the rising importance of import tariffs for India's federal budget. In fiscal year 1996/97, tariffs provided one third of India's gross tax revenue. Over the last few years, India has been simplifying its import policies by lowering tariffs, reducing the variation in tariff rates, and eliminating import licensing requirements. The stated goal is to reduce tariffs towards levels found among Association of South East Asian Nations (ASEAN) members. However, while India has been lowering its various import barriers, it has become a leading nation in the filing of antidumping measures with the WTO. Following the passage of the 1995 amendment to its 1975 Customs Act, which established India's antidumping and countervailing duty procedures, India began filing a large number of antidumping notifications. Between 1995 and 2001, India made 250 such notifications. As of June 30, 2006, India had 174 antidumping measures in force on products from 30 different WTO members, including 11 measures on U.S. products. India's tariff system has long had a reputation of being complex and opaque. Besides having a comparatively high average tariff rate, India also had a more dispersed range of tariff rates, even among similar types of products. Moreover, India had many exemptions or exceptions to the standard "most favored nation" (MFN) tariff rate, making it difficult for foreign companies to determine the correct tariff rate for their exports. Finally, there were frequent reports of uneven enforcement of existing tariff laws, as well as claims of arbitrary evaluation of imported goods. Most of these perceived problems with India's tariff system have improved with the lowering of its average tariff rate and the simplification of its tariff schedule. In fiscal year 1991/92, just before the start of its economic reforms, India's average tariff rate was almost 130%. According to the WTO, in fiscal year 1997/98, India's average tariff rate was 35.3%, with a peak rate of 260%, but by fiscal year 2001/2002, the average rate had declined to 32.3%, with a peak rate of 210%. By 2005, India's average tariff rate was down to 19.5%. Along with the lowering of tariff rates, India also reduced the number of different tariff rates it charged. For fiscal year 2006/07, the tariff rate became 30% for most agricultural goods and 12.5% for most non-agricultural goods. However, the peak tariff rates for agricultural goods is 100% and for non-agricultural goods is 182%. Two product categories that remain exceptions to India's tariff reduction and simplification are textiles and clothing. Prior to the elimination of import licenses for textile and clothing imports in April 2001, India introduced specific duties for a range of fabrics and apparel. These duties generally involved the imposition of the higher of two tariffs—one calculated on a percentage basis; the other calculated by a fixed amount per kilogram or square meter. According to one estimate, depending on the unit price of the imported textile or garment, the implicit tariff rate could be as high as 63%. In fiscal year 2006/07, many products in HS chapters 50 to 63 still face this two-track duty system. Although most of India's import restrictions have been lifted, there remain a small set of goods that are either prohibited, controlled or monitored. Import bans are either due to existing international obligations (for example, the international ban on trade in ivory) or on health and safety concerns. In March 2007, India banned the import of live poultry, pigs, and pig meat products from countries with bird flu outbreaks. India also controls the import of some products by means of stringent regulations. Finally, India regulates imports by means of monitoring import flows. Among these items are: milk products, fruits, nuts, coffee, tea, spices, cereals, oilseeds, edible oils, alcoholic products, silk, and toys. In its 2007 report on foreign trade barriers, the United States expressed concern about several other aspects of India's trade policy beyond its tariff rates and import restrictions. According to the report, India provides trade-distorting subsidies for di-ammonium phosphate (DAP) fertilizer. Also, the report is critical of Indian Customs for the "extensive documentation" it requires, as well as its apparent application of "discretionary customs valuation criteria to import transactions." In addition, the United States is concerned about India's standards and certification requirements, especially as they pertain to sanitary and phytosanitary measures. In some cases, the United States believes that the scientific basis of the standards is questionable; in other cases, it sees the certification requirement as forming a non-tariff trade barrier. Economic and trade relations between the United States and India have been problematic in the past, but are currently considered comparatively cordial. U.S. policymakers often identify in the Indian political system shared core values, and this has facilitated increasingly friendly relations between the U.S. and Indian governments. In addition, the trade and investment reforms implemented by India over the last 15 years have generally fostered improved trade relations. Indian officials opine that the two national economies present "complimentary business interests rather than a standard developed-developing relationship." However, the improvement in trade relations has been punctuated by episodic problems, generally based on political—rather than economic—differences of opinion. A major divergence came on May 13, 1998, when the United States imposed trade sanctions on India in response to its nuclear weapons tests. Regardless of which nation's trade statistics are considered, the value of merchandise trade between India and the United States has picked up dramatically over the last 20 years. In 1986, according to U.S. trade statistics, the total value of bilateral trade with India was $4.0 billion. By 2006, the total value of bilateral trade had risen to $31.9 billion—nearly an eight-fold increase. However, despite the rapid growth in the value of trade, the relative importance of the other nation to its total trade declined markedly in the late 1960s—a decline from which it has not recovered. Figure 6 shows the value of India's exports to and imports from the United States from 1958 to 2006, according to data reported by the Indian government to the International Monetary Fund (IMF). The graph shows that both India's exports to and imports from the United States were relatively low in value and subject to fluctuations from 1958 to about 20 years ago. However, since the mid-1980s, U.S. imports from India have steadily increased in value while India's exports to the United States have shot up dramatically. Despite the recent strong growth in trade flows in both directions, the relative importance of the U.S. for India's imports has actually declined over the last 40 years, while its share of India's exports has rebounded (see Figure 7 ). In the mid-1960s, nearly one-fifth of India's exports went to the United States, and the United States supplied India with over one-third of its imports. In 1981, the United States had declined in importance, purchasing just over 11% of India's exports and supplying less than 10% of its imports. In 2006, the United States purchased 17.4% of India's exports—almost the same percentage as in 1961—but only provided India with 5.9% of its imports. As a result, the United States was India's largest export market in 2006, and its third largest source of imports. An examination of U.S. statistics for bilateral trade with India reveals a similar pattern as India's data. Figure 8 shows official U.S. trade statistics for the same time period as Figure 6 . In value terms, U.S. exports to India and India's exports to the United States are comparatively low in value and flat until the mid-1980s. After a significant increase in the 1980s, U.S. imports from India rise rapidly starting in the early 1990s. U.S. exports to India also pick up in value starting in the early 1990s, but not at the same pace as imports from India. The role of India in U.S. merchandise trade flows has undergone a similar, but less dramatic, change as was seen for the importance of the United States for India's trade (see Figure 9 ). In the mid-1960s, India provided the United States with about 3% of its imports and purchased about 1.5% of its exports. Both of these percentages slid to under 1% in the 1970s. Since then, India's importance as a supplier of U.S. imports has risen slightly and slowly to 1.2% while India's share of U.S. exports has increased modestly to 1.0% after falling to 0.4% in the early 1990s. As a result, India was the 21 st largest export market for the United States in 2006 and its 18 th largest supplier of imports. There are some differences between official U.S. and Indian trade data on what the top traded commodities are between the two countries. In some cases, the difference is only in the value and ranking of the leading traded goods. However, in other cases, there are significant differences in the value of goods exchanged, leading to differences in the top traded items. Table 4 lists the top five commodities imported and exported according to U.S. and India trade statistics in 2006. The United States and India agree that the top U.S. exports to India in 2006 included machinery, electrical machinery, optical & medical instruments, and aircraft, but disagree on the value of those exports and their relative ranking. Similarly, both nations report that the top Indian exports to the United States in 2006 included jewelry, woven apparel, knitted apparel, and miscellaneous textile articles. There are differences between the two countries over the last commodity in their respective top five exports to each other. U.S. data indicates that missing commodity category for top five exports to India is jewelry, but Indian data says it is fertilizer. Similarly, Indian trade authorities list machinery as its fifth largest export to the United States, but U.S. trade figures place electrical machinery as the country's third largest import from India. While there are minor differences in the trade figures for bilateral U.S.-India merchandise trade, both nations recognize that China is a rising competitor to the United States. According to India's trade statistics, China became India's leading source of imports in 2004, displacing the United States (see Figure 10 ). In 2000, U.S. exports to India were worth nearly $2.9 billion—nearly twice the value of China's exports to India. By 2004, China's exports to India totaled $6.0 billion, and U.S. exports to India were $5.7 billion. In 2006, U.S. exports to India totaled $9.9 billion, but China's exports to India had risen to $15.6 billion. The United States remains India's leading trading partner on the strength of India's exports to the United States. The value of such exports more than doubled from $9.3 billion in 2000 to $18.7 billion in 2005. Over the same time period, India's exports to China increased from $0.7 billion to $7.8 billion—a more than 10-fold increase. As a result, India's total trade with the United States rose from $12.2 billion in 2000 to $28.6 billion in 2006, while its total trade with China jumped from $2.2 billion to $23.3 billion. To summarize, from both the U.S. and Indian perspective, there has been a recent rapid increase in bilateral merchandise trade flows, with India's exports to the United States our performing U.S. exports to India. However, despite the rise in the value of bilateral trade, the relative importance of the other country to the nation's external trade volume has remained small and is well below levels seen in the decade immediately following India's independence. Also, over the last five years, India's trade with China has grown more rapidly than trade with the United States. As a result, China has already surpassed the United States as India's leading source of imports, and may soon become India's largest trading partner. According to the U.S. Bureau of Economic Analysis, bilateral trade in services in 2005 totaled just over $10 billion—about one-third the size of the nation's merchandise trade with India (see Table 5 ). However, many analysts believe that bilateral trade in services has greater potential for rapid growth in the near future than merchandise trade. As a result, there is increased interest in service trade relations between the United States and India, including a proposal for a U.S.-India free trade agreement in services. In contrast to merchandise trade, bilateral service trade was nearly balanced in 2005, after a period of service trade surpluses for the United States. Between 2000 and 2005, bilateral services trade increased 130%, compared to 90% growth in bilateral merchandise trade over the same five year span. Trade in transportation services is a major component of the bilateral trade. In 2005, the United States exported about $1.5 billion worth of transportation services to India, and imported a nearly identical amount of such services from India. India and the United States also exchanged a large amount of professional services, with U.S. exports worth $462 million in 2005 and imports of $597 million. The recent growth in U.S. foreign direct investments (FDI) in India parallels the growth in bilateral trade. After steady, modest growth during the 1990s, U.S. investments in India rose dramatically between 2001 and 2005, according to official U.S. data (see Figure 11 ). Between 1990 and 2000, U.S. investments in India rose from $372 million to $2.4 billion—an increase of over $2 billion over 10 years. Over the next five years, U.S. FDI in India increased by over $6 billion to $8.5 billion. Over the 15 year period, the total value of U.S. FDI in India increased 22-fold. Despite the rapid growth in U.S. investments in India, the nation remains a relatively small destination for overseas U.S. investors. As of 2005, less than one-half of one percent of U.S. direct investment overseas was located in India. U.S. investments in India are about half the size of its investments in China, less than a quarter of the size of U.S. investments in Hong Kong, and nearly a sixth the size of U.S. investments in Singapore. Overall, India ranked 31 st in 2005 for locations for overseas U.S. direct investments. If the United States views India as a growing, but comparatively minor market for its overseas investments, the United States is an important source of foreign direct investment for India. According to India, the United States had $4.913 billion in investments in India as of December 2005, making the United States the second biggest investor in India and representing 16.1% of all foreign direct investment in India. There are, however, forces that may increase the importance of India for U.S. companies looking for overseas investment opportunities. With multinational firms anticipating increased labor costs and a growing labor shortage in China, India's large, educated, English-speaking young workforce may become more appealing. Nearly two-thirds of the recent FDI in India went into the manufacturing rather than services sector. Meanwhile, Indian companies have in recent years been buying up overseas firms. An example of Indian company actively involved in overseas FDI is the Tata Group. In 2000, the Tata Group bought Britain's Tetley Tea brand. In June 2006, a Tata subsidiary purchased Eight O'Clock Coffee for $220 million, which has a majority share in the U.S. branded whole bean coffee market. Then, in January 2007, Tata Steel took over Corus, a European steel company, for over $11 billion. According to an IMF report, India's overseas acquisitions for the first nine months of 2006 totaled over $7.2 billion. India and the United States have not signed either a bilateral trade agreement or bilateral investment treaty. Their bilateral trade relations are principally governed by the terms of their memberships in multilateral organizations, such as the World Trade Organization (WTO) and the International Monetary Fund (IMF). There are, however, four specific bilateral relationships that have affected or will likely affect trade relations between India and the United States. India's status as a non-signatory to the 1968 Nuclear Nonproliferation Treaty (NPT) has kept it from accessing most nuclear-related materials and fuels on the international market for more than three decades. New Delhi's 1974 "peaceful nuclear explosion" spurred the U.S.-led creation of the Nuclear Suppliers Group (NSG)—an international export control regime for nuclear-related trade—and the U.S. government further tightened its own export laws with the Nuclear Nonproliferation Act of 1978. In a major policy shift, the July 2005 U.S.-India Joint Statement asserted that, "as a responsible state with advanced nuclear technology, India should acquire the same benefits and advantages as other such states," and President Bush vowed to work on achieving "full civilian nuclear energy cooperation with India." As a reversal of three decades of U.S. nonproliferation policy, such proposed cooperation stirred controversy and required changes in both U.S. law and in NSG guidelines. India reciprocally agreed to take its own steps, including moving 14 of its 22 nuclear reactors into permanent international oversight by the year 2014 and placing all future civilian reactors under permanent safeguards. After many months of deliberation and multiple hearings involving Administration and non-governmental experts, the 109 th Congress passed enabling legislation near the end of its term. President Bush signed the Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 (or "Hyde Act") into law in December 2006 ( P.L. 109-401 ). The final bill language made significant procedural changes to the Administration's original legislative proposal, changes that sought to retain congressional oversight of the negotiation process, in part by requiring the Administration to gain future congressional approval of a completed peaceful nuclear cooperation agreement with India (this is often referred to as a "123 Agreement," as it is negotiated under the conditions set forth in Section 123 of the Atomic Energy Act). Congressional conferees also provided a 30-page explanatory statement ( H.Rept. 109-721 ). U.S. proponents of the civil nuclear initiative with India assert that, in addition to bringing India "into the nonproliferation mainstream," it has the potential to reduce pressures on global energy markets, reduce carbon emissions/greenhouse gases, and benefit progress of the broader U.S.-India "global partnership." India seeks access to U.S. nuclear technology as part of a national program to improve its energy infrastructure. U.S. business interests are eager benefit through the export to India of nuclear reactors, fuel, and support services. The U.S. Chamber of Commerce, which, along with the U.S.-India Business Council, lobbied vigorously in favor of President Bush's initiative, speculated that civil nuclear cooperation with India could generate contracts for American businesses worth up to $100 billion, as well as generate up to 27,000 new American jobs each year for a decade. However, foreign companies such as Russia's Atomstroyexport and France's Areva may be better poised to take advantage of the Indian market. Moreover, U.S. nuclear suppliers will likely balk at entering the Indian market in the absence of nuclear liability protection, which New Delhi does not offer at present. In 2007, U.S.-India negotiations toward finalizing a 123 Agreement proved contentious, as New Delhi expressed significant dissatisfaction with some aspects of U.S. conditions (these included provisions to end civil nuclear cooperation in the event that India tests a nuclear device, and an absence of assurances of uninterrupted fuel supplies or prior authorization for India's reprocessing of spent fuel). Influential political elements in India—including the Left Front, the main opposition BJP, and members of the nuclear scientific community—voiced strong disapproval of the proposed deal, and these domestic political pressures constrained the space in which Indian leaders were able to maneuver on the issue. However, in July, the United States and India announced having concluded negotiations 123 Agreement, calling it a "historic milestone" in the bilateral strategic partnership. New Delhi appeared to have been successful in negotiating reprocessing rights, assured fuel supplies, and no automatic termination if it conducts further nuclear weapons test. Indeed, subsequent reports suggested that U.S. negotiators had made considerable concessions to Indian demands and that the agreement could face resistance from some in Congress if its legal stipulations are seen to deviate from those found in the Hyde Act (the 123 Agreement can become operative only through a Joint Resolution of Approval from Congress). Civil nuclear cooperation with India cannot commence until the NSG allows for such cooperation, and until New Delhi concludes its own safeguards agreement with the International Atomic Energy Agency. In March 2006, President Bush pledged to create a verified end user (VEU) program with India. Also known as the "Trusted Customer" program, the VEU program would facilitate the license-free sale of otherwise controlled U.S. exports to approved Indian end users. As described by U.S. Commerce Secretary Carlos Gutierrez in a February speech, the VEU program would provide qualified Indian companies "access to U.S. technology products in a faster, more efficient, and more transparent manner." According to Secretary Gutierrez, the VEU Program will be operational in a "few months." The United States is pressing India to strengthen its export control systems and meet the standards specified in the Wassenaar Arrangement and the Australia Group. While India's strengthening of its export controls is not a precondition for the VEU program, the United States has indicated that it will exclude certain chemicals and Wassenaar items from the program if India does not tighten its export controls. India is a beneficiary of the U.S. Generalized System of Preferences (GSP) Program, which "provides duty-free tariff treatment to certain products imported from designated developing countries." In 2006, India received GSP preferential treatment for $5.7 billion of its exports to the United States, of which $2.4 billion, or 42%, was jewelry or jewelry-related products (HTS chapter 71). Some in the 109 th Congress discussed discontinuing India's inclusion in the GSP Program, in part due to India's stance on the Doha Round of negotiations. In May 2006, the then-Senate Finance Committee Chairman questioned the renewal of the GSP Program, pointing to India and Brazil as "two of the countries most responsible for holding up the Doha negotiations." In September 2006, the then-Senate Agriculture Committee Chairman called for U.S. Trade Representative Susan Schwab to consider revising the GSP Program to exclude advanced developing countries such as Brazil and India. However, no action was taken by the Bush Administration to remove India from the GSP Program. During the Indian prime minister's July 2005 visit to Washington, D.C., he and President Bush agreed to revitalize the U.S.-India Economic Dialogue. The Economic Dialogue has four main fora—the U.S.-India Trade Policy Forum, the Financial and Economic Forum, the Environmental Dialogue, and the Commercial Dialogue. At the July 2005 session, India and the United States agreed to three new initiatives under the Economic Dialogue—the Information and Communications Technology Working Group, the CEO Forum, and the U.S.-India Agricultural Knowledge Initiative—and reconstituted the High Technology Cooperation Group. The objective of the Economic Dialogue is to seek ways to resolve outstanding economic and trade issues, develop administrative capacity, and provide technical assistance. In general, meetings of the Economic Dialogue or its constituent groups consist of government officials from both nations, as well representatives of the Indian and U.S. private sectors. In addition to their direct bilateral relations, India and the United States interact on economic and trade issues in several multilateral fora. Both countries are members of the WTO, IMF, the World Bank, the Asian Development Bank (ADB), and other topical multilateral organizations. In other multilateral organizations, one nation may be a member, but the other nation may have informal ties to the group or interest in its activities. For example, while the United States is a member of the Asia Pacific Economic Cooperation (APEC) and India is not, there are indications that India would be interested in joining APEC when its current moratorium on new members ends. Similarly, India is a member of the East Asian Summit (EAS) and the South Asian Association for Regional Cooperation (SAARC), but United States is not. While the United States has a rather ambivalent attitude about the EAS, it and has applied for observer status with SAARC. Current discussions among WTO members regarding the Doha Round have placed the United States and India on opposing sides of key issues. When a half-year long suspension in negotiations ended earlier this year, India and the United States were joined by the European Union and Brazil to form a core group seeking to resolve the outstanding issues. The key outstanding issues for the Doha Round center around trade in agricultural goods, non-agricultural market access (or NAMA), trade in services, and trade remedies. At present, differences on trade in agricultural goods are foremost among the four remaining issues, and is generally viewed as the lynchpin for the successful completion of the Doha Round. It is generally understood that resolution of all the outstanding issues must occur for a successful outcome to the Doha Round, in part because the four key issues are to varying degrees linked to one another. India's Commerce Minister, Kamal Nath, has blamed U.S. intransigence for the Doha Round's collapse. In November 2006, during a visit to New Delhi to discuss trade issues with top Indian leaders, U.S. Agriculture Secretary Mike Johanns urged India to match "ambitious" U.S. offers and "lead the way toward unlocking the Doha negotiations by offering real market access." Indian officials later rejoined the negotiations, but, in June 2007, claimed the talks had "collapsed" due to lack of convergence among the major actors. Trade Representative Schwab later expressed U.S. surprise at how "rigid and inflexible" India (and Brazil) were during the June negotiations and she suggested that "some countries ... really don't want a Doha round outcome." During the suspension of the Doha Round negotiations, interest in alternative means of trade promotion and investment liberalization grew. In Asia, one of the more popular alternatives discussed was the formation of a regional free trade agreement. At the 2006 APEC meetings in Vietnam, the United States proposed the creation of a Free Trade Association of the Asia-Pacific, or FTAAP. As envisioned by the United States, the FTAAP would include the current APEC members only, thereby excluding India. At the second meeting of the East Asian Summit, held in conjunction with the January 2006 ASEAN Summit held in Cebu, Philippines, one of main agenda items was a proposal to form a pan-Asian free trade association that would include current ASEAN members plus Australia, China, India, Japan, New Zealand, and possibly Russia. The United States, which was not invited to the summit, was not being considered for membership in the pan-Asian FTA because it is not an Asian nation. India had already expressed its support for the idea of a pan-Asia FTA before the summit took place. The United States opposes the idea, preferring its FTAAP model of an Asian FTA. The United States and India are both members of the Asian Development Bank (ADB)—one as a developed country and a contributor of funds; the other as a developing country and a recipient of funds. According to the most recent ADB Annual Report, India received $567.2 million in assistance in 2005, including $440.3 million in loans, $100 million in "special funds" (primarily tsunami relief support), and $20.6 million in equity and guarantees. Outside of the tsunami relief assistance, most of the ADB's 2005 support in India went to infrastructure development projects. Since joining the ADB in 1966, India has received nearly $15 billion in ADB assistance. The United States has pledged to contribute $461 million to the ADB's Asian Development Fund between 2005 and 2008. However, Congress set the U.S. support for the ADB for FY2006 and FY2007 at $99 million. For FY2008, the Bush Administration has requested $133.85 million: $115.25 million for its annual contribution and $18.6 million to pay a portion of its arrears. One important issue of note emerging from the ADB is a proposal to create an Asian Currency Unit (ACU), to be overseen by the ADB. The ACU is envisioned as a unit of account, determined by a weighted average of regional currencies, to be used by financial market participants for regional settlement of payments and invoicing of trade transactions. According to the ADB, over time the ACU may be transformed into a regional currency, much like the Euro. India has expressed a desire to be part of the ACU, but Finance Minister Chidambaram has admitted the "Asian Currency Unit is not going to happen overnight." India is also aware of resistance among the ASEAN nations to include India in the ACU. The United States has expressed misgivings about the ACU proposal in general, raising concerns about "mission creep." Besides the general multilateral and bilateral economic and trade issues described above, there are several sectoral or topical issues of significance between India and the United States. Some of these issues interplay with more general issues, such as the Doha Round negotiations or the bilateral trade balance. What follows is a brief summary of each of these issues, arranged in alphabetical order. In India and the United States, there is interest in improving market access to each other's markets in anticipation of greater trade in agricultural goods. In 2006, the United States exported over $300 million in agricultural goods (including over $42 million in prepared foods) to India, and imported $1.3 billion in agricultural goods from India (see Table 6 ). U.S. exports of live animals and animal products are hindered by Indian import restrictions and cultural norms. Cattle and beef imports are subject to import controls because of the risk of "mad cow" and "hoof in mouth" disease, as well as the Hindi and Buddhist prohibitions of eating beef and Muslim prohibitions of eating pork. Similarly, on March 14, 2007, India stopped the import of poultry, poultry products, pigs, and pork products from countries infected with avian influenza to protect the public health. Other U.S. products—such as coffee, tea and most grains —are effectively kept out of India by tariff rates as high as 100%. A July 2007 Indian government reported determined that U.S. wheat was unfit to be imported into India due to the presence of pervasive weeds. On March 6, 2007, the United States requested WTO dispute settlement consultations with India over the customs duties it imposes on imports of wine and distilled spirits, claiming that charges for "additional duty" and "extra additional duty" increased the imposed tariff rate to 150% to 550%. The European Union (EU) also requested consultations over the same issue. India has committed to the WTO to bind its tariff on wine and spirits to no more than 150%. On March 30, 2007, Indian Trade Minister Kamal Nath said that India knew its import duties on wine and alcohol were "high" and that "this situation would be corrected." However, at an April 10 meeting of WTO Dispute Settlement Board, India blocked the first attempt by the European Union to request the creation of a dispute settlement panel to address India's import regime for wine and alcohol. The dispute panel was approved at a subsequent meeting of the WTO Dispute Settlement Board on April 24, 2007. The United States has also expressed concern about India's application of its sanitary and phytosanitary (SPS) regulations on certain U.S. exports. The United States questions some of the scientific basis for India's SPS regulations. It also believes that some of the SPS standards are not in accord with internationally recognized standards. Plus, the United States has indicated that India has failed to notify other nations of changes in SPS regulations in a timely fashion. In particular, the U.S. Trade Representative has objected to India's proposed import and labeling requirements for genetically modified foods. For its part, India has also indicated dissatisfaction with U.S. SPS regulations with regards to the treatment of Indian agricultural goods. For example, one long-standing source of tension between the two nations is a 17-year old ban on the import Indian mangoes into the continental United States. The mango ban was a subject of discussion during President Bush's trip to India in March 2006, during which President Bush promised to have the ban lifted. On March 12, 2007, when the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS) issued a final rule allowing, under certain conditions, the import of mangoes from India. However, according to India's Commerce Department, the estimated cost of compliance with the new rule is about $3 per mango, rendering the Indian mango uncompetitive. Other than issues of threats to public health and unfair SPS rules, India's concern about agricultural imports from the United States also includes the U.S. farm subsidy program. India, along with a number of other nations, views the current U.S. farm support program as a form of trade-distorting export subsidy and is calling on the United States to significantly reduce the annual limit on farm assistance. India has rejected the proposed U.S. limit of $22 billion as insufficient, pointing out that the actual level of support in 2006—$19 billion—was already below the U.S. offer. India, the United States, Brazil, and the European Union are actively discussing the agricultural support programs as part of the reinvigorated Doha Round negotiations. Trade in clothing and textiles is a major issue in U.S. relations with India for two key reasons. First, as shown in Table 4 , clothing and textiles are among the top five India exports to the United States. Second, following the termination of the WTO's Agreement on Textiles and Clothing (ATC) on January 1, 2005, most experts predicted that the global manufacturing of clothing and textiles would restructure, and that China and India would emerge as major production sites. By implication, it was expected that U.S. clothing and textile imports from India (and China) would jump beginning in 2005, as production shifted from other nations to India (and China). As a result, the termination of the ATC might cause a spike in the U.S. bilateral trade deficit with India. The U.S. trade data on textile and clothing imports from India appear to support the predictions for clothing, but not textiles (see Figure 12 ). Clothing imports, which had been increasing by about 10% per year for the previous three years, rose by over 30%, or more than $1 billion, in 2005, and then returned to the previous growth rate. By contrast, textile imports from India did not spike in either 2005 or 2006, but grew at a rate similar to the previous three years. The sharp increase in clothing imports from India did not, however, translate into an unusual rise in the U.S. bilateral trade deficit with India (see Table 7 ). According to U.S. trade figures, the nation's bilateral trade deficit with India grew in a rather uneven pattern between 2000 and 2006. The increase in the trade deficit between 2004 and 2005 was large—over $1.5 billion—but not that much larger than the year before or the increase between 2001 and 2002. While the debate over the impact of the termination of the ATC on global trade patterns continues, another factor—the relative value of key currencies—appears to be influencing the global clothing and textile market. For India, the dramatic strengthening of the rupee against the U.S. dollar (see Figure 13 ) has apparently hurt the nation's clothing and textile exports to the United States. Between July 1, 2006, and March 1, 2007, the value of the Indian rupee gained 4% against the U.S. dollar, as the exchange rate declined from 46.126 rupees per U.S. dollar to 44.287 rupees per U.S. dollar. However, over the next two months, the strengthening of the rupee accelerated, so that by the middle of July, the exchange rate stood at 40.423 rupees per dollar—or an appreciation of 9.1% in less than four months. According to some market observers, the appreciation of the rupee has reversed two years of growth of clothing and textile exports to the United States. Official U.S. trade statistics for the first six months of 2007 show a 1.5% year-on-year decline in the value of textile imports from India and a 0.6% year-on-year decline in the value of clothing imports. D.K. Nair, secretary-general of the Confederation of Indian Textile Industry, said that the slowdown in U.S. demand along with the strengthening of the rupee are causing serious harm to India's clothing and textile industry. The more recent appreciation of the rupee is making it even more difficult for India to remain competitive. At another forum, Nair stated, Supply side problems like unworkable labor laws that restrict the garment industry to SMEs [small and medium enterprises], high transaction costs that render exports uncompetitive and infrastructure weaknesses have been infusing production inefficiencies into the textile and clothing industry. What is new is perhaps the steep appreciation of the rupee during the last few months, and particularly during the last couple of weeks. The forthcoming Verified End Users (VEU) Program is perceived as portending a period of greater trade in dual-use technology and military equipment between the United States and India. Because the Export Administration Act (EAA) of 1979 ( P.L. 96-72 ,) expired in August 2001, exports of dual-use technology to India are currently restricted or controlled by International Emergency Economic Powers Act (IEEPA) ( P.L. 95-223 ). Munitions and military equipment are controlled by the Arms Export Control Act ( P.L. 94-329 ). India is seen as a large and promising market for U.S. exporters of military equipment and dual-use technology. From 1998 to 2005, India was the leading arms purchaser among less industrialized countries, signing arms transfer agreements worth $20.7 billion. Most of these agreements were made with Russia, upon which India has long relied for its procurement of military equipment. India's future defense procurement budget could total as much as $35 billion over the next two decades. Officials from both the U.S. and Indian governments assert that greater defense trade should be an important aspect of future bilateral relations. As a result of New Delhi's increased defense expenditures, the issue of U.S. arms sales to India has taken a higher profile in recent years. In 2002, the Pentagon negotiated a sale to India of 12 counter-battery (or "Firefinder") radars sets worth a total of $190 million, the largest such bilateral arms deal to date. In 2006, New Delhi approved a $44 million plan to purchase the USS Trenton , a decommissioned American amphibious transport dock. The ship, the second largest in the Indian navy, set sail for India as the INS Jalashva in June 2007 carrying six surplus Sikorsky helicopters purchased for another $39 million. In May 2007, the Pentagon notified Congress of the possible sale to India of six C-130J Hercules transport aircraft (manufactured by Maryland-based Lockheed Martin) which, along with associated equipment and services, could be worth more than $1 billion. The Pentagon reports military sales agreements with India worth $336 million in FY2002-FY2006. American defense firms eagerly pursue new and expanded business ties with India, lobbying most recently at India's biennial air show in Bangalore in February 2007, where 52 U.S. companies exhibited their wares and sought deals. According to U.S. Ambassador to India Mulford, there is a widespread expectation in the United States that U.S. companies should get "favorable treatment" following American gestures to India, even as he denied there was any "negotiated quid pro quo " related to planned bilateral civil nuclear cooperation. Still, some top Indian officials express concern that the United States is a "fickle" partner that may not always be relied upon to provide the reciprocity, sensitivity, and high-technology transfers sought by New Delhi. Nevertheless, the Indian government reportedly possesses an extensive list of desired U.S.-made weapons, including PAC-3 anti-missile systems, electronic warfare systems, and possibly even combat aircraft. The 2005 unveiling of the Bush Administration's "new strategy for South Asia" included assertions that the United States welcomed Indian requests for information on the possible purchase of F-16 or F/A-18 multi-role fighters, and indicated that Washington is "ready to discuss the sale of transformative systems in areas such as command and control, early warning, and missile defense." India is expected in 2007 to issue a tender for the purchase of 126 new fighter jets in a deal that could be worth up to $10 billion. Lockheed Martin and Illinois-based Boeing are competing with aircraft built in Russia, France, and Sweden. The enthusiasm of U.S. defense companies themselves is somewhat dampened by India's Offset Policy for defense procurements. Introduced in 2005, the Offset Policy requires that foreign defense contracts worth more than 3 billion rupees (about $74 million) include an offset purchase, investment, or transfer of technology worth at least 30% of the total contract. The direct purchases may include goods or services from India's defense industry, and the investments should be made in either India's defense industry or organizations conducting defense research and development. Some U.S. companies object to India's Offset Policy and have lobbied for its termination. Trade in dual-use technology with India is subject to the provisions of the IEPPA. As a result, U.S. companies wishing to export dual-use products to India must secure an export license from the Department of Commerce's Bureau of Industry and Security (BIS). In addition, some exports to India (including certain computers) are subject to post-shipment verification to ensure that the products are not being re-exported to other restricted locations. Finally, the BIS maintains a list of entities to which the export of dual-use technology is generally prohibited. At the time of this writing, the list includes four Indian entities and/or their subordinates. At a February 2007 meeting of the U.S.-India High Technology Working Group, there was extensive discussion of the possibility of removing some or all of the Indian companies from the BIS entities list, as well as eliminating or alleviating the restrictions on dual-use technology trade with India. Assistant Secretary of Commerce for Export Administration Chris Padilla appeared to signal a willingness to consider a relaxation of export restrictions during the HTCG meeting, saying, "There may be some remainders of Cold War-type treatment that we may be able to address and clean up in our regulations." However, there are some indications that the United States would like to see India tighten its export control regime before relaxing its exports controls on India. While emphasizing that tighter export controls were not a precondition to the implementation of the proposed VEU program, Assistant Secretary Padilla implied that the scope of VEU program might be constrained by the status of India's export controls. Although current levels of U.S. foreign direct investment (FDI) are relatively low when compared to China, there is strong private interest in the Indian market for U.S. companies in certain industries. Annual FDI to India from all countries rose from about $100 million in 1990 to nearly $6 billion for 2005, then nearly doubled in one year to more than $11 billion in 2006. About one-third of these investments was made by U.S. firms; in recent years, the major U.S.-based companies Microsoft, Dell, Oracle, and IBM announced plans for multi-billion-dollar investments in India. However, current Indian law restricts foreign ownership in many industries to varying degrees, making FDI less attractive to many U.S. companies. At present, India strictly prohibits FDI in four industries: retail trade (except single-brand outlets); atomic energy; lottery business; and gambling and betting. For other sectors of interest to U.S. companies—including broadcasting, pharmaceuticals, banking, financial services, insurance, defense production, mining, oil and natural gas, and telecommunications—FDI limits range from 26% to 100% of total equity, both across and within sectors. In addition, depending on the sector and the size of the FDI, the investment may be subject to administrative approval. In late 2006, India announced it is considering new legislation on FDI. The so-called FDI Promotion Act would cover all aspects of FDI, including entry conditions, dispute settlement, incentive programs, approval procedures. The Indian government is also considering a proposal to create uniform FDI limits within each sector, as well as raise some of the current FDI limits. Prospects for these two proposals are uncertain. However, New Delhi did increase the FDI limit for the telecommunications industry from 49% to 74% in March 2007. Especially closely watched are opportunities for investment in India's potentially vast retail sector. Foreign involvement in his sector is a sensitive issue for Indians; in March 2005, Commerce Minister Nath said, "We are very clear that if at all FDI is permitted into retail trade it should lead to incremental economic benefits and not substitute ongoing activities. There is no question of replacing or displacing what we have: it must add to economic activity." New Delhi subsequently commissioned a report on FDI in the retail sector and, in January 2006, Nath announced new regulations that allow foreign investors to own up to 51% of retail outlets selling only single-brand goods. India has a particularly large number of small merchant shops—perhaps the highest per capita number worldwide—meaning that tens of millions of citizens could be adversely impacted by the appearance in India of "big-box" retailers. The U.S. Trade Representative listed India on the U.S. Special 301 Priority Watch List in 2007, despite recognition of improvements in India's IPR laws, regulations and enforcement. On the administrative side, the United States urged India to "improve its IPR regime by providing stronger protection for copyrights, trademarks, and patents, as well as protection against unfair commercial use for data generated to obtain marketing approval." The U.S. Trade Representative has also indicated that the United States would like to see India join the World Intellectual Property Organization's (WIPO) Internet Treaties. On the enforcement side, the United States claimed that piracy of copyright materials was "rampant." Opponents of inserting "data exclusivity" clauses into Indian law assert that they constrict India's generic drug industry's ability to compete both domestically and internationally, and place a large financial burden on firms that must repeat expensive clinical trials. By removing the availability of inexpensive and oftentimes life-saving medications, the argument goes, would have a seriously detrimental resulting impact on public health. India appears to have been active in its IPR enforcement during 2007. On February 6, 2007, India joined 11 other Asia-Pacific entities in a combined sting operation that arrested 870 people and seized nearly 5 million pirate DVDs and VCDs. The operation was called "Operation Trident," and involved operations in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, and Thailand. In India, there were 110 raids, with 118 arrests. Operation Trident occurred while India was hosting the first-ever International Meeting on Intellectual Property and Development. Organized by India's Department of Industrial Policy & Promotion (DIPP), the meeting included representatives from 22 countries, including the United States. The focus of the February 5-7 meeting was on the relationship between intellectual property rights (IPR) and economic development. In addition, in May 2007, the U.S.-India Business Council (USIBC) in conjunction with the Federation of Indian Chambers of Commerce and Industry (FICCI), implemented a "Bollywood-Hollywood" anti-piracy initiative aimed at stopping the illegal copying and distribution of U.S. and Indian entertainment videos. The initiative seeks to reduce video piracy both in India and the United States, where the growing popularity of Bollywood movies has given rise to a growing problem of video piracy. The relationship between IPR and economic development has been of interest to India for several years. In 2003, a group of developing countries, including India, circulated a paper at the WTO making recommendations on actions that could be taken to foster greater technological transfer to developing countries. The United States and other WTO members objected to the paper's analysis, which suggested that the TRIPS agreement and its IPR protection provisions were hindering technological transfers. In October 2005, India, Pakistan, and the Philippines submitted another paper on the subject of technological transfer and the TRIPS agreement that focused on ways to encourage technical assistance, promote the performance of technological development work by multinational corporations in developing countries, and facilitate the mobility of scientists and technicians under the GATS agreement. The U.S. response to the second paper was more favorable. The second paper became the focus of discussion in 2006 of the WTO's Working Group on Trade and Transfer of Technology (WGTTT), a body established in 2001 at the Doha Ministerial Conference. According to the USTR's 2007 Trade Policy Agenda, the United States expects that the paper will also dominate WGTTT discussions in 2007. Beyond the usual concerns expressed by the software, movie, and publishing industries about IPR protection, the U.S. pharmaceutical industry has of late been very actively seeking improved IPR protection in India. In particular, it would like to improve patent protections, secure test data exclusivity, and limit pre-grant opposition to patent applications. India's pharmaceutical industry, for its part, believes that the level of IPR protection sought by the U.S. companies exceeds those provided for in the TRIPS agreement, and will effectively prevent the introduction of generic drugs in India in the future. India is a leading exporter of jewelry, especially diamonds and diamond jewelry, to the world and to the United States. In 2006, the United States imported $5.9 billion worth of jewelry (HTS71) from India, or 25.5% of all imports from India. Of this, $3.3 billion (55.5%) were diamonds and diamond jewelry and another $2.4 billion (41.0%) was precious metal jewelry. The depletion of many of India's diamond mines has pushed its industry to source its diamonds from overseas. In 2005, India imported nearly $10.6 billion worth of diamonds. This has raised concerns about the possible import of so-called "conflict diamonds." In January 2003, India, the United States, and 53 other countries endorsed a UN initiative called the Kimberley Certification Process that certifies that the diamonds do not come from Angola, Liberia, Sierra Leone, and Congo. In 2005, India considered lowering the FDI limit for diamond mines from 100% to 74% in an effort to close a possible back door for the import of "conflict diamonds." However, there are claims that uncut "conflict diamonds" are still finding their way into India, especially into the markets in Surat. If true, then there is high likelihood that "conflict diamonds" could also be making their way into the U.S. consumer market. The rapid growth in India's economy has also meant a rapid increase in its demand for oil. Although India has proven oil reserves, production is nearly at capacity, while demand continues to rise. According to the U.S. Department of Energy's Energy Information Agency (EIA), India produced an average of 846,000 barrels per day (bbl/day) of "total oil liquids" in 2006, and used an average of 2.63 million bbl/d of oil, resulting in a shortage of nearly 1.8 million bbl/d. In addition, according to the EIA's estimates, India's oil demand increased by 100,000 bbl/d in 2006, and will increase by similar amounts in 2007 and 2008, leading to the nation's growing "energy deficit." In order to fill its oil gap, India national oil companies have been actively seeking overseas sources of crude oil, involving the acquisition of equity in some cases. According to EIA, the most active Indian oil company overseas is ONGC Videsh Ltd., which holds interests in 25 oil and natural gas projects in 15 different countries in Africa, Asia, the Americas, and the Middle East. Indian companies have also been actively involved in Sudan's oil industry, as well as the operation of the major oil pipeline and terminus in Port Sudan. India's growing oil demand, along with China's growing demand, are contributing factors in the a tightening global petroleum market and higher crude oil prices. Competition for crude oil and energy in general is becoming an important issue in Asia, pressing nations to develop trade relations outside of the region. For example, India is pursuing closer relations with the repressive regime in neighboring Burma (Myanmar), with an interest in energy cooperation and to counterbalance China's influence there. In response, the United States is exploring ways to foster cooperation with friendly nations with respect to global petroleum market. Legislation specifically on energy cooperation with India has been introduced in both the House of Representatives and the Senate. At present, most of the focus of Indo-U.S. service trade is in the information technology (IT) sector. Over the last few years, U.S. companies have been outsourcing many aspects of their IT work to India and other nations. According to one recent study, U.S. banks will increase the share of their IT work overseas from 6% to 30% by 2010, representing a transfer of over $10 billion of IT services. The study also predicted that the nature of the overseas IT work will shift from "low-level applications" to more sophisticated IT activities. Another study projected that U.S. IT outsourcing would increase at a compound annual growth rate of 5.9% over the next five years, reaching a total value of $17.7 billion in 2011. This later study indicated that an impending shortage of IT skills among government employees will be one of the key stimuli of the outsourcing. U.S. companies are not limiting their activities in India to IT; they are also utilizing India to provide a growing array of services related to the financial sector. On April 11, 2007, Citigroup announced the elimination of 17,000 jobs—or nearly 5% of its global workforce—and the relocation of 9,500 jobs to "low-cost" locations. However, in the same news story, sources close to Citigroup said that between 5,000 and 8,000 jobs would be moved to India in the near future. Most of these relocated jobs would involve equity research, investment banking, and back-office transaction-related services. Meanwhile, India's domestic IT industry is attempting to branch out of the lower value-added activities (such as call centers and payroll processing) into higher value-added services (such as product design, software development, and chip engineering). Many U.S. companies are establishing tech centers in India to take advantage of the greater availability and lower cost of Indian engineers. Plus, leading Indian IT companies—such as Tata, Infosys, Wipro, Satyam, and HCL Technologies—are developing their international IT service capacity. The growth of trade in IT services has placed pressure on the U.S. H-1B visa program. The H-1B visa permits U.S. companies and universities to temporarily employ foreign workers who have the equivalent to a U.S. bachelor's degree. While there is an annual quota of 78,200 visas, exemptions have allowed the U.S. Citizenship & Immigration Services to issue over 100,000 H1-B visas in 2004 and 2005. Recipients of an H1-B visa may remain in the United States for up to six years (ten years for Defense Department related work) so long as they remain employed by the same company. H1-B visas are not transferable. Both U.S. and Indian companies have complained that the current quota is too restrictive, making it difficult for U.S. companies to hire enough engineers and technicians to remain competitive in the global market. Also, some companies would like to see the creation of a new visa category that would allow foreign nationals to work and/or train in the United States for a short period of time. However, there is opposition to the expansion of the current H1-B program. In May 2007, two senior U.S. Senators wrote letters to nine Indian companies that account for nearly one-third of all H1B visas issued in 2006 and requested further details about their use of the special visa program. The Senators expressed concern that fraud and abuse in such programs may have negative impact on U.S. workers. Given the relatively positive relationship between the United States and India, most of the economic and trade issues between India and the United States are developing trends with few direct legislative implications. One of the exceptions is in the energy sector, where there are bills before Congress concerning U.S.-Indian energy cooperation. However, in some cases, there is pending or possible congressional legislation that may have an indirect impact on U.S.-Indian relations. What follows is a summary of the more prominent issues or topics in U.S.-Indian relations. There currently is legislation before 110 th Congress on the subject of U.S.-India energy cooperation. The United States-India Energy Security Cooperation Act of 2007 ( H.R. 1186 ) would "promote global energy security through increased cooperation between the United States and India in diversifying sources of energy, stimulating development of alternative fuels, developing and deploying technologies that promote the clean and efficient use of coal, and improving energy efficiency." Both the Energy Diplomacy and Security Act of 2007 ( S. 193 ) and the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 ( S. 1419 ) would, inter alia , establish a U.S. petroleum crisis response mechanism in conjunction with China and India. A section of the International Climate Cooperation Re-Engagement Act of 2007 ( H.R. 2420 ) would create Foreign Commercial Service attaches and deploy these to India (and China) for the purpose of promoting U.S. exports in clean and energy efficient energy technologies. The New Direction for Energy Independence, National Security, and Consumer Protection Act ( H.R. 3221 ), introduced in July 2007, contains similar provisions. Moreover, and as noted above, an initiative to launch civil nuclear cooperation with India was provisionally endorsed by the 109 th Congress in the Hyde Act ( P.L. 109-401 ) and any future "123 Agreement" guiding such cooperation must be approved by Congress. Immigration reform is a major issue for the 110 th Congress. The Comprehensive Immigration Reform Act of 2007 ( S. 1348 ), currently being considered by the Senate, would alter the eligibility requirements for H-1B visas under the Securing Knowledge, Innovation, and Leadership Act of 2007 (SKIL Act of 2007), and limit the number of "market-based visas" to 115,000 per fiscal year. While this is an increase from the current limit, it is below the level sought by both Indian and U.S. information technology companies. Nor does the bill address the industry's desire to see the creation of a new visa category for short-term training of foreign nationals in the United States. Many provisions of the current omnibus farm bill, the Farm Security and Rural Investment Act of 2002 ( P.L. 107-171 ), expire in 2007. India, along with Brazil and other nations, have argued that certain aspects of the current U.S. farm program are "trade distorting,' and are pushing the United States to change various agricultural programs, including its farm subsidies. It was previously hoped that the Doha Round would be completed in time for Congress to consider the enabling legislation under Trade Promotion Authority (TPA), and that any changes in U.S. agricultural policy could be including the enabling legislation. However, since the Doha Round discussions are not completed, Congress is considering the expiring programs without the benefit of knowing the terms of any new WTO obligations. The recently introduced H.R. 2419 provides for the continuation of the expiring farm programs, but may not prove to be in compliance with the results of any agreement coming out of the current Doha Round discussions. The 110 th Congress is considering legislation pertaining to the operation of the Committee on Foreign Investment in the United States, or CFIUS, an interagency committee that overseas the security implications of foreign investments in the United States. While U.S. laws governing FDI are generally viewed as being very liberal, there has been recent concern about the security implications of some proposed overseas investments, especially their implications for national defense and port security. Proposed legislation would require CFIUS to investigate all foreign investment transactions in which the entity is owned or controlled by a foreign government, regardless of the nature of the business. Given the recent increase in Indian FDI in the United States, this could cause some tension with India, as well as weaken U.S. efforts to persuade India to lower its current barriers to FDI. The growth of outsourcing various services to India, as well as other nations, is a serious concern for many U.S. workers. Current U.S. law provides some assistance to "displaced workers" via the Trade Adjustment Assistance (TAA) program authorized by the Trade Act of 1974 ( P.L. 93-618 ), the Worker Adjustment and Retraining Notification (WARN) Act of 1988 ( P.L. 100-379 ) of 1988, and the Workforce Investment Act of 1998 ( P.L. 105-220 ). However, various groups and individuals have called upon Congress to revisit these programs, and strengthen the provisions protecting U.S. workers from job losses caused by outsourcing. There are currently two bills before Congress that offer additional assistance and/or protection to displaced U.S. workers. The Trade Adjustment Assistance Reform Act ( H.R. 1729 ) expands eligibility for displaced textile and apparel workers for trade adjustment assistance, arguably in response to the growth in clothing and textiles imports from India. The second bill, the Worker Empowerment Act ( S. 1330 ), would amend the Social Security Act to provide for wage insurance for dislocated workers.
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After decades of strained political relations, the U.S. and Indian governments are currently pursuing a "strategic partnership" based on numerous overlapping interests, shared values, and improved economic and trade relations. India is in the midst of a rapid economic expansion, and many U.S. companies view India as a lucrative market and a candidate for foreign investment. For its part, the current Indian government sees itself continuing the economic reforms started in 1991, aimed at transforming a quasi-socialist economy into a more open, market-oriented economy. However, the U.S. government is concerned that India's economic reforms are progressing too slowly and unevenly. Bilateral merchandise trade has grown from $6 billion in 1990 to $33 billion in 2006. Although India was only the 21st largest export market for the United States in 2006, the United States has become India's leading trading partner, mostly due to the growth in India's exports to the United States. However, recent increases in trade with China have made it a close second to the United States. In 2006, the U.S. bilateral trade deficit with India totaled $13 billion. In 2006, India's gross domestic product (GDP) grew by 9.2%, a growth rate second only to China among Asian nations. India's economic growth has also brought about the emergence of a sizeable "middle class" and the largest number of billionaires in Asia, but the country's mostly rural population remains comparatively poor and largely isolated from the benefits of growth. In addition, there is growing concern that the economy is "overheated," as evidenced by rising rates of inflation. Moreover, despite several years of strong growth, investment in infrastructure is lagging, creating a potential bottleneck for long-term economic expansion. Finally, attempts at additional economic reforms aimed at resolving these and other economic problems are constrained by India's political dynamics. Despite the significant liberalization of India's trade and foreign investment policies, there remain a number of bilateral and multilateral trade issues between the United States and India. The United States seeks greater market access to India's agricultural market and key service sectors for its exports and for foreign direct investment. The United States is also concerned about "outsourcing," and would also like to see improvements in India's intellectual property rights protection. India, for its part, calls for the lowering of perceived U.S. barriers to agricultural and service imports, as well as an expansion of the H-1B visa program. Many of the more prominent Indo-U.S. trade issues may have indirect implications for Congress. The growth of India's services exports to the United States has contributed to congressional consideration of possible legislation to provide greater assistance to displaced U.S. workers. Also, India's growing demand for crude oil has raised the possibility of boosting bilateral energy cooperation. Finally, the passage of the Hyde Act in 2006 (P.L. 109-401) has led to the negotiations of a bilateral peaceful nuclear cooperation ("123") agreement, which cannot go into effect without congressional approval. For a broader review, see CRS Report RL33529, India-U.S. Relations, by [author name scrubbed]. This report will be updated as warranted.
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On September 20, 2017, Hurricane Maria made landfall in Puerto Rico as a Category 4 storm with sustained wind speeds of over 155 miles per hour. The hurricane also brought torrential rainfall with a range of 15 to 25 inches in many areas and 40 inches or more in isolated spots. This resulted in widespread flooding across the island. Puerto Rico's office of emergency management reported that the storm had incapacitated the central electric power system, leaving the entire island without power. Puerto Rico's grid infrastructure was essentially destroyed by Hurricane Maria. Recovery efforts from Hurricane Maria focused on restoring electricity to hospitals, water treatment plants, and some industries. However, the Commonwealth of Puerto Rico (the Commonwealth) was already in recovery mode following the glancing blow struck by Hurricane Irma on September 6, 2017, which left 70% of electricity customers without power. After Maria, officials were estimating that many of Puerto Rico's 3.5 million people could be without electricity for up to six months. Even before the 2017 hurricane season, Puerto Rico's electric power infrastructure was known to be in poor condition, due largely to underinvestment and poor maintenance. Questions are now being raised as to possible options for rebuilding the electricity grid on the island, given the financial debt of the Puerto Rico Electric Power Authority (PREPA) before the damage from the storms. PREPA's current debts at the end of 2016 totaled about $9 billion. PREPA is overseen by a board appointed by the Puerto Rican governor. Some have blamed much of PREPA's woes on governance issues. Hurricanes Irma and Maria brought the electricity system's problems to a head, as power outages before the first storm were eclipsed in magnitude by the island-wide power outages brought on by the destruction of the second storm. Power outages in Puerto Rico have been common, as an apparent lack of maintenance and vegetation management practices have contributed to power outages. Some have questioned PREPA's dispensing with long-established practices (e.g., a request for proposals) following its posthurricane decision to give a major repair and reconstruction contract to a small firm. This decision seemed to eschew normal industry practices which rely on mutual aid as a primary route to system restoration. With the poor state of the electricity system (physically, organizationally, and financially), and a perceived lack of transparency with regard to decisions (both before and since Hurricane Maria), some have called for a new electricity system regime to lead the reconstruction and resiliency planning efforts ahead. Should Congress decide that alternatives to PREPA be considered, the question of what entities and structures could replace PREPA will arise. This report presents a history of PREPA, describes issues related to the debt crisis in Puerto Rico, and offers some options if Congress wants to consider restructuring the electricity system in Puerto Rico. Modernizing Puerto Rico's grid, and taking the next steps to incorporate resiliency, will be expensive. Congress may want to consider whether investment incentives to form public-private partnerships could provide alternatives for modernizing Puerto Rico's grid. Congress may also want to consider whether the efforts to restore electric power in Puerto Rico will need to progress beyond simple restoration of electricity, and require new investment and oversight by the federal government, especially if Congress considers the further goal of building a resilient grid. Puerto Rico was in a fiscal, economic, and social crisis before Hurricane Maria destroyed the electric grid on the island. Some 3,900,000 people live in Puerto Rico, approximately one-third of them within the San Juan metropolitan area. The island, with an area of 3,435 square miles (9,000 sq. km)—110 miles long by 39 miles wide—has a mountainous interior and is surrounded by a wide coastal plain where the majority of the population lives.... Manufacturing, for so many years the workhorse of the island economy, has been hit by competition from low-cost destinations, as well as high local utility, shipping, and other fixed costs. The sector's decline began in 1996, when a 10-year phase-out of U.S. industrial tax breaks began. This marked the end of 75 years of federal incentives that attracted stateside industries and helped make Puerto Rico the Caribbean's industrial powerhouse. Puerto Rico's economy has shrunk by about 15% in the last decade. The fiscal cuts to deal with Puerto Rico's debt crisis and the economy's downward direction, according to one analysis, are projected by the Centre for International Governance Innovation "to result in an additional 12 percent contraction in Puerto Rico's economy over the next 10 years." Approximately 45% of Puerto Rico's population lives under the poverty level. An estimated 47.5% of the Commonwealth's population participates in the labor force, with the island territory having the highest unemployment rate in the United States at 10.1%. Puerto Rico's population has fallen by about 11% in the last decade, and the population has declined about 2% in each of the past three years. The migration of Puerto Rican residents to the mainland reflects challenging economic circumstances and also implies a shrinking customer base for goods and services on the island, including the consumption of electric power. Uncertainty about future demand levels provides another complication to the revitalization of PREPA. PREPA is a public power utility owned by the Commonwealth of Puerto Rico, and is the largest supplier of electricity in the Commonwealth. As of 2014, according to the American Public Power Association, PREPA was one of the largest public power utilities in the United States, serving approximately 1.4 million customers. At that time, PREPA ranked in the top 10 of U.S. public power utilities in terms of net electric power generated, with about 12.7 million megawatt-hours (MWh). In 2014, PREPA sold approximately 17.3 million MWh, which included sales for resale and sales to ultimate consumers of electricity. Revenues from electricity sold in 2014 totaled approximately $4.6 billion (from sales for resale, and sales to ultimate consumers of electricity). Generating electric power anywhere in the world has historically been based on available resources. The Puerto Rico Water Resources Authority (PRWRA) was formed in 1941 with the aim of consolidating existing power operators into an integrated publicly owned utility that could respond to increased demand for electric power, which Puerto Rico was experiencing at the time. As the agency's name suggested, hydropower originally was a major source of electric power. In that respect, Puerto Rico is very similar to some of its Caribbean island neighbors. As demand for electric power grew, the PRWRA purchased the Puerto Rico Railway Light and Power Company and the Mayagüez Light Power and Ice Company in 1945. Over time, Puerto Rico shifted from hydropower dominance to petroleum. Generating power with fuel oil or diesel was a logical choice in the absence of other nonhydro resources. Currently, heavy fuel oil (e.g., number 5 or 6 residual fuel oil) is the dominant source of electricity in Puerto Rico. Unlike most of its island neighbors, Puerto Rico imports coal to fuel its pulverized coal power plant at Guayama, which represents almost 8% of overall electricity generation. In 1950, PRWRA began operating its first thermoelectric facilities fired by petroleum fuels with the San Juan (400 MW), Palo Seco (602 MW), and Costa Sur (990 MW) power plants. In 1979, the Puerto Rico Water Resources Authority changed its name to the Puerto Rico Electric Power Authority. Other major power plants include the Aguirre thermoelectric (900 MW) and Aguirre combined-cycle power (592 MW) plants. As shown in Table 1 , most of the island's electricity is generated at five PREPA-owned, petroleum-derived fuel power plants: Costa Sur, Aguirre, Palo Seco, San Juan, and Cambalache, which are responsible for about 62% of total electricity production capacity. Other large generation (owned by nonutility independent power producers) includes the EcoEléctrica plant, which is fueled by natural gas from imported liquefied natural gas (with about 9% of overall generation capacity), and the AES facility at Guayama, fueled by imported coal. Much of the island's electricity is generated at power plants (e.g., at Aguirre, Costa Sur, AES, and EcoEléctrica) on Puerto Rico's southern coast (see Figure 1 ), located relatively far away from the major population centers. Approximately 2 million of Puerto Rico's people reside in the large urban areas in and around San Juan, Bayamón, and Carolina, on the northern coast of the island. As a result, most electricity must be sent by transmission lines over the island's forested, central mountain range. The almost 6 GigaWatts (GW) in power generation capacity in Puerto Rico has long been dominated by fossil fuels. Figure 2 illustrates that continuing dependency, as petroleum and coal accounted for approximately 64% of generation in 2016. Natural gas and renewable sources accounted for approximately 36% (34% natural gas, 2% renewables). Renewable generation mostly came from several small, privately owned wind and solar photovoltaic (PV) power installations, collectively providing less than 160 MW of capacity. Even before Hurricanes Irma and Maria hit Puerto Rico in September 2017, the finances and operations of PREPA had attracted the attention of Congress. PREPA's debt—about $9 billion—is larger than that of any other operational U.S. public corporation. High electricity prices and the unreliability of power supply resulting from deterioration of the island's generating and transmission infrastructure have hindered the island's economic development prospects and the well-being of its residents. Two threads of policy developments have shaped Puerto Rico's energy sector. First, Puerto Rico's government has taken steps to modernize its energy policy and grid, although implementation of changes has been slow and at times contentious. Second, PREPA has faced increasingly severe financial constraints. The threads of energy reform and financial exigency have intertwined in recent years and appear unlikely to untangle in coming years. In July 2010, Puerto Rico enacted (Act 82 of 2010) a Renewable Energy Portfolio Standard (RPS) which mandated that PREPA supply increasing amounts of retail electricity sales from eligible "green energy" resources, peaking at 20% of retail sales by 2035. In 2014, concerns about PREPA's performance culminated in legislation (Act 57 of 2014) that established a Puerto Rico Energy Commission (PREC) and an office of consumer advocacy. PREC was authorized to review PREPA's rates and provide oversight. Previously, PREPA set its own rates, subject to requirements of a 1974 bond contract that required the utility to set rates and fees "sufficient for the payment of expenses of the Authority." In May 2014, PREPA lacked funds to buy fuel. Negotiations with bondholders, fuel line creditors, and bond insurers led to an August 2014 forbearance agreement that averted PREPA's default. In the absence of viable federal bankruptcy options at the time, Puerto Rico attempted to create local bankruptcy procedures. Those local procedures, however, were struck down by federal courts. Act 57 of 2014 also called for governance reforms within PREPA as well as a possible decoupling of electric generation and distribution. In July 2015, PREC issued regulations starting a process to review existing PREPA rates and framing a process to ensure that future rates would be "just and reasonable." The August 2014 forbearance agreement required the appointment of a Chief Restructuring Officer (CRO) to oversee PREPA operations, a post taken by Lisa Donahue of the energy consulting firm Alix Partners. A tentative Restructuring Support Agreement (RSA) was reached in mid-December 2015 between PREPA and holders of about 70% of PREPA's debt and created a process for reducing PREPA's debt. Had the RSA been finalized, uninsured creditors would have been required to accept new securities that were estimated to reduce PREPA's debt by 15%. Additional efforts by the Puerto Rico legislature and PREC sought to further shape PREPA. The Puerto Rico legislature and governor enacted a law (Act 4 of 2016) in February 2016 to fulfill other RSA conditions, including imposing a surcharge on electric bills to repay creditors and establishing an appointment procedure for the PREPA board that relied upon an independent search to identify technically qualified candidates. PREC approved a 3.1 cents per kilowatt hour (kWh) surcharge in June 2016 as well as a 1 cent/kWh base rate increase in January 2017. To address the lack of federal bankruptcy options, Congress established two processes for debt adjustment in the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187 ), enacted at the end of June 2016. Title VI set out a process for voluntary collective action agreements, similar in ways to the RSA negotiations in progress. Title III set out a process that draws on procedures from the U.S. Bankruptcy Code. PROMESA also established a Financial Oversight and Management Board (OB) for Puerto Rico that required PREPA to draw up a fiscal plan. While PROMESA endowed the OB with wide authorities, the governor and legislature of Puerto Rico retained substantial control over public priorities, within constraints of fiscal plans and other provisions of PROMESA. The board approved and issued a revised draft fiscal plan for PREPA on April 28, 2017, which outlined proposals and projections for the utility's finances, operations, capital investments, and market environment for the coming decade. The plan projected a 23% reduction in energy sales, and called for setting a 21 cent per kWh target rate by 2023. The RSA continued to be extended after enactment of PROMESA. In 2017, following the election of Governor Ricardo Rosselló Nevares, PREPA's affairs took a different turn. At the end of February 2017, CRO Lisa Donahue's contract expired. On April 27, 2017, an RSA extension granted additional concessions from PREPA creditors that were sought by the governor. The structure of PREPA's board was also changed, resulting in the removal of members selected for their technical expertise and the appointment of new members by the governor. A new Puerto Rico agency was also set up to handle debt negotiations. Although the PREPA fiscal plan aimed to complete RSA negotiations by July 1, 2017, the OB decided to terminate PREPA's RSA and put it into the bankruptcy-like process of Title III on July 2, 2017. On the following day, PREPA did not make scheduled debt service payments. A coalition of bondholders holding nearly two-thirds of PREPA's debt then requested the appointment of a receiver to operate PREPA. On September 13, 2017, after Hurricane Irma but before Hurricane Maria, U.S. District Court of the Southern District of New York Judge Laura Taylor Swain, who was appointed by Chief Justice John Roberts to oversee the Title III processes, denied the request citing PROMESA-set limitations on the court's powers. In September 2017, Hurricanes Irma and Maria severely damaged electrical system assets, raising new questions about how repairs to the system could be paid for given PREPA's precarious financial state. The outmigration of Puerto Rican residents and businesses to the U.S. mainland, which posthurricane conditions may accelerate, presents serious challenges to the size of PREPA's customer base, and therefore, to its finances. The scale of damage left by the hurricanes has led some to question whether PROMESA provided an adequate framework for Puerto Rico's recovery and restructuring efforts. The Oversight Board has called for revisions in fiscal plans and has taken steps to impose stricter oversight of recovery operations. In particular, in response to concerns about PREPA's contracting practices, the Oversight Board attempted to appoint its revitalization coordinator Noel Zamot as chief transformation officer (CTO) of PREPA, a move that the governor opposed . On November 15, 2017, Judge Swain denied the Oversight Board's request to appoint Mr. Zamot to that post, holding that PROMESA did not empower the Oversight Board to appoint a CTO, or to exercise the authority of a chief executive officer for PREPA. In April 2017, PREPA issued a draft fiscal plan for investments to upgrade and modernize its power generation and delivery infrastructure as it seeks to restructure its debts. Most of the existing electricity infrastructure in Puerto Rico is considered old, with a median power plant age of 44 years; an average depreciable service life of a power plant is typically 40 years. PREPA is thus seeking to modernize its electric generation options, and renewable energy is expected to be an increasing part of the portfolio. The major benefit of most renewable power sources is that they do not need a fuel to generate electricity, and thus there is no variable cost component of generation resulting from fuel costs. PREPA's draft plan proposed a number of actions to modernize its infrastructure including public-private partnerships, increased use of renewable energy and distributed generation, making "smart grid" improvements, and initiating a short-term maintenance program for its transmission and distribution systems. Improving safety, reliability, and resiliency are also stated goals. PREPA maintains that the proposal "commits PREPA to fiscal responsibility and implements urgently needed infrastructure modernization," while allowing for "revised fuel prices, distributed generation trends, [and] urgent infrastructure investments for needed efficiencies." However, the draft plan recognized that PREPA faced major challenges ahead as falling customer demand could mean a 23% drop in energy sales through the forecast period (i.e., from 2016 to 2026). This means that revenues needed for modernization from electricity rates were likely to fall (and likely to be exacerbated by posthurricane migration), and as such, would likely not be available to help fund the proposed plan. The extent of damage from Hurricanes Irma and Maria has slowed the restoration of electric power in Puerto Rico. The hurricanes knocked out of service over 2,400 miles of transmission lines (including 1,375 miles of subtransmission lines operating at 38 kV), and 30,000 miles of distribution lines, representing almost the entire transmission and distribution infrastructure of the island. Recovery efforts have focused primarily on restoring electricity to hospitals, water treatment plants, and some industries. However, restoration of the electricity transmission and distribution systems will be key to the overall recovery of the island from the disaster. In some instances, especially in rural areas, the estimation of the total cost of power restoration is still ongoing. However, the extent to which the restored infrastructure in Puerto Rico is rebuilt to current electrical standards will be important to the necessary modernization efforts that will follow. As a public utility, PREPA is an eligible applicant that can receive federal assistance through the Federal Emergency Management Agency (FEMA). In particular, FEMA provides grant assistance through the Public Assistance Grant Program (PA Program) for the repair, restoration, and replacement of public facilities, as defined by law, in states and communities that have received a major or emergency disaster declaration through the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act, P.L. 93-288 , as amended). Generally, under the PA Program, an eligible applicant that owns a public facility or facilities may receive grant assistance to repair or replace its predisaster design (its size and capacity) and function. Grants additionally include eligible expenses that are required by current applicable codes and standards, provided the work is required as a direct result of the disaster. Pursuant to 44 CFR §206.226(d), for a code-required improvement to be eligible, the code or standard requiring the upgrade must meet the five criteria listed below: 1.Apply to the type of repair or restoration required; 2.Be appropriate to the pre-disaster use of the facility; 3.Be found reasonable, in writing, and formally adopted, and implemented prior to the disaster declaration date or be a legal federal requirement; 4.Apply uniformly to all facilities of the type being repaired within the applicant's jurisdiction; and 5.Have been enforced during the time that it was in effect. FEMA may require documentation showing prior application of the standard. According to PREPA, the authority adopted interconnection standards based on the standard in the federal Energy Policy Act of 2005 (EPAct 2005, P.L. 109-58 ) via regulation . The standard in EPAct 2005, IEEE standard 1547 , Standard for Interconnecting Distributed Resources with Electric Power Systems, is a consensus-based standard that "establishes criteria and requirements for interconnection of distributed resources (DR) with electric power systems." Whether FEMA will determine this code standard to be "applicable" per 44 CFR §206.226(d) remains unknown. Qualifying projects may also be required to meet minimum standards for public assistance to promote resiliency and achieve risk reduction. The minimum standards for eligible building restoration projects are described in a FEMA policy. According to FEMA, the minimum standards policy does not directly apply to most power facilities, as power facilities do not fit the definition of "building." However, the legal authority supporting the FEMA minimum standards policy would seem to allow for further expansion of the policy to power facilities at the discretion of FEMA. The U.S. Army Corps of Engineers (USACE) supports the Department of Homeland Security in carrying out the National Response Framework. If requested by the President and the affected governors under the Stafford Act, USACE's primary role under the framework is to provide emergency support in areas of public works and engineering. These USACE activities are funded through the Disaster Relief Fund and not through direct appropriations to the agency. In Puerto Rico, USACE is not only restoring emergency power but also leading initial grid repair. USACE leadership in grid repair as part of domestic disaster recovery is a novel development. USACE initially responded to the power situation in Puerto Rico as part of its responsibilities for emergency power restoration following natural and man-made disasters. USACE activated and deployed its Emergency Power Planning and Response Team (power PRT or power team) and the 249 th Engineer Battalion to Puerto Rico. The power PRT and 249 th Engineer Battalion were deployed on September 3, 2017, and on October 4, 2017, as part of the response to Hurricane Irma and Maria respectively. The power team and battalion assist with restoring emergency power for public and critical facilities (e.g., hospitals), often by procuring and installing generators. That is, USACE generally focuses on emergency power response for life-saving and life-sustaining facilities and in assisting municipal facilities to regain their operations. On September 30, 2017, the FEMA Administrator also tasked USACE to work with the PREPA, Department of Energy (DOE), and FEMA to provide a unified effort to repair Puerto Rico's power grid. USACE was tasked with leading the planning, coordination, and integration of the electric power grid repair. USACE is approaching the repair as a four-part process: Providing temporary power and spot generation for critical facilities; Ensuring adequate generation at power plants; Reinstalling and repairing transmission lines; and Restoring and repairing distribution lines. In testimony given on October 31, 2017, the USACE Deputy Commanding General for Civil and Emergency Operations shared that USACE was repairing the system to "pre-storm condition." At the same hearing the FEMA Administrator stated that USACE was "mobilizing to rebuild the grid to U.S. code standards." Much of the work that USACE is leading is being accomplished through contracts with private companies. USACE has awarded these contracts following the applicable federal acquisition regulations. In addition to considerations of federal disaster assistance for restoration , Congress may consider comprehensive energy planning to address the vulnerabilities of Puerto Rico's electric power system to hurricanes and extreme weather events. Energy planning assesses current and future energy supply and demand, examines existing energy policies, and identifies potential challenges and opportunities in meeting future needs cost-effectively and sustainably. Under 48 U.S.C. §1492, Congress authorized comprehensive energy planning, demonstration of cost-effective renewable energy technologies, and financial assistance for projects in insular areas—including Puerto Rico—related to ener gy efficiency, renewable energy, and building power transmission and distribution lines. Although two energy assessment reports were conducted—a DOE report issued in 1982 and a Department of the Interior (DOI) report issued in 2006—only the 1982 report by DOE included Puerto Rico. The 1982 DOE report evaluated options to diversify Puerto Rico's energy portfolio to decrease reliance on imports. At the time, imported oil provided 98% of the system's electricity and hydropower provided 2%. Several resources were evaluated to displace oil for electricity generation: wind, hydropower, solar, bioenergy, ocean thermal energy conversion (OTEC), and cogeneration. The assessment projected savings in millions of barrels of oil imports, through the year 2000. Near-term priorities focused on wind and existing hydropower. The 1982 assessment stated that "the system experiences reliability problems because of its isolation, the large size of several units relative to total system size, limited quick response capability, and maintenance problems." Puerto Rico also directed PREPA to prepare an Integrated Resources Plan (IRP). The IRP identified potential strategies to meet electricity needs through 2035. These included new fossil fuel-fired generation, new renewable generation, retirements of several existing units, and transmission projects. The IRP assumptions reflected conditions as of June 30, 2015, including PREPA's financial situation. In February of 2017, the Puerto Rico Energy Commission disapproved the IRP, stating the following: The public needs assurance that the paths chosen in reliance upon an IRP are going to achieve public policy objectives of least cost, reliability, integration of renewables and lower environmental impacts. The IRP provided by PREPA was insufficient in terms of the process and mechanisms chosen for achieving the results contained therein. Therefore, the Commission is unable to rely upon the IRP filed by PREPA. If the IRP cannot be used for its intended purposes, then it is noncompliant. Post-Hurricane Maria, the operability of the system has changed. On October 31, 2017, the Energy Commission granted an extension until December 31, 2017, citing a need to conclude an investigation into the current state of PREPA's electric system. Authority for DOE and DOI to provide financial assistance to the Government of Puerto Rico and other insular area governments is codified at 48 U.S.C. 1492. Assistance under DOE authority includes financial assistance "to carry out projects to evaluate the feasibility of, develop options for, and encourage the adoption of energy efficiency and renewable energy measures." Assistance under DOI authority includes grants for power line projects designed to protect the system from damage caused by hurricanes and typhoons. Congress may consider providing appropriations to facilitate energy planning or improving system resiliency. Resilient electric systems are able to maintain some level of operations during hurricanes or storms, and quickly recover from storm-related damage. To promote system efficiency and resilience, many electric utilities have "hardened" exposed power generation and delivery systems. Hardening refers to physically changing the infrastructure to make it less susceptible to damage from extreme wind, flooding, or flying debris. Hardening improves the durability and stability of energy infrastructure, making it better able to withstand the impacts of hurricanes and weather events without sustaining major damage. Resiliency , by contrast, refers to the ability of an energy facility to recover quickly from damage to any of its components or to any of the external systems on which it depends. Resiliency measures do not prevent damage; rather they enable energy systems to continue operating despite damage and/or promote a rapid return to normal operations when damages/outages do occur. Some question how much more system hardening is appropriate in the context of the perceived risks from climate change and other factors. Grid resilience, a core requirement for climate adaptation, includes hardening, advanced capabilities, and recovery/reconstitution. Although most attention is placed on best practices for hardening, resilience strategies must also consider options to improve grid flexibility and control. Resilience includes reconstitution and general readiness such as pole maintenance, vegetation management, use of mobile transformers and substations, and participation in mutual assistance groups. While some distribution poles and electric power facilities have been hardened in U.S. coastal areas to withstand a Category 3 hurricane, consideration may be warranted for upgrading certain facilities to withstand a more severe event. In parts of Puerto Rico, even concrete poles were destroyed by the high Category 4 winds of Hurricane Maria. While hardening activities are generally based on the types of extreme weather experienced in a region, activities to improve resiliency may consider more than a region's history with storms. According to a 2010 report from the DOE, a number of actions exist for hardening electric grid transmission and distribution infrastructure. Some actions electric utilities can take to harden energy infrastructure include the following: To protect against damage from flooding: Elevating substations/control rooms/pump stations Relocating/constructing new lines and facilities. To protect against damage from high winds: Upgrading damaged poles and structures Strengthening poles with guy wires Burying power lines underground. Newer electric power infrastructure can potentially survive damage from extreme weather better than older infrastructures, simply due to the repeated exposure over time to weather events of older facilities. Therefore, DOE also recommends modernizing electricity systems by deploying smart grid technologies with smart sensors and control technology to pinpoint system problems, and reroute power flows as needed. DOE also states that electric system resiliency can be enhanced by improvements to utility preparedness by programs and investments which improve general readiness (e.g., conducting hurricane preparedness planning and training, complying with inspection protocols, managing vegetation, participating in mutual assistance groups, improving employee communications and tracking, purchasing or leasing mobile transformers and substations, and procuring spare equipment). Storm-specific readiness can also be improved by activities such as maintaining minimum fuel tank volumes, facilitating employee evacuation and reentry to storm areas, securing fuel contracts for emergency vehicles, expanding deployment staging areas, and supplying logistics to recovery staging areas. Other observers point out that distributed resources, particularly microgrids, can function separately from a centralized power grid, and may be easier to repair and restore electricity service than a centralized power generation system, which provides power to communities via transmission and distribution systems. While DOE's recommendations are fairly extensive, electric utilities generally try to manage the potential costs of actions to promote system reliability by consideration of the risks of various extreme weather events. A strategy for grid resilience was suggested in the 2013 report from DOE and the President's Council of Economic Advisors and focused on six factors identifying weather-related risks to the system, and the cost for hardening of the grid. Key among these factors were the following: Risk awareness and preparation using mutual aid networks with other utilities; Cost-effective grid strengthening focused on distribution line pole upgrades to concrete, steel, or composite materials, and transmission tower upgrades to galvanized steel lattice or concrete structures; and Increasing system flexibility and robustness by utilizing new technologies for power generation and control, and energy storage. Another potential way to improve the resilience of Puerto Rico's electric power system is to increase the generation of electricity from renewable resources. The major benefit to resiliency from renewables is that most renewable power sources do not need a fuel to generate electricity. Therefore, if the solar panels and wind turbines remain intact and operable, and if these are connected to distribution systems rather than connected at the transmission level, then they can provide electricity to those local residences and businesses whose individual electricity service connections are undamaged. The most utilized renewable sources of electricity (i.e., wind or solar PV power) are considered variable or intermittent, since the wind does not always blow nor does the sun always shine. Although in the Caribbean both the prevailing winds and available sunlight are considered high-quality resources throughout most of the year, electricity generation from wind power or solar PV panels must be backed up when the resources ebb. When considering large-scale renewable electric generation, this lack of availability means that other forms of generation (for example, fast-ramping natural gas capacity) must generally be available to step in and provide power, or that some form of energy storage must be provided to assure that power demands are met. The estimated availability of renewable resources in Puerto Rico during the day or night (the capacity factors) is 30% for wind power and 18% for solar PV. Other than hydropower from impoundments and dams, new renewable energy technologies to produce electricity from marine, hydrokinetic, and ocean thermal sources may provide more firm capacity than wind power or solar PV, and be able to provide power on demand. However, these technologies are largely in the developmental stage. Using renewable wind power and solar PV to produce hydrogen for use in fuel cell power generation is another option under development. Biomass and landfill gas can provide power in a similar manner to base load generation fired by fossil fuels, if these resources exist on a large enough scale. Puerto Rico's RPS already includes biomass and landfill gas under its "green energy" categories, and alternative energy biomass sources (for example, bagasse) exist. Under the RPS's Alternative Renewable Energy category, landfill gas and waste-to-energy power plants are included, and can provide green energy to complement increasing renewable electric generation. PREPA, through Puerto Rico's RPS, has a current target of 12% renewable generation for the period from 2015 to 2019. A 2014 study prepared by the Siemens company for PREPA concluded that renewable energy could not be significantly ramped up in Puerto Rico without a new natural gas-fired combined-cycle (NGCC) power plant, or major upgrades to the electric grid. The Siemens study concluded that PREPA's existing electricity system (in place before Hurricane Maria) could have accepted up to 579 MW of renewable generation, split into 160 MW of wind and 419 MW of solar photovoltaic (PV) power, which would represent almost 10% of capacity. The study also concluded that PREPA's system may not be able to achieve the existing 12% renewables goal by 2019, and may not be able to attain Puerto Rico's higher 20% RPS goal by 2035 without system improvements, and new power generation able to function in a load-following role (to back up variable power production from renewable electricity sources). As the sun begins to set, solar generation ebbs and traditional base load fossil must ramp up quickly to meet demand. Most existing base load power plants are not designed to cycle up and down quickly in this manner. Generally, older power plants (such as those in PREPA's generation fleet) are not well-suited to operate in a "load-following" manner, cycling power generation up and down to meet the highs and lows of renewable electricity generation. Energy storage resources could potentially provide power during times of peak demand, and could help to address load and demand balancing issues raised with increasing amounts of renewable electricity generation on the grid. The 2014 Siemens study concluded that existing energy storage options were not an economic option for Puerto Rico. Nevertheless, PREPA instituted minimum technical requirements for new power projects mandating new wind or solar PV projects include minimum levels of energy storage to help accommodate the variability of renewable electric generation, and help provide ancillary services. Under the new [minimum technical requirements], developers will be required to add a minimum 30% of the installation's contracted capacity in storage as well as the flexibility to keep a minimum 45% of the capacity in reserve for at least one minute, for ramping and frequency control to mitigate the intermittency of renewables generation. Demand response programs and energy efficiency may also be able to reduce some of the early-evening peak load when renewable solar PV electric generation (in particular) declines. New tools to actively reduce load in the early‐evening peak hours, as solar generation is falling, can reduce the level of fossil ramping required, particularly by being available to shave (i.e., reduce) what will otherwise be the highest net peak load hours of the day. The most extreme ramping events happen on only a few days per year, and the ability of system operators to call on customers to reduce loads, or shift consumption to another time of day, can reduce the need to purchase new gas capacity. New wind and solar forecasting technologies have been used in other regions of the United States to improve renewables integration, and may be able to improve renewables integration in Puerto Rico. Novel smart grid technologies may also be able to incorporate more amounts of renewable energy, but deploying these technologies may require large-scale upgrades to Puerto Rico's aging transmission and distribution systems, and some degree of energy storage. However, other than operating at night to replace solar PV operation, it is unclear whether biomass or other alternative fuel providers of renewable energy could rapidly cycle power generation efficiently (like new NGCC) to deal with the surges and ebbs of wind and solar resources. The availability of necessary volumes of fuel to operate these facilities is one question. Another question would be whether these facilities could be commercially ready or scaled to operate to the capacities needed to provide base load or cycling power to meet the RPS 12% target in 2019, or to levels targeted after 2019. Interconnecting Puerto Rico's grid with that of the U.S. Virgin Islands (or other Caribbean island electric systems) may provide for a larger "balancing area" for renewable electricity integration, and reduce needs for backup power from fossil, storage, or other sources. Puerto Rico does not have its own geothermal resources that could provide base load generation, but such resources do exist in other parts of the Caribbean (for example, in Dominica, Saint Kitts, and Nevis). Interconnection would require undersea electricity cables, transmission substations, and agreements between government entities to allow and price the transfer of electricity between the islands. Puerto Rico recently began to institute policies to increase renewable electric generation. In 2007, Puerto Rico instituted a net metering program for PREPA's customers who install their own power generation facilities (i.e., solar PV, wind, or other distributed generation) to offset electricity purchased from the utility. Owners of such installations must also provide (at their own expense) a bidirectional meter which subtracts customer-generated electricity from power purchased from PREPA. In July 2010, Puerto Rico enacted a Renewable Energy Portfolio Standard (RPS) which essentially requires PREPA to supply increasing amounts of retail electricity sales from eligible green energy resources, peaking at 20% of retail sales by 2035. PREPA must demonstrate compliance with the RPS through procurement of renewable energy credits. A newly created Commonwealth Energy Public Policy Office will be responsible for overseeing RPS implementation. In addition to the 2010 RPS, Puerto Rico has also created a Green Energy Fund (GEF) for small- to utility-scale projects to help increase green energy production. Through the GEF, Puerto Rico was coinvesting up to $185 million in the development of renewable energy projects on the island, beginning with $20 million allocated to the fund in 2011. The GEF offers rebates of up to 40% of the eligible costs for Tier 1 projects (installations up to 100 kiloWatts [kW]), and up to 50% of eligible costs for Tier 2 projects (from 101 kW to 1,000 kW or 1 MW). However, some renewable developers say that implementation of renewable policy has been slow. Before Hurricane Maria, Puerto Rico had 215 MW of renewable electricity capacity. Renewable electricity development entails a number of choices, beginning with the type and scale of projects. For example, with regard to solar PV power, it may be asked how much development should be utility scale vs. rooftop residential units, and what type of regulatory program should this development be under? With wind power, while the technology favors larger-capacity projects, should the utility develop these or issue solicitations for generation from independent power producers (IPPs) to develop projects? Renewables are also amenable to distributed generation, which places power generation close to the consumer and thus may lessen the need for transmission line expansion and modernization. Funding of renewable projects is an issue. Some cost risks can be passed to developers of IPP projects, whereby the utility contracts with the IPP to purchase the power generated. If a jurisdictional government encourages residential rooftop solar PV, and allows some form of net metering of power produced, such arrangements can reduce a utility's peak power demand, and thus its overall capacity needs. Some electric utilities would argue that net metering rates and policies must include provisions to compensate the utility for backup power provided when the customer purchases power from the utility, and compensate the utility for its infrastructure costs. The level of compensation for the net-metered customer is also a consideration, as the jurisdiction develops a price (i.e., at retail or wholesale) or a policy for allowing power generated by customers to be subtracted from power purchased from the utility. This section presents some possible options and alternatives Congress may consider for restructuring Puerto Rico's electricity system, recognizing that any alternative would require agreement from Puerto Rico. Consideration is given to Puerto Rico's population distribution, low income levels, and depressed economy in evaluating potential options for restructuring the Commonwealth's electric power system. PREPA initially estimated the cost of modernizing Puerto Rico's electricity system at $4 billion, not including the damage from the 2017 hurricanes. However, incorporating additional goals, such as resiliency, as well as the hurricane recovery, could result in costs several times that estimate. While there are a number of paths to obtaining solar power, villages, towns, and other areas in the more rural areas of Puerto Rico may want to consider community solar projects as a way to reduce their costs of power from the central grid. Community Solar is defined as a solar-electric system that, through a voluntary program, provides power and/or financial benefit to, or is owned by, multiple community members. Community Solar advocates are driven by the recognition that the on-site solar market comprises only one part of the total market for solar energy. Community solar projects are built around a solar PV project, sized to provide a community with a portion of their electricity demand. There are options as to how the community owns or finances the project. 'Community solar' can refer to both 'community-owned' projects as well as third party-owned plants whose electricity is shared by a community.... When projects are ownership-based, participants can either purchase their panels up-front or finance them through a loan provided by the project developer or their own bank. In this way, ownership-based community solar models are very similar to purchasing a rooftop system—except, of course, that no system will be installed on the participant's roof or property. Instead, the participant will own a set number of panels in the array or, instead, a certain number of kilowatts (e.g. 5 [kiloWatts] kW) out of the solar plant's total capacity. In such programs, participants may only purchase enough share to meet their annual electricity usage. A matching proportion of the project's actual output will be credited to the customer through their electricity bill or through some other arrangement with the project administrator.... Ownership-based projects can be complicated to develop and administer, and the 'ownership' factor can be a barrier to entry for those who do not have the capital or credit rating necessary to get involved. In areas with good prevailing winds, villages, towns, and other areas in the more rural areas of Puerto Rico may want to consider small wind power projects. The types of local communities which employ community wind include groups with agricultural or rural economic development interests, or those that want to invest in small wind power projects for their communities. Small wind is defined as wind turbines with a capacity rating of less than or equal to 100 kW. Turbines in this category range in size from smaller than 1 kW for off-grid applications to 100-kW turbines that can provide village power. According to DOE, a number of paths can be followed to establish a community wind project. Community wind projects have multiple applications and can be used by schools, hospitals, businesses, farms, ranches, or community facilities to supply local electricity. Rural electric cooperatives or municipal utilities can own community wind projects and use them to diversify electricity supplies. Community wind projects can also consist of groups of local individuals who form independent power producer groups or limited liability corporations to sell the power the turbines produce to a local electricity supplier. With the combination of no fuel costs and relatively low operating costs, owners of community wind projects can confidently predict the price that they will pay for energy throughout the lifetime of the project. Community wind projects generally operate on a smaller scale than utility-scale wind farms, so they may not require transmission upgrades. Most community wind projects can be easily connected to the distribution grid. In general, a microgrid is any small or local electric power system which can function independently of a transmission-connected, centralized electric power network. Electricity services provided by all-renewable distributed generation systems may be limited without some type of energy storage, due to the daily variability of some renewable sources. In addition, some solar-only distributed generation solutions may only provide lighting, phone charging, and other basic services. The provision of other basic human needs, such as continuous refrigeration for medical supplies or water pumping for sanitation and agricultural usage, may be limited with a solar-only distributed generation (DG) architecture. While microgrids are generally standalone systems, they can be interconnected with other microgrids to form larger networks. Due to the ability of microgrids to generate electricity using renewable resources, they are being installed in many parts of the developing world. As noted above, using solely renewable resources for microgrids can have technical challenges since the generation can be intermittent (i.e., wind power) or variable (i.e., solar power). Load balancing for microgrids with renewable electricity input can be an issue, especially when the microgrid is operating in an island mode. New technologies may address these technical challenges for microgrids. Smart inverters are under development that may make variable power supplies easier to use and at more reasonable costs. Battery and other storage technologies that can absorb or discharge energy are growing in application. These technical and operational challenges can be accentuated for more rural communities, as technology support may be an issue. Potential costs for control systems and infrastructure should also be evaluated when considering the potential benefits of a microgrid. However, the development of new technologies may simplify microgrid design and operation, further reducing barriers to microgrid adoption. PREPA is one of the nation's largest public power utilities. However, other types of public power options may be considered for serving Puerto Rico's population. The context of these options becomes more apparent when Puerto Rico's population density, current infrastructure, and geography are considered. Given the population distribution, and the aged nature of PREPA's largest power plants, Congress may consider whether smaller public power entities such as municipal utilities or electric cooperatives should be established. These entities may be a part of a restructured electric power system in Puerto Rico, and may be designed with reliability and resiliency goals to serve the needs of various population segments more effectively, considering the poor reliability much of the island experienced under PREPA. As can be seen in Figure 1 at the beginning of this report, Puerto Rico's population outside of urban centers is distributed across the island in rural communities, many of which are farming communities. Electric cooperatives (co-ops) are owned by the consumers they serve, and generally operate in rural areas with relatively low numbers of customers per transmission mile. They are incorporated under state laws, and are governed by a board of directors elected by the members. Electric cooperatives set rates similar to publicly owned utilities. As nonprofit entities, electric cooperatives are required to provide service to their members at cost. Any revenues in excess of the cost of providing service are returned to the members. Co-ops serve an average of 7.4 consumers per mile of line and collect annual revenue of approximately $16,000 per mile of line as compared to investor-owned utilities, which have on average 34 customers per mile of line and collect $75,500 per mile, and publicly-owned utilities, or municipals, which average 48 consumers and collect $113,000 per mile. The Rural Utilities Service (RUS) of the U.S. Department of Agriculture (USDA) and the National Rural Utilities Cooperative Finance Corporation are important sources of debt financing for cooperatives. The loans and loan guarantees finance the construction of electric distribution, transmission, and generation facilities, including system improvements and replacement required to furnish and improve electric service in rural areas, as well as demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems. Loans are made to cooperatives as well as to corporations, states, territories and subdivisions and agencies such as municipalities, people's utility districts, and nonprofit, limited-dividend, or mutual associations that provide retail electric service needs to rural areas or supply the power needs of distribution borrowers in rural areas. USDA also has a High Energy Cost Grant program for retail or power supply providers serving eligible rural areas. The program "[a]ssists energy providers and other eligible entities in lowering energy costs for families and individuals in areas with extremely high per-household energy costs (275 percent of the national average or higher)." While entities in Puerto Rico and the U.S. Virgin Islands are eligible, they have not as yet been recipients of these grants. Generation and transmission cooperatives (which own power plants and transmission lines) can potentially be established to sell electricity for resale to distribution-only cooperatives. Co-ops also employ renewable energy. According to the National Rural Electric Cooperative Association, wind power is now second only to hydropower in co-ops' renewable energy portfolio with over 6.7 GW of capacity. Co-ops lead the electric utility in deployment of community solar projects. Using this model, a co-op develops a solar array for members who can either purchase the power or lease panels. Over 77 MW in community solar capacity is deployed at distribution co-ops. There are about 10 smaller cities and towns in Puerto Rico, with populations ranging from 20,000 to about 80,000 people, which could be served by municipal utilities. Across the United States, a number of cities have shown an interest in taking over the electricity business from private utilities, reflecting intensifying concerns about climate change, responses to power disruptions, and a desire to add more renewable energy to the electricity system. Municipal utilities are public power entities (as is PREPA) and are owned by the local government body. They are nonprofit public entities, typically managed by elected officials and public employees. Customer rates may be established by a city council or other municipal government body, while municipal utilities may return a portion of net income to the general fund of the local government. Like PREPA, public utilities have access to tax-free bonds, and rates are set to recover costs and earn additional returns to maintain bond ratings, and potentially invest in new facilities. Municipal utilities existed at one time in Puerto Rico, until the act that established PREPA. While some cities on the U.S. mainland have utility power plants that they may be able to acquire from their host utility, many of the smaller cities in Puerto Rico may not have that option (given the potential costs of acquisition and remote location of most power plants, among other issues). Accordingly, new power plants may have to be built or private generators contracted to serve the local demand. The Electric Programs of RUS also make loans to municipalities for building or upgrading electric power systems. Table 2 summarizes the organization, management, and regulatory oversight for the major types of electricity providers. The following paragraphs discuss aspects of these electric industry entities as the rebuilding, and perhaps restructuring, of Puerto Rico's electricity system is assessed. Investor-owned utilities (IOUs) are included in the chart for comparison purposes. As the chart shows, IOUs are established to optimize returns to shareholders. Under traditional rate regulation, rates are established in regulatory proceedings and include a return on the utility's investment in the rates charged to customers. In June 2017, four of the seven members of the Financial Oversight and Management Board for Puerto Rico wrote an article recommending privatization for PREPA. The article stated their reasoning: We believe that only privatization will enable PREPA to attract the investments it needs to lower costs and provide more reliable power throughout the island. By shifting from a government entity to a well-regulated private utility, PREPA can modernize its power supply, depoliticize its management, reform pensions, and renegotiate labor and other contracts to operate more efficiently. A reformed PREPA is key to restoring opportunity for the people of Puerto Rico. Privatization is generally the process of transferring property from public ownership to private ownership. It can also include the transfer of the management of a service or activity from the government to the private sector. Types of privatization include complete privatization, privatization of operations, privatization through contracts, franchising, and open competition. Government run industries and assets have generally been completely privatized through one of three main ways. The first way is share issue privatization. The government sells shares of the government run company which can then be traded on various stock markets. Share issue privatization has been the most prevalent method used, though a developed secondary market is necessary. The second method is through asset sale privatization. In this method, the whole firm or asset is sold to an investor. This is usually done by auction. The final method is voucher privatization in which shares of ownership are distributed to all citizens for free or for a very low price. Privatizing PREPA's generation could therefore mean that PREPA-owned generation is either transferred or sold to private owners. Given PREPA's debt situation, it is unclear how such a sale would proceed. However, given the age and condition of most of PREPA's generation, the costs of acquisition may be small in comparison to the investments potentially needed to modernize the plants, if that option were considered. Given the condition and modernization needs of most of PREPA's transmission and distribution (T&D) networks, it is unlikely that a privatization effort would involve PREPA's entire system. A privatization venture would likely focus on PREPA's generation assets, which would leave open the question of how to modernize and maintain the T&D systems. One possible option is for some type of hybrid model. Public-private partnerships (PPPs) generally involve a private company signing a contract with government to "build, operate, lease, transfer, and/own certain assets.... The government and the private company enter into an agreement establishing a set of rules that determines the tariffs or regulated prices to be paid by either the government or customers." Such an agreement allows companies to recover prudently incurred operating and capital costs while serving the public. Unlike private contracts, a public-private partnership is a risk-sharing business model in which the government and one or more private companies jointly provide services or goods. PPPs often form when a project requires a massive investment to establish the necessary infrastructure and because either the government or private firms (or both) lack the expertise, financial resources, and incentives to undertake the project by themselves. Another option for Puerto Rico is a public-private combination, wherein public or private power generators provide and sell power to distribution companies (primarily organized as municipal utilities or cooperatives). The transaction between generators and distribution companies could be managed by a publicly owned transmission entity. Congress may also want to consider whether investment incentives to form public-private partnerships could provide an alternative for modernizing Puerto Rico's grid. A combined public-private model could allow for retail competition if power generation is of a sufficient scale to allow real competition to exist between generators. Most retail competition programs in mainland states allow customers to choose between a default electricity provider and competing retail providers. Consumer protections would have to be in place to ensure that competitive processes were legitimate. In Puerto Rico, it could be argued that the state of the island's infrastructure and the historic failings of the system in provision and oversight call for a different approach. One such option could be for a federal government corporation to be established to manage Puerto Rico's transmission system, serving as the transaction manager between power generators and retail distribution sellers of electricity to industrial, commercial, and residential customers. Such an entity could manage publicly owned generation and transmission facilities, providing power at cost to retail distribution companies. Additionally, such an entity could also procure wholesale power from privately owned generation for sale to distribution companies. One example for a federal government model generation and transmission system is the Western Area Power Administration (WAPA). As one of four power marketing administrations (PMAs) under the DOE, WAPA markets and transmits power from federally owned and operated hydropower projects, and markets power from the Navajo Generating Station coal-fired plant. In general, the PMAs came into being because of the government's need to dispose of electric power produced by dams constructed largely for irrigation, flood control, or other purposes, and to promote small community and farm electrification—that is, providing service to customers whom it would not have been profitable for a private utility to serve. Though PMAs were all created to market federal power, and they share the common mission of providing electricity at cost-based rates with preference to public customers, each PMA also has unique elements and regional issues that affect its business. Alternatively, another potential model is the Tennessee Valley Authority (TVA), a federal government corporation created by Congress in 1933. The preamble to the TVA Act of 1933 (TVA Act) (16 U.S.C. 831) lists flood control, reforestation, and agricultural and industrial development as primary considerations in the original establishment of the TVA. As such, TVA was established to "exist in perpetuity." While the focus of TVA's activities originally was largely on its flood control and economic development roles, TVA is now essentially a power generation company. TVA's business metrics are focused on optimizing TVA's financial position, and its operational goals are focused on providing electricity at the lowest feasible rates to its wholesale customers in the multistate Tennessee Valley region. The TVA Act of 1933 gave TVA up to $50 million (equivalent to $939 million in 2017) for building new generation and transmission facilities (in accord with Section 7 of TVA Act). An additional $61.5 million (equivalent to $1.2 billion in 2017) was allowed for acquiring the property of other utilities incorporated into the TVA system. In 1959, Congress passed legislation making the Tennessee Valley Authority power system self-financing. Between FY1934 and FY1959, Congress appropriated approximately $1.96 billion in funding for TVA. Appropriations during that period were approximately $22.7 billion in 2017 dollars, adjusted for inflation. Another potential option could be for a power generation and marketing authority (PGMA), based on the mainland or in Puerto Rico. If the PGMA were based in Puerto Rico, the initial market could be for Puerto Rico and the U.S. Virgin Islands. As shown in Figure 3 , the market area could potentially be expanded, exporting power via undersea cables to the wider Caribbean region. A federal government corporation created for this purpose would likely need to price its output to recover its capital costs of construction over a reasonable period, and to cover its operations and maintenance costs. Like PMAs, any federal funds used for the PGMA's establishment or costs could be repaid with interest to the U.S. Treasury. As with other federal government corporations, establishing a PGMA would require an act of Congress. A PGMA taking advantage of economies of scale could generate electricity at U.S. market-based rates, which are likely to be lower cost than power generated in most Caribbean Basin countries from smaller plants that serve smaller, individual country markets. Building a PGMA could be potentially advantageous to U.S. interests for several reasons. For the Caribbean Basin countries, the advantages could come from a cheaper, cleaner fuel since power generation could use natural gas as opposed to coal, diesel, and heavy fuel oil options currently in use. However, if the PGMA were built in Puerto Rico, liquefied natural gas imports might be used to fuel the facility, and consideration would then be on how to bring natural gas to Puerto Rico affordably, given Jones Act limitations. The 2017 hurricane season and the resulting destruction in Puerto Rico have led to an unprecedented disaster for the people of Puerto Rico. The ability of the electricity system to deliver power was effectively destroyed, and restoration of electricity services to the majority of Puerto Rico's people has yet to be achieved, as of the writing of this report. The reliability of service from the electric utility, PREPA, was poor before the hurricane by the utility's own admission. Post-Hurricane Maria, power restoration is the first priority. But PREPA's subsequent efforts to restore power have been considered questionable by most observers, as contracts to rebuild the system appear to have been hastily arranged without due process, and one large contract was cancelled. Infighting and disputes between the utility, the Commonwealth's government, the Oversight Board, and the Energy Commission have added to the distress of Puerto Ricans. Congress may want to consider governance issues or reforms for Puerto Rico. Some observers have stated that it is time for a new regime to serve the electric power needs of Puerto Rico. The destruction of electric infrastructure offers an opportunity to design and build a new, efficient, relatively low-cost electricity system, incorporating renewable electricity and flexible, new natural gas-fired generation (assuming the fuel can be brought to Puerto Rico cheaply). Some have also suggested that the publicly owned utility PREPA should be privatized as a way to modernize and improve electricity services. Congress may also want to consider a federal government corporation to serve these purposes. However, neither a greater incorporation of renewables and natural gas nor privatization provides a silver bullet solution to the issues facing rebuilding the grid in Puerto Rico. Renewable electric generation on an increased scale would require modernization of the grid. The ability of the Commonwealth and its citizens to assume the burden of paying for a rebuilt (and possibly restructured) electricity system is a key consideration. Privatization, and a potential sale of PREPA's aged generation assets (which might normally generate funds to help modernize the electricity system), are also in question given the debt issues. Entities interested in a privatization venture in Puerto Rico would likely seek recovery of an investment in a "reasonable" amount of time. Such a time frame could potentially lead to a sizable increase in rates based on the recovery period and how rate allocation across customer classes could be accomplished. Given Puerto Rico's economic condition and falling population, the design of a privatization venture, in whole or part, would likely have to consider socioeconomic factors alongside the financial investment, if it is to achieve success.
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On September 20, 2017, Hurricane Maria made landfall in Puerto Rico as a Category 4 storm with sustained wind speeds of over 155 miles per hour. The hurricane also brought torrential rainfall with a range of 15 to 40 inches or more in some places, resulting in widespread flooding across the island. Puerto Rico's office of emergency management reported that the storm had incapacitated the central electric power system, leaving the entire island without power as the island's grid was essentially destroyed. Even before the 2017 hurricane season, Puerto Rico's electric power infrastructure was known to be in poor condition, due largely to underinvestment and the perceived poor maintenance practices of the Puerto Rico Electric Power Authority (PREPA). As of the date of this report, the most urgent need in Puerto Rico remains the restoration of power to the island, where the greatest challenge will likely be access by repair crews to rural areas due to storm-damaged roads and bridges. The government of Puerto Rico was in a fiscal, economic, and social crisis before Hurricane Maria destroyed the electric grid on the island. PREPA's massive $9 billion debt (incurred before the damage from Hurricanes Irma and Maria) was a particular problem. To address the lack of federal bankruptcy options (due to the island's special status), Congress established two processes for debt adjustment in the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187), enacted at the end of June 2016. Title VI set out a process for voluntary collective action agreements, similar to those PREPA had been negotiating with creditors since 2014. Title III set out a process that draws on procedures from the U.S. Bankruptcy Code. PROMESA also established a Financial Oversight and Management Board for Puerto Rico (OB) that required PREPA to draw up a fiscal plan. While PROMESA endowed the OB with wide authorities, the governor and legislature of Puerto Rico retained substantial control over public priorities, within constraints of fiscal plans and other provisions of PROMESA. The OB decided to put PREPA into the bankruptcy-like process of Title III on July 2, 2017. While the Federal Emergency Management Agency (FEMA) and the U.S. Army Corps of Engineers (USACE) are focused on simply restoring power, the potential arguably exists under current law for FEMA and USACE to restore the grid meeting existing, modern standards. Longer term, hurricanes and extreme weather will continue to threaten the Caribbean, necessitating consideration of infrastructure hardening and improvements to make the system more resilient. Building a modernized, flexible electric grid, capable of incorporating more renewable sources of electricity, underpinned by more efficient natural gas combined-cycle power plants and energy storage, may help Puerto Rico accomplish these goals. Questions are now being raised as to possible options for rebuilding the electricity grid on the island, given PREPA's debt problem. The perceived failures of PREPA in managing the existing system, and an apparent lack of transparency with regard to decisions (both before and since Hurricane Maria), have led to calls for a new electricity system regime to lead the rebuilding and modernization effort. Should Congress decide that alternatives to PREPA be considered for this endeavor, the question of what entities could replace PREPA will likely arise. This report explores several alternative electric power structures to PREPA for meeting the electricity services and needs of Puerto Rico. The ability of Puerto Rico and its citizens to assume the burden of paying for a rebuilt (and possibly restructured) electricity system is doubtful. Modernizing Puerto Rico's grid, and taking the next steps to incorporate resiliency, could be expensive. None of the options discussed provides a silver bullet solution to the issues of the grid in Puerto Rico. Congress may consider whether the efforts to restore electric power in Puerto Rico need to progress beyond simple restoration of electricity, and require new investment and oversight by the federal government.
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Several states are experiencing varying degrees of drought, with several western states experiencing severe to exceptional drought conditions. Drought conditions persist in all counties in California, with a majority classified as in either extreme or exceptional drought. Notwithstanding recent rains, California is experiencing its third consecutive dry year, which has resulted in abnormally low reservoir levels, as well as low surface and groundwater levels. Current drought conditions in California and much of the West have fueled congressional interest in drought and its effects on water supplies, agriculture, and ecosystems. Several bills have been introduced in the 113 th Congress to address different aspects of drought in California and other regions. This report focuses on S. 2198 , the "Emergency Drought Relief Act," which was introduced April 2, 2014, and may proceed quickly to the Senate floor under an expedited rule, Senate Rule XIV. S. 2198 is largely a revision of a previous drought bill, S. 2016 , the "California Emergency Drought Relief Act." Some provisions in S. 2198 have been broadened to apply to states outside of California; however, certain provisions in Title I remain focused on California water project development, management, and operation. Additionally, S. 2016 contained numerous direct spending provisions that are not included in S. 2198 . Overall, S. 2198 directs the Secretary of the Interior, the Secretary of Commerce, and the Administrator of the Environmental Protection Agency (EPA), to undertake numerous actions that would address emergency drought impacts in California and other states, by aiming to increase water supplies for California water users, expanding purposes of program funding for drought mitigation activities, streamlining environmental reviews, providing drought planning assistance, addressing Colorado River water supplies, addressing Klamath River Basin water issues, and expanding the availability of federal emergency disaster assistance. The bill also would reauthorize and modify several water resource management programs. S. 2198 includes two titles: Title I , "Emergency Drought Relief," contains 14 provisions ranging from mandating maximization of California water supplies—consistent with laws and regulations—through specific project development, management, and operations directives and addressing project environmental reviews, to reauthorizing several water resources management laws (CALFED, P.L. 108-361 ; the Reclamation States Emergency Drought Relief Act, P.L. 102-250 , 106 Stat. 53, as amended ; and the Secure Water Act, P.L. 111-11 , Subtitle F ). Title II , "Federal Disaster Assistance," expands the assistance potentially available under an emergency declaration for drought (or other emergency) pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended, and discusses in congressional findings the application of the act to drought. The scope of S. 2198 is fairly broad, as it would address certain drought-related assistance for states that are experiencing drought, as well as specific issues related to water infrastructure and conveyance in California. In relation to projects and operations that would address drought in California, S. 2198 would direct federal agencies to maximize water supplies and streamline environmental reviews while remaining "consistent" with law and regulations. This policy approach is aimed at addressing drought, and in doing so, touches upon many long-standing and controversial issues associated with operations of the federal Central Valley Project (CVP), managed by the U.S. Bureau of Reclamation (hereinafter referred to as Reclamation), and the State Water Project (SWP), managed by the California Department of Water Resources. Proposed provisions related to these projects and operations raise several questions that are noted throughout the analysis of Title I below. Title I of S. 2198 includes numerous sections related to emergency drought relief. As noted above, these sections range widely. While Section 103 of the bill focuses on specific actions related to California water supply management, other sections apply to any state during the time for which a state emergency drought declaration is in effect or a U.S. Department of Agriculture (USDA) natural or agricultural disaster declaration is in effect. S. 2198 also would change, or in some cases modify, implementation procedures or financial assistance for several water resource and water quality programs. These include the Reclamation States Emergency Drought Relief Act of 1991 (43 U.S.C. 2201 et seq.), the Secure Water Act of 2009 (42 U.S.C. 10361 et seq.), and State Revolving Funds (SRFs) administered by the Environmental Protection Agency (EPA) under the federal Clean Water Act (33 U.S.C. 1231 et seq.) and the Safe Drinking Water Act (42 U.S.C. 300j-12). One such provision would direct the Secretary of the Interior to fund or participate in pilot projects to increase water supplies in Colorado River Storage Project reservoirs. Title I of S. 2198 also would authorize federal drought planning assistance, including hydrologic forecasting and other planning or technical assistance, upon the request of CVP or Klamath Project contractors or other Reclamation project contractors in California. Title I would reauthorize funding for CALFED activities through 2018 and the Reclamation States Emergency Drought Relief Act through 2019, and increase the funding ceiling for the Secure Water Act. The bill also would expand the Secure Water Act to include the state of Hawaii. Title I provisions related to California water flow, infrastructure development and operations, and environmental permitting have one overarching theme: maximization of water supplies available for general agricultural and municipal and industrial demand while an emergency drought declaration is in effect—consistent with existing law and regulations. Other provisions under Title I would largely modify, expand, or reauthorize existing program authorizations. Section 103(a) would direct the Secretary of the Interior, the Secretary of Commerce, and the Administrator of the Environmental Protection Agency (together defined as "the Secretaries" under the act) to provide the maximum quantity of water supplies possible to CVP and Klamath Project agricultural, municipal and industrial (M&I), and refuge service and repayment contractors; SWP contractors; and any other locality or municipality in the state of California, by approving, consistent with applicable laws and regulations, the following types of projects and operations: any project or operations to provide additional water supplies "if there is any possible way whatsoever that the Secretaries can do so," unless the project or operations result in a highly inefficient way of providing additional supplies; any project or operations "as quickly as possible" to address emergency conditions. This provision provides broad authority to the Secretaries to approve "any" project or operational change that would provide additional water supplies (unless the action is highly inefficient or inconsistent with "applicable" laws). This could include, for example, projects ranging from relatively small conservation or efficiency projects to large projects expanding storage or conveyance facilities to provide additional water to users throughout different seasons, as well as to adjusting operations at reservoirs or in the Delta to increase water supplies. Additionally, this section would create the authority necessary for federal participation in state-driven projects to address the drought. California recently passed a law providing $687.4 million to address the drought. The intent of this section, according to some sponsors of the bill, is to provide flexibility to increase water supplies and allow federal agencies to use water supplies during periods of increased precipitation. There are several questions or issues that might arise from this section. A brief summary of each is listed below. Section 103(a) raises the question as to how agencies are to provide the maximum amount of water supplies and, relatedly, how they would determine what constitutes maximization of water supplies consistent with laws and regulations. Implementation of the provision could be difficult and possibly contentious. For example, the effects of providing maximum water supplies on species viability and water quality may not be apparent, quantifiable, or known for several years into the future. Conversely, agencies and water users may not agree that particular actions are providing maximum water quantities. Some observers already believe the agencies are maximizing water supplies to the detriment of species; while others are advocating relaxation of some laws and regulations. Projects or operations authorized under this section are to provide maximum quantities of water by approving projects and operations to provide "additional water supplies"; however, there is no definition for additional water supplies in S. 2198 . The lack of specificity raises the question of whether the language is meant to apply to water supplies during parts of the year, the entire year, or several years. The broad variety of potential projects that could be authorized under this section are tempered by language stating that projects and actions must be consistent with applicable law and should not be a "highly inefficient way of providing additional water supplies." The term "highly inefficient" is not defined and a determination would presumably be subject to the discretion or judgment of the Secretaries. Whether the term "highly inefficient" relates to cost efficiency, water supply efficiency, procedural efficiency, or perhaps all of these, is not specified. Projects and operational changes would have to be consistent with state and federal endangered species laws and regulations, as well as with the National Environmental Policy Act (NEPA; 42 U.S.C. §4321, et seq.), California Environmental Quality Act (CEQA), and water quality laws and regulations, among other laws and regulations. This provision raises the question of how the term "consistent with the law" might be interpreted as opposed to "pursuant to" or "in compliance with" applicable laws. Some might question if the phrase "consistent with law" would allow for more agency discretion or flexibility than other phrases. Ultimately, determining what is or is not consistent with laws and regulations may be left to the courts. The authority in this section would also be limited by the duration of the drought emergency declaration. Specifically, Section 112 states that the authority for this section of the bill would expire when the governor suspends the state drought emergency declaration. It is unclear; however, if a project started under this authority would enjoy permanent authorization or how it would be funded after the emergency funding under Section 104 of S. 2198 expires. The provision also would mandate that projects or operations be implemented as quickly as possible. It appears this provision could provide additional authority for agencies to streamline permit processes or feasibility studies for implementing projects, as long as such actions were consistent with existing laws and regulations. Although streamlining or shortening these processes would arguably lower the time it takes for operations and projects to become operational, and would therefore have a more immediate effect on reducing drought impacts, it is not clear whether such action would be helpful in the long run, for example, if full effects on species were not accounted for and species declined at a rapid pace. Section 103(b) of S. 2198 contains 12 subsections that would direct the Secretaries to implement several specific project-related and operational actions in California for carrying out Section 103(a). As with Section 103(a), Section 103(b) states that all actions are to be accomplished consistent with applicable laws and regulations. Project water deliveries from the CVP and SWP are sometimes limited due to federal and state endangered species regulations, as well as state water quality regulations. Such regulations may limit how much and when water is released from reservoirs and pumped from the Bay-Delta. These reductions are controversial and are at the crux of management disputes among water contractors, environmental groups, fisheries interests, and others. Several subsections of Section 103(b) address specific projects and project operations that may have an effect on project water deliveries, as well as species viability and water quality. Some selected actions directed by Section 103(b) include the following: modifying the operations of water conveyance infrastructure to maximize supplies for water users; modifying water flows to increase water supplies; establishing a deadline for the U.S. Fish and Wildlife Service (FWS) and Reclamation to meet NEPA and ESA requirements for certain decisions involving land fallowing; addressing water transfers so that maximum water supplies are available; addressing the effects of actions authorized under Section 103(b) on species viability and implementing projects to offset any effects; using scientific tools to assess if any changes to water conveyance and flow operations could result in additional water supplies. Several of these specified actions are focused on increasing water supplies (or minimizing reductions to water supplies); however, their effectiveness in achieving their objectives will be tempered by the condition that they are to be implemented consistent with applicable laws and regulations. Further, the actions specified in this section are only in effect until the governor of the state suspends the state of drought emergency declaration. This section generates similar questions and potential issues to those discussed in relation to Section 103(a). This section also generates some potentially broad questions, discussed below. Some might question how the projects and operations specified in this section will differ from existing actions if they are to be consistent with the law and regulations. For example, the section raises the question as to whether or not agencies are already maximizing water supplies or have any flexibility to do more than they are currently doing under existing laws and regulations. Some may respond that agency actions specified under this section will be directed to maximize water supplies as a priority over other considerations if the bill is enacted. On the other hand, others might argue that such would not be consistent with exiting law and regulations. Agencies would have to balance the new directives with parameters prescribed in existing law and regulations, thus making it difficult to estimate what affect the provision would have on projects and project operations. Some might question if the actions in this section and the direction to maximize water supplies for users might have unintended or long-term consequences for species in or migrating through the Bay-Delta. Some of the provisions under Section 103(b) contain directions to monitor the effects of actions on species and, in some cases, recommend changes to regulations. However, these actions appear to cover short-term effects, such as entrainment of species at project pumps, and might not address or contemplate long-term effects on species. Section 103(c) states that the provisions of Section 103 shall apply to all federal agencies that have a role in approving projects in Sections 103(a) and 103(b) of this bill. Thus, although not specifically mentioned, if the Corps of Engineers or another agency has a permitting or approval role in one of the projects that could be implemented under Section 103, the provisions of Section 103 would also apply to that agency. Section 103(d)(1) directs federal agencies, upon request of the state of California, to use "expedited procedures under this subsection" to make final decisions related to federal projects or operations that would provide additional water or address emergency drought conditions under Sections 103(a) and 103(b). Pursuant to Section 103(d)(2), after receiving a request from the state, the head of an agency referred to in Section103(a), or the head of another federal agency responsible for reviewing a project, the Secretary of the Interior would be required to convene a "final project decision meeting" with the heads of all relevant federal agencies "to decide whether to approve a project to provide emergency water supplies." After receiving a request for resolution, the Secretary would be required to notify the heads of all relevant agencies of the request for resolution, the project to be reviewed, and the date of the meeting. The meeting must be convened within seven days of the request for resolution. Not later than 10 days after that meeting, S. 2198 would require the head of the relevant federal agency to issue a final decision on the project. The Secretary (presumably the Secretary of the Interior) is authorized to convene a final project decision meeting at any time, regardless of whether a request for resolution is requested by the state. The accelerated project decision and elevation provisions would not mandate federal agency approval of a project. Instead, they would establish procedures to expedite the federal agency process for deciding whether to approve a project. As discussed above, provisions in Section 103(b) specify that projects carried out shall be consistent with current laws and regulations. As a result, it would appear that agencies could decide not to approve a project. This subsection appears to apply to a broad set of projects and operations, as long as such are requested by the state or agency heads for final approval. Specifically, it appears that this subsection might supersede regular processes for final project decisions under various laws, including but not limited to NEPA and ESA. However, earlier parts of S. 2198 mandate that actions be consistent with current laws and regulations. Thus, it is not clear how this provision might be implemented. Given the short timeframe for deciding whether to approve the project—10 days from the request of the state or agency heads—it is difficult to determine whether a state or agency head may make a request for resolution for a project unless or until that project complies with applicable law. Also, a final decision related to a project pursuant to Sections 103(a) and 103(b) would be subject to the meetings convened by the Secretary instead of the traditional processes established by the federal agencies. The specific process for approving or not approving a project is not provided in the bill and therefore raises the question of how final project decisions would be made (e.g., by consensus, majority vote). Presuming that a meeting could be requested as soon as a project is submitted, it is uncertain how much analysis of a project could be done within the 10-day time frame to approve a project. A question to consider is, if not enough time is provided to make a decision, could the meeting result in a default rejection of the project? Section 104 would authorize the use of funds for the Secretary (presumably the Secretary of Commerce or the Secretary of Interior, but it is not specified) to provide "financial assistance" under the Reclamation States Emergency Drought Relief Act (RSEDR Act), the Secure Water Act (Secure), and other federal law "for eligible water projects to assist drought-plagued areas of the State [California] and the West." By referencing "the West," Section 104 may limit the geographic eligibility for financial assistance to the 17 Reclamation states. Section 104(a)(2) appears to expand the eligibility for financial assistance to organizations and entities (public or private) engaged in collaborative processes to restore the environment, water rights settlements, and restoration settlements. Section 104(b) identifies a range of projects that would be eligible for assistance: it specifically identifies water diversion, pumping, water wells, conservation, irrigation, agricultural water conservation, maintenance of crop cover for dust management for public health purposes, and technical irrigation assistance, and would provide the Secretary discretion for assistance to other activities that increase available water supplies and mitigate drought impacts. Most, but perhaps not all of these purposes, are already authorized under RSEDR Act, Secure, or WaterSMART. Section 103 states that funding made available under Section 104 may be used to meet the "contract water supply needs of Central Valley Project refuges through the improvement or installation of wells to use groundwater resources and the purchase of water from willing sellers." Under Section 114 of the bill, the authority under Section 104 would expire on the earlier of when a state-declared drought declaration is withdrawn, or a USDA-declared natural disaster declaration is suspended. Emergency environmental review provisions in Section 105 may affect how certain emergency federal and federally funded drought projects in California would be required to demonstrate compliance with NEPA. Broadly speaking, NEPA requires federal agencies to identify and consider the environmental impacts of a proposed federal action before a final agency decision is made on that action. In doing so, NEPA intends to inform the federal decision-making process with regard to agency actions that would affect the environment. Section 105 directs agencies responsible for implementing projects under this bill to consult with the Council on Environmental Quality (CEQ) to develop "alternative arrangements" to comply with NEPA in accordance with existing regulations. Emergency compliance arrangements are currently allowed in existing CEQ regulations implementing NEPA. These regulations provide that an agency may seek such alternative arrangements when an emergency makes it necessary to take "an action with significant environmental impact." This provision would apply to any states while a state-declared drought declaration or a USDA-declared natural disaster declaration is in effect. It is difficult to identify whether and/or to which projects such alternative arrangements would apply. For example, there is some question as to whether the projects mandated in Section 103(b) would require review under NEPA. Although the statute is not explicitly repealed, and courts disfavor repeals by implication, courts have found that where a law gives no discretion to an agency, NEPA does not apply. The theory is that if the NEPA review would not inform agency decision making—because the actions are strictly mandated by Congress—NEPA does not apply. In making such a determination, a court would consider whether a federal agency had control over the action. Under the Section 103(b) projects, agencies would be required to carry out 13 mandated actions. Some of these 103(b) mandates are very specific (e.g., the mandated 1:1 inflow-to-export ratio for the increased flow of the San Joaquin River in Section 103(b)(4)). It is possible that the specificity of this action could lead a court to decide that the agency lacked discretion and that a NEPA review was not required. Other federal and state environmental laws may still apply, however. Regardless of whether NEPA applies or how NEPA compliance must be demonstrated, an agency would still be required to determine whether the project's impacts would require compliance with state or federal environmental requirements established under other laws, regulations, or executive orders. That is, even if compliance with NEPA was not required, the actions required or funded under S. 2198 would need to be consistent with applicable requirements such as those established under the ESA or state and federal water quality laws, among others. The language raises the question as to how such consistency is to be demonstrated, and at what point that burden of demonstration falls. Section 106 addresses California's use of monies in its State Revolving Fund programs that assist wastewater and drinking water infrastructure projects, pursuant to the federal Clean Water Act (CWA) and the federal Safe Drinking Water Act (SDWA), respectively. The SRFs provide loans and other types of financing assistance under specific terms set by California and other states. S. 2198 adds no new or supplemental funding for California's SRF programs. Rather, S. 2198 directs the Environmental Protection Agency (EPA) Administrator, when allocating SRF funds, to require that the state of California review and give priority to projects that will "provide additional water supplies most expeditiously to areas that are at risk of having inadequate supply of water for public health and safety purposes or to improve resilience to droughts." The bill does not appear to add new types of project eligibility under the SRF programs. Instead, it appears intended to direct the state's priorities when awarding assistance among projects that already are SRF-eligible. These could include water recycling projects (e.g., recycled water treatment works and recycled water distribution systems) and water conservation measures, which currently are eligible under the state's clean water SRF program. It also could include source water and water storage projects that address the state's public health priorities, which are eligible under California's drinking water SRF program. The California agencies that administer the SRF programs have well-established procedures for identifying and prioritizing projects eligible for assistance. Intended Use Plans are prepared annually and are open to public participation. While the apparent intention of this section of S. 2198 is to provide funds expeditiously, it is unclear how quickly this could occur, in light of the state's existing priorities. For projects that are awarded assistance pursuant to Section 106, the bill would direct the EPA Administrator to expedite review of Buy American waiver requests, if such requests are submitted, and it authorizes 40-year loan repayments to the SRFs. Under both of the SRF programs, loans are normally to be repaid to a state within 20 years, but terms may be extended to 30 years in cases such as economically disadvantaged communities. Under the legislation, both of these provisions also would apply to any other state that has a state-declared drought declaration in force, or for which the Secretary of Agriculture has declared a drought or agricultural disaster. Finally, the bill provides that nothing in Section 106 authorizes EPA to modify existing state-by-state funding allocations, funding criteria, or other requirements related to the CWA and SDWA SRF programs for any states other than California or a state that has a state-declared drought or USDA-declared disaster declaration. Under Section 114 of the bill, the authority under Section 106 would expire on the earlier of when a state-declared drought declaration is withdrawn, or a USDA-declared natural disaster declaration is suspended. Section 107 directs that upon the request of Reclamation Project contractors in California (as well as all Klamath contractors), Reclamation shall provide water supply planning assistance for and in response to dry, critically dry, and below-normal water year types. Section 108 reauthorizes the CALFED Bay-Delta Act ( P.L. 108-361 ) through 2018. Many water- and species-related activities conducted by Reclamation and other federal agencies in the Bay-Delta are authorized under this act. Section 109 would extend the authorization of appropriations for the Reclamation States Emergency Drought Relief Act through FY2019 and increase the total authorized amount for FY2006 to FY2019 from $90 million to $190 million. It also would postpone the expiration of the program's authority from 2017 to 2019. As part of Interior's WaterSMART initiative, Reclamation manages a water and energy efficiency grant program using an authority provided by the Secure Water Act (42 U.S.C. 10364) and other authorities. Section 110 would increase the authorization of appropriations for the grants authorized by the Secure Water Act from $200 million to $300 million and would expand eligibility to include entities in the state of Hawaii. Section 110 also would provide the Commissioner of Reclamation with the ability to waive all associated nonfederal cost-share requirements to address emergency situations (e.g., waive the 50% nonfederal cost share). Section 110 would also allow the Commissioner to prioritize projects that "expeditiously yield water supply benefits" during drought. Section 111 would address water supply concerns in the Colorado River Basin. The basin has experienced decreasing water supplies over the last 14 years, and many fear it is in danger of reaching levels in Lake Mead that would trigger implementation of water shortage allocations for Colorado River water users. Section 111 would attempt to address these concerns by directing the Secretary of the Interior, as soon as practicable, to fund or participate in pilot projects to increase water in Lake Mead and other reservoirs of "initial" units of the Colorado River Storage Project (as authorized under the first section of the Act of April 11, 1956; 43 U.S.C. 620). Funding for the pilot projects would be directed to come from grants made by the Secretary to public entities that use Colorado River Basin water for municipal purposes and would be for projects implemented by one or more nonfederal entities or for implementing water conservation agreements in existence on the date of enactment of S. 2198 . Section 111(c) specifically notes that Upper Colorado River Basin Fund moneys would not be available for use in carrying out this section. The pilot projects in this section are limited to purposes as outlined in the Secure Water Act (42. U.S.C. 10364), which are quite varied. The provision appears to prioritize Colorado River Basin grants in that it would direct the Secretary to provide them as soon as practicable, whereas other existing laws authorize the Secretary to provide funding for various projects but do not necessarily direct him/her to do so. It is not clear what funding source the Secretary would use to fund this provision, although it is clear that the Secretary could not use the Upper Colorado River Basin Fund. Section 112 of S. 2198 states that if the bill were to be enacted, it would not preempt any California state law in effect on the date of such enactment, including area-of-origin, or other water rights protections. Section 113 of the bill would provide a general authorization for the Secretary of the Interior to conduct ecosystem restoration and water conservation activities in the Klamath Basin watershed. The water conservation activities authorized under this section could potentially decrease water demand in the Klamath Basin, an over-allocated basin in a prolonged state of drought. The ecosystem restoration activities could potentially increase the resilience of some fish species in the Klamath Basin that have been stressed by drought, among other things. Notably, both types of activities have previously been proposed in the Klamath Basin Restoration Agreement (KBRA), a water rights settlement involving the federal government, which is controversial among some and has yet to be authorized by Congress. Examples of KBRA activities that may be authorized by Section 113 include programs to purchase and "retire" certain water rights in the basin, restore endangered fish habitat, and reintroduce some fish populations. Section 114 states that authorities under Section 103 expire when the governor of the state suspends the drought emergency declaration. The authority under Sections 104, 105, and 106 expires in a state or area on the earlier of (1) the date the emergency declaration is withdrawn; or (2) the date when the Secretary of Agriculture suspends the national disaster declaration issued under the Consolidated Farm and Rural Development Act (7 U.S.C. 1961(a)) for drought or an agricultural disaster area. Title II of S. 2198 would amend the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended (42 U.S.C. 5192(a)), to expand the available programs under an emergency declaration to include disaster unemployment assistance (DUA), emergency nutrition assistance, and crisis counseling assistance. The provision would apply to emergency declarations broadly; that is, it is not limited to drought declarations. Emergency declarations are short-term and, given the immediacy of their work, include an abbreviated group of assistance programs when compared to assistance available under a major disaster declaration. Title II also includes congressional findings indicating that a major drought may be eligible for a major disaster or state of emergency declaration by the President for purposes of the Stafford Act. If the effects of a drought overwhelm state or local resources, the President, at the request of the state governor or tribal governing body, is authorized under the Stafford Act (42 U.S.C. 5121 et seq.) to issue major disaster or emergency declarations resulting in federal aid to affected parties. However, requests by states for Stafford Act drought-related declarations and related assistance since the 1980s have been denied. The infrequency of presidential domestic drought declarations increases the uncertainty about the circumstances under which such a declaration is likely to be made. The de facto federal policy since the 1980s has been that the U.S. Secretary of Agriculture is the lead in responding and declaring eligibility for federal agricultural disaster assistance, including drought-related disasters. A declaration of an agricultural disaster area by the Secretary of Agriculture triggers the availability of multiple agricultural assistance programs, most notably the programs of the Farm Services Agency (FSA), and may trigger availability of other federal programs, such as the Economic Injury Disaster Loans of the Small Business Administration (SBA). Since FEMA has deferred to USDA over the past three decades, there are no sections of the Stafford Act, nor regulations or policy guidance documents, that address or even appear to lend themselves to a prolonged drought event as opposed to a disaster incident. FEMA has published a listing of the factors that are considered when evaluating a major disaster request by a governor. However, similar factors are not listed for an emergency declaration, since that action is intended to provide emergency assistance to save lives and protect property and to lessen the threat of a more catastrophic event. In addition, while governors may request an emergency declaration, the law also provides to the President the authority to issue an emergency declaration if the emergency involves what is considered primarily a federal responsibility. As previously noted, emergency declarations are short-term and include an abbreviated portfolio of assistance programs compared to assistance associated with major disaster declarations. For example, while an emergency declaration can provide debris-removal assistance, it cannot offer any form of repair to damaged permanent facilities. Similarly, while emergency temporary housing is available through Section 408 of the Stafford Act, other programs assisting families and individuals are not. In light of those differences, Title II of S. 2198 would expand the available programs under an emergency declaration to include disaster unemployment assistance (DUA), emergency nutrition assistance, and crisis counseling assistance. While each of those programs offers special, targeted assistance for unique problems caused by a disaster event, the reference to the DUA program has the closest link to previous FEMA actions. For example, the President declared a disaster due to a freeze during the winter of 2007. The main form of assistance provided at that time was DUA for farmworkers unemployed by the weather event. The proposed changes to the emergency section would arguably provide the President the authority to provide similar assistance under an emergency declaration without having to reach the bar set by the disaster declaration factors noted earlier.
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Over the past five years, portions of the country have been gripped with extensive drought, including the state of California. Drought conditions in California are "exceptional" and "extreme" in much of the state, including in prime agricultural areas of the Central Valley, according to the U.S. Drought Monitor. Such conditions pose significant challenges to water managers who before this dry winter were already grappling with below-normal surface water storage in the state's largest reservoirs. Groundwater levels in many areas of the state also have declined due to increased pumping over the last three dry years. While recent rains have improved the water year outlook somewhat—moving the year from the driest on record in terms of precipitation to date to the third-driest—water managers are fearful of the long-term impacts of a relatively dry winter and little existing snowpack to refresh supplies later in the year. Because of the extent of the drought in California, drought impacts are varied and widespread. Most of the San Joaquin Valley is in exceptional drought, and federal and state water supply allotments are at historic lows. Many farmers are fallowing lands and some are removing permanent tree crops. Cities and towns have also been affected, and the governor has requested voluntary water use cutbacks of 20%. The effects of the drought are also likely to be felt on fish and wildlife species and the recreational and commercial activities they support, potentially including North Coast salmon fisheries. The intensity of the drought in California has generated congressional interest. Several bills have been introduced to address drought conditions in California. This report discusses S. 2198, which would address drought impacts in California and other states, and assist with drought response. This bill has two titles. Title I contains provisions ranging from mandating maximization of California water supplies through specific project development, management, and operations directives and addressing project environmental reviews—as long as actions are consistent with applicable law and regulations and not highly inefficient—to reauthorizing several water resources management laws. In addressing drought effects, Title I also would address project operations that relate to long-standing and controversial issues associated with management of the federal Bureau of Reclamation's Central Valley Project (CVP) and the California Department of Water Resources' State Water Project (SWP). Title II would expand the assistance potentially available under an emergency declaration for drought (or other emergency) pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended.
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The U.S. Constitution allocates specific roles to both the President and the Senate in the appointment of government officials. Under the Appointments Clause, the President is empowered to nominate and appoint principal officers of the United States, but only with the advice and consent of the Senate. In addition to this general appointment authority, the Recess Appointments Clause permits the President to make temporary appointments, without Senate approval, during periods in which the Senate is not in session. This constitutionally established appointment process, whether executed pursuant to the Appointments Clause or the Recess Appointments Clause, has often served as a source of political conflict between the President and Congress. This tension between the branches is perhaps most acute when the Senate perceives the President as circumventing the Senate's constitutional "Advice and Consent" role by unilaterally appointing officials pursuant to the Recess Appointment Clause, or, conversely, when the President perceives the Senate as obstructing his appointment power by refusing to confirm nominees the President feels are qualified. The unique facts underlying President Obama's recess appointments of Richard Cordray as Director of the Consumer Financial Protection Bureau (CFPB) and Terrence F. Flynn, Sharon Block, and Richard F. Griffin Jr. as Members of the National Labor Relations Board (NLRB, or Board) have brought the inherent tensions of the appointments process into stark focus. Although the President had formally nominated all four officials for confirmation by the Senate during the first session of the 112 th Congress, the Senate—as is its prerogative—did not confirm the President's nominees. After adjourning on December 17, 2011, the Senate agreed to hold a series of "pro forma" sessions to occur periodically until January 23, 2012. Citing Senate inaction, asserting that the Senate was in recess despite the pro forma sessions, and stressing the need for a fully functioning CFPB and NLRB, on January 4, 2012, the President exercised his recess appointment power and announced the appointment of all four officials. The President's recess appointments were challenged through various lawsuits filed by parties affected by actions taken by either the CFPB or the NLRB. The plaintiffs generally argued that because Cordray, Flynn, Block, and Griffin Jr. were not validly appointed, neither the CFPB nor the NLRB had authority to act. On January 25, 2013, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) became the first court to evaluate the merits of these challenges. In a case entitled Noel Canning v. N ational L abor R elations B oard , the circuit court issued a broad decision invalidating the appointment of all three NLRB Board Members. The court concluded that under the Recess Appointments Clause, the President may make recess appointments only during a formal intersession recess (a recess between the end of one session of Congress and the start of another), and only to fill those vacancies that arose during the intersession recess in which the appointment was made. Although the decision directly applies only to the NLRB's authority to undertake the single action at issue in the case, the legal reasoning, if adopted by other courts or affirmed by the Supreme Court, would cast serious doubt not only upon an array of previous actions by the Board and its ability to function in the future, but also upon the validity of the President's appointment of Director Cordray; the validity of various actions already undertaken by the CFPB; and the authority of the CFPB to function going forward. This report begins with a general legal overview of the Recess Appointments Clause and a discussion of applicable case law that existed prior to the D.C. Circuit's decision in Noel Canning . The report then analyzes the Noel Canning opinion and evaluates the impact the case could have on the roles of the President and Congress in the appointments context. A companion report, CRS Report R43032, Practical Implications of Noel Canning on the NLRB and CFPB , by [author name scrubbed] and [author name scrubbed], provides a detailed discussion of the impact the Noel Canning decision may have on the functioning of the NLRB and the CFPB. The Constitution establishes two methods by which the President may make appointments. The Appointments Clause, which establishes the principal method of appointment, requires that the President "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States whose Appointments are not herein otherwise provided for, and which shall be established by Law ..." Thus, while the Appointments Clause authorizes the President to nominate principal officers of the United States, a nominee cannot assume the powers of the office for which she has been nominated until confirmed by the Senate. In addition to this general provision, the Constitution also provides an alternative method of appointment that may be exercised only "during the Recess of the Senate." The Recess Appointments Clause (Clause) establishes that "The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session." The formative constitutional period provides only limited evidence of the intended meaning of the Clause. In arguing for the Constitution's ratification by the states, however, Alexander Hamilton broadly characterized the Clause as a complement to the general appointment power that would allow the President to make temporary appointments during a Senate recess, without Senate confirmation, to offices that needed to be filled without delay. Hamilton articulated the purpose of the Clause in Federalist 67, stating that the Clause was nothing more than a supplement to the [Appointments Clause], for the purpose of establishing an auxiliary method of appointment, in cases to which the general method was inadequate. The ordinary power of appointment is confided to the President and Senate jointly , and can therefore only be exercised during the session of the Senate; but as it would have been improper to oblige this body to be continually in session for the appointment of officers, and as vacancies might happen in their recess , which it might be necessary for the public service to fill without delay, the succeeding clause is evidently intended to authorize the President, singly , to make temporary appointments, "during the recess of the Senate, by granting commissions which shall expire at the end of their next session." Although the precise contours of the Recess Appointments Clause remain unclear, a consensus appears to have developed with respect to certain principles. For example, the Clause does not establish a lesser form of appointment. Courts that have considered the question have noted that, as a constitutional matter, a recess appointee possesses the same legal authority as a Senate confirmed appointee. Article II "neither distinguishes nor limits the powers that a recess appointee may exercise while in office." As such it is widely accepted that during his term, a recess appointee "is afforded the full extent of authority commensurate with that office." It is also generally understood that, pursuant to the express terms of the Clause, the commission of a recess appointee expires at the conclusion of the Senate's "next Session" following the appointment. Therefore, the point at which an individual is appointed may determine how long the officer serves. If an officer receives a recess appointment during either the first session of a Congress, or the period between the first and second sessions, the officer would serve until the end of the second session of that Congress. If an officer is appointed during the second session of a Congress, she would serve until the end of the first session of the next Congress. Absent these few generally established principles, the Recess Appointments Clause is typically characterized as containing a number of inherent ambiguities. Most prominent among these lingering questions is the proper interpretation of the two phrases that form the very foundation of the Clause: "Vacancies that may happen during" and "the Recess of the Senate." With respect to the former phrase, must the vacancy arise during the recess in which the President exercises his appointment authority, or is it sufficient that the vacancy merely exist at the time the Senate is in recess and the appointment made? Regarding the latter, what is meant by "the Recess"? Specifically, is the President's recess appointment authority triggered only during intersession recesses (recesses between sessions of Congress) or may he also exercise his authority during intrasession recesses (recesses that occur within a session of Congress)? Or, to the contrary, is it the duration , rather than the form, of a recess that triggers the President's authority? The executive branch and Congress have given some of these questions consideration in Attorneys General opinions and committee reports, respectively. The courts, however, have rarely engaged in any significant interpretive analysis of the Clause. The Supreme Court, for example, has never considered when the President's appointment authority is triggered under the Clause, and prior to the D.C. Circuit's decision in Noel Canning , only three federal courts of appeals had engaged in such analyses. All three decisions arguably interpreted the Clause broadly, that is, in a manner that imposed limited restrictions on the President's exercise of the recess appointment authority. These cases are discussed in greater detail below. In the 1962 decision of U nited States v. Allocco , the U.S. Court of Appeals for the Second Circuit (Second Circuit) considered a challenge to President Eisenhower's appointment of John M. Cashin as a federal judge. The position to which Judge Cashin was appointed became vacant on July 31, 1955. The Senate was in session at the time, and remained so until August 2, when it adjourned sine die . President Eisenhower made his appointment on August 17 during the resulting intersession recess. In determining that the President's appointment was valid, the three-judge panel unanimously held that the Recess Appointments Clause permits the filling of vacancies that "happen to exist" at the time of a recess and rejected the argument that the President cannot fill those vacancies that arise while the Senate is in session. Focusing on the practical difficulties of the rejected approach, the court determined that to have adopted the more restrictive interpretation would require that offices which became vacant "on the day the Senate adjourns ... remain vacant until the Senate reconvenes and has the opportunity to fill them." This delay would create a "manifestly undesirable situation," "frustrate the commendable objective sought by the drafters," and "do violence to the orderly functioning of our complex government." The court noted that its interpretation was "not without precedent," citing the "long and continuous line" of Attorneys General opinions determining that "the recess power extends to vacancies which arise while the Senate is in session" as well as the "widespread acceptance of [the] practice followed since the earliest days of the Republic." The Second Circuit declared: "In short, a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned, engaged in by Presidents who have also sworn to uphold the Constitution, making as it were such exercise of power part of the structure of our government, may be treated as a gloss on 'Executive Power' vested in the President by §1 of Art. II." More than 20 years after the Second Circuit's decision, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) heard a similar recess appointment challenge in U nited States v . Woodley . President Carter had nominated Walter Heen to be a federal district court judge on February 28, 1980. Although the Senate Judiciary Committee took up consideration of the Heen nomination, the full Senate adjourned sine die on December 16, 1980, without holding a confirmation vote. During the subsequent intersession recess, President Carter appointed Judge Heen pursuant to the Recess Appointments Clause on December 31, 1980. The Woodley court concurred with the reasoning applied in Allocco and held that a vacancy need not arise during a Senate recess in order to fall within the scope of the Clause. In adopting the "happen to exist" interpretation of the Clause, the court noted that embracing an interpretation that did not permit the President to fill "all vacancies" that exist during a recess would lead to "absurd result[s]" and "conflict with a common sense reading of the word happen , as well as the construction given to this word by the three branches of our government." Furthermore, a restrictive interpretation would defeat the purpose of the Clause, which the court identified as assuring to the President "the capacity for filling vacancies at any time to keep the government running smoothly." Like the opinion in Allocco , the Ninth Circuit cited historical evidence suggesting that the executive branch has "consistently construed" the Clause as providing the President with the authority to fill any vacancy that existed at the time of the Senate recess. Whereas the appointments in Allocco and Woodley were made during intersession recesses, the appointment challenged in Evans v . Stephens was made during an intrasession recess of the Senate. On February 12, 2004, the Senate adjourned until February 23 for a "President's Day recess." During this break, President George W. Bush exercised his recess appointment power to appoint William H. Pryor to the federal bench. Citing to both Allocco and Woodley , the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) interpreted the Recess Appointments Clause to "mean[] that, if vacancies 'happen' to exist during a recess, they may be filled on a temporary basis by the President." The court determined that such an interpretation was "consistent with the understanding of most judges that have considered the question, written executive interpretations from as early as 1823, and legislative acquiescence." The court also noted that early Presidents "made recess appointments to fill vacancies that originated while the Senate was in Session." In addition, because the appointment in question had not occurred during an intersession recess, the Eleventh Circuit also became the first appellate court to hold that the Recess Appointments Clause authorized the President to make appointments during an intrasession recess of the Senate. The court expressly rejected the argument that the Clause "limits the opportunity to make recess appointments to one particular recess: the recess at the end of a session." In adopting its interpretation, the court noted that the text of the Clause "does not differentiate expressly between inter- and intrasession recesses ..." and therefore determined that "'the Recess,' originally and through today, could just as properly refer generically to any one—intrasession or intersession—of the Senate's acts of recessing ..." The Eleventh Circuit also looked to historical practice for support, noting that 12 Presidents have made over 285 intrasession recess appointments. Moreover, the court identified the main purpose of the Clause as enabling "the President to fill vacancies to assure the proper functioning of our government." Given this concern over administrative continuity, the court gave greater weight to the duration of the Senate recess as opposed to whether it was intersession or intrasession. The court did not, however, establish a minimum recess period required "to give legal force" to the President's recess appointment power, instead only noting that Presidents previously had made recess appointments during recesses of similar length. Thus, prior to Noel Canning , three federal courts of appeals had held that the President may fill any vacancy that "happens to exist" at the time of a recess, and one had concluded that the President's recess appointment authority extends to both inter- and intrasession recesses. Although acknowledging that the Clause was subject to different textual interpretations, all three cases appear to have concentrated on a concern that a narrower interpretation would undermine what they identified as the overall purpose of the Clause, evidence of historical practice, and congressional acquiescence. Due principally to the implementation of the aforementioned "pro forma" sessions, President Obama's recess appointments at issue in Noel Canning present a unique set of facts not entirely parallel to the appointments considered in Allocco , Woodley , and Evans . As such, prior to discussing the D.C. Circuit's decision, it is necessary to detail the January 4 appointments. President Obama formally nominated Richard Cordray to be the first Director of the CFPB on July 18, 2011. On October 6, 2011, the Senate Committee on Banking, Housing, and Urban Affairs approved Cordray's nomination for a full vote of the Senate. However, on December 8, 2011, the Senate fell 7 votes shy of the 60-vote threshold necessary to reach cloture and move to a vote on the nomination. The NLRB, an agency with certain powers to investigate and adjudicate unfair labor practices, consists of a board of up to five officials appointed by the President with the advice and consent of the Senate. Obtaining Senate confirmation of Board nominees has been difficult in recent years. Accordingly, there have been long periods during the presidencies of both George W. Bush and Obama in which the Board has had vacancies, including a period of more than two years in which the Board operated with only two Members. In 2011, the Board had only three Members—the minimum number of Members required for a quorum —with one of the three scheduled to vacate his seat by the end of the first session of the 112 th Congress. In an effort to prevent membership from dropping below the minimum quorum required for the Board to fully conduct business, President Obama nominated Terrence F. Flynn for a seat on the Board on January 5, 2011. The President formally nominated Sharon Block and Richard F. Griffin Jr. for positions on the Board on December 15, 2011. Two days later, the Senate adopted a unanimous consent agreement in which the body adjourned, but scheduled a series of "pro forma" sessions every three to four days to occur from December 20, 2011, until January 23, 2012. The unanimous consent agreement established that "no business" would be conducted during the pro forma sessions and that the second session of the 112 th Congress would begin at 12:00 p.m. on January 3, 2012, as required by the Constitution. The Senate, at various times during recent Congresses, has held periodic "pro forma" sessions to "break up" what otherwise would have been a sustained adjournment. These sessions typically have been held every three or four days and are often governed by unanimous consent agreements that prohibit the chamber from conducting any formal business. The sessions generally consist of a single Senator simply convening the session, assuming the chair, and then adjourning. The modern use of pro forma sessions was initially instituted in 2007 by the Senate to avoid a sustained recess with the apparent intent of preventing the President from exercising his recess appointment powers. Although the purpose of the pro forma sessions has not changed, during the 112 th Congress, the House began to play an active role in the implementation of the sessions. Pursuant to the Adjournments Clause, "[n]either House, during the Session of Congress, shall, without the consent of the other, adjourn for more than three days." Generally then, unless both houses agree to an extended recess, neither body is constitutionally permitted to adjourn. In a June 2011 letter to House Leadership, numerous Members of the House requested that "all appropriate measures be taken to prevent any and all recess appointments by preventing the Senate from officially recessing for the remainder of the 112 th Congress." By refusing its consent to a Senate adjournment, the House has been able to prevent the Senate from entering into an extended recess thought necessary to trigger the President's recess appointment authority. None of the President's four nominees were confirmed before the end of the first session of the 112 th Congress. On January 4, the President, understanding the Senate to be in a recess, asserted his authority under the Recess Appointments Clause and announced his appointment of Cordray, Block, Flynn, and Griffin. Acting with its newly appointed Members, the NLRB issued an administrative decision against Noel Canning (a Pepsi distributor and bottler) in February 2012, ruling that the company had violated the National Labor Relations Act by failing to reduce to writing a collective bargaining agreement with a local Teamsters Union. Noel Canning challenged the NLRB's decision in the D.C. Circuit, claiming that three Members of the Board were invalidly appointed and that, as a result, the Board lacked a quorum to issue the decision. A unanimous three-judge panel held that the President's three recess appointments to the Board were constitutionally invalid. The opinion rested on two alternative justifications. First, the court held that "the Recess," for purposes of the Clause, refers only to an intersession recess entered into at the end of a session of Congress pursuant to a sine die adjournment. Second, a two-judge majority held that the President may make recess appointments only to fill vacancies that arise during the intersession recess in which the appointment is made. The President's recess appointments were neither made, nor did the vacancies arise, during "the Recess." Before proceeding to a detailed discussion of the case, it may be useful to identify three key themes that appear to pervade the court's opinion. First, the opinion favors a strict textualist constitutional interpretation and endeavors to ascertain the public meaning of the Recess Appointments Clause at the time it was adopted. Second, rather than adopting the historical evidence embraced in Allocco , Woodley , and Evans , the opinion reassessed, and arguably revalued, the historical use of recess appointments. Third, the opinion invokes Marbury v. Madison to support the conclusion that the judiciary is the proper and ultimate arbiter for this type of constitutional dispute. In holding that the President's authority to make recess appointments extends only to intersession recesses of the Senate, the D.C. Circuit placed significant importance on the Framers' choice of the phrase "the Recess," as opposed to "a recess," the plural "recesses," or the even broader "adjournment." Looking to the "natural meaning of text as it would have been understood at the time of the ratification of the Constitution," the court found that the use of "the Recess," "points to the inescapable conclusion" that the Framers must have intended the Clause to mean something other than a "generic break in proceedings." Moreover, the court also determined that the Clause creates a dichotomy between "the Recess" and "Session," resulting in the conclusion that "[e]ither the Senate is in session, or it is in the recess. If it has broken for three days within an ongoing session it is not in 'the Recess.'" The court concluded that the only time that the Senate is not in "Session," and therefore is in "the Recess," is during the period between the termination of one session and the beginning of another. The D.C. Circuit also concluded that historical practice "strongly supports the intersession interpretation" of "the Recess." However, in evaluating the historical use of the Clause, the court made clear that the "early understanding of the constitution is more probative of its original meaning than anything to be drawn from administrations of more recent vintage." The court was not swayed by the prevalence of intrasession recess appointments made by recent Presidents, but rather accorded significant weight to the fact that only three intrasession recess appointments were made before 1947 and that "no President attempted to make an intrasession recess appointment for 80 years after the Constitution was ratified." The court concluded that "the infrequency of intrasession recess appointments during the first 150 years of the Republic 'suggests an assumed absence of [the] power' to make such appointments." The Court also held that the context and purpose of the Clause buttressed its intersession interpretation. The court noted that the Clause was meant only as an appointment "stopgap" for the six- to nine-month intersession recesses of the Senate which were common at the time of the Constitution's ratification. The Framers, however, placed "strict limits" on the use of the Recess authority by requiring that the appointments only be made during "the Recess." "It would have made little sense to extend this 'auxillary' method to any intrasession break," held the court, "for the 'auxillary' ability to make recess appointments could easily swallow the 'general' route of advice and consent." Although the D.C. Circuit's holding that recess appointments may only be made during intersession recesses was sufficient to invalidate the President's appointments, a two-judge majority also held that the President's recess appointments were invalid because the vacancies that were filled did not "happen during the Recess of the Senate." The Court determined that the Clause authorizes the President to fill only those vacancies that "come into being" or "arise" during an intersession recess, rather than those that "happen to exist" during an intersession recess. Moreover, the court held that the recess appointment must occur "during the same intersession recess when the vacancy for that office arose." The court arrived at this construction because a plain reading of "that may Happen" could not properly be interpreted to encompass all vacancies in existence, otherwise, the court argued, "the operative phrase ... would be wholly unnecessary." The court acknowledged that this interpretation directly conflicted with the decisions in Allocco , Woodley , and Evans , but criticized those decisions for relying on modern dictionaries to define "happen," rather than contemporary 18 th century dictionaries that would define the term as understood during the time of ratification. In support of its holding, the court also noted that a broader interpretation of "happen during the Recess" would "eviscerate the primary mode of appointments set forth in Article II, Section 2, Clause 2." The court reasoned that it "would have made little sense" to impose advice and consent restrictions in the Appointments Clause when "[a] President at odds with the Senate over nominations would never have to submit his nominees for confirmation. He could simply wait for a 'recess' (however defined) and then fill up all vacancies." The court also determined that early historical commentary by Attorney General Edmund Randolph, Alexander Hamilton, and Joseph Story suggested an early understanding that "happen" meant "arise." In addition, the court noted President Washington's practice at the end of a session to obtain confirmation for a nominee, without the nominee's consent, before the Senate recess so that if the official later declined the office during the recess, the President could then fill the resulting vacancy through a recess appointment. Finally, the court held that the existence of an intersession recess can be identified by the sine die adjournment of the Senate. Literally translated as "without day," sine die is a term used to describe an adjournment in which the Senate has not set a day for its next meeting and is, therefore, not scheduled to meet again until the day set by the Constitution (or by law) for its next session to convene. These adjournments are the formal means by which Congress ends a session and are generally agreed to by both the House and the Senate through a concurrent resolution that explicitly characterizes the adjournment as " sine die ." The court noted that "it has long been the practice of the Senate, dating back to the first Congress, to conclude its sessions and enter 'the Recess' with an adjournment sine die ." The decision would appear to suggest that a sine die adjournment is necessary to trigger the President's recess authority. The court expressly held that "[b]ecause the Senate did not adjourn sine die , it did not enter 'the Recess' between the First and Second Sessions of the 112 th Congress." Notably, the Court made clear that when the Senate declines to adjourn sine die by resolution, and instead remains in session until the start of the next session of Congress, the previous session "expire[s] simultaneously with the beginning of the" next session. Consequently, it would appear that under Noel Canning the President's recess authority is triggered only during an intersession recess initiated pursuant to a sine die adjournment of the Senate. The D.C. Circuit's decision in Noel Canning contrasts with Allocco , Woodley , and Evans in a number of ways. Most prominently, of course, are the conflicts created by Noel Canning 's two chief holdings. Whereas the Second, Ninth, and Eleventh Circuits had previously determined that the Clause authorized the President to fill any vacancy that "happens to exist" at the time of a recess, regardless of when the vacancy arose, the Noel Canning court took a more restrictive view of the Clause, holding that the President may only fill those offices that first become vacant during the recess in which the appointment is made. In addition, the D.C. Circuit's holding that the President's recess appointment authority is only triggered during an intersession recess differs from the Eleventh Circuit's holding in Evans that the President may make recess appointments during both intersession and intrasession recesses. These differences are substantial and may provide a strong justification for the Supreme Court to grant review of this case. However, the disagreements between Noel Canning and the three previous appellate decisions extend beyond the ultimate scope of the President's authority under the Recess Appointments Clause. Indeed, the opinions fundamentally diverge on a number of important interpretive and practical issues. Some of these distinctions are briefly highlighted below. The opinions differed in their overall approaches to constitutional interpretation. In Noel Canning , the D.C. Circuit employed a formalistic textualist approach, invoking "cold, unadorned logic," in interpreting the language of the Recess Appointment Clause. Seeking the plain logical meaning of the Clause, the court characterized its search as one for the "natural meaning of the text as it would have been understood at the time of the ratification of the Constitution." Although also beginning with an evaluation of the Clause's text, the decisions in Allocco , Woodley , and Evans arguably engaged in a more functional, purpose-driven interpretation—focusing on the practical impact of a more restrictive interpretation of the Clause; its effect on the President's ability to ensure continuity of government; and the potential that a such an interpretation would "frustrate the commendable objective sought by the drafters." The decisions differed in their characterizations of the basic purpose of the Clause. Whereas the earlier decisions characterized the Clause as ensuring that the President be able to fill vacancies to avoid administrative inefficiency, the Noel Canning court viewed the Clause primarily as a "stopgap" establishing a limited exception to the general requirement that nominees be approved by the Senate. Indeed, Evans , Woodley , and Allocco all referenced the importance of preventing "executive paralysis" or "atrophy" so as to ensure smooth functioning of government. Evans expressly identified the purpose of the Clause as "enabl[ing] the president to fill vacancies to assure the proper functioning of our government" and "to keep important offices filled and the government functioning." Noel Canning criticized that characterization of the Clause's purpose for "omitt[ing] a crucial element of the Clause, which enables the President to fill vacancies only when the Senate is unable to provide advice and consent ." Moreover, the D.C. Circuit noted that any "inefficiencies" that arise as a result of the court's interpretation can be "alleviate[d]" by Congress through holdover provisions or by authorizing "acting" officers. In Allocco , the Second Circuit supported its conclusion that a vacancy need not arise during a recess with an evaluation of historical practice. The court noted that "we find widespread acceptance of [that] practice followed since the earliest days of the Republic." The Evans court agreed, noting that "as we understand the history, early Presidents [] made recess appointments to fill vacancies that originated while the Senate was in session." As an example, the court specifically cited to an appointment made by George Washington to a vacancy that the court asserted arose while the Senate was in session. Evans also cited historical practice in support of the conclusion that the President can make intrasession recess appointments, identifying 12 more recent Presidents that had made in excess of 285 intrasession appointments. Noel Canning 's evaluation of historical practice led that court to the opposite conclusion on both fronts. The court determined that in fact, "historical practice strongly supports the intersession interpretation" of the Clause. The court found that the first intrasession appointment did not occur until 1867, and only three such appointments were made prior to 1947. In fact, the court noted that no President had attempted an intrasession recess appointment for the republic's first 80 years and that it has only been administrations of a "more recent vintage" that have regularly made intrasession recess appointments. "The dearth of intrasession appointments in the years and decades following the ratification of the Constitution" concluded the court, "speaks far more impressively than the history of recent presidential exercise of a supposed power to make such appointments." Noel Canning also contested Evans 's use of historical evidence as a basis for its conclusion that Presidents may make recess appointments to any vacancy, regardless of when it arose. The D.C. Circuit challenged Evans 's reliance on "a handful of recess appointments supposedly made by Presidents Washington and Jefferson to offices that became vacant prior to the recess," asserting that "[s]ubsequent scholarship has demonstrated" that the cited vacancies did not actually arise while the Senate was in session. Finally, the courts are in direct conflict over the import of the enactment of 5 U.S.C. §5503 and its predecessor statutes. This statutory provision, as it currently exists, provides that "[p]ayment for services may not be made from the Treasury of the United States to an individual appointed during a recess of the Senate to fill a vacancy in an existing office, if the vacancy existed while the Senate was in session.... " The provision, however, establishes three broad exceptions to this general rule. Allocco , Woodley , and Evans all identified this statute as a basis for implying congressional approval of the President's authority to fill vacancies that arise while the Senate is still in session. In Allocco , the court stated that "Congress has implicitly recognized the President's power to fill vacancies which arise when the Senate is in session by authorizing payment of salaries to most persons so appointed under the recess power." In Woodley , the court cited to the statute in reasoning that "[b]oth Houses of Congress have apparently recognized the soundness of this construction of the recess power" by "provid[ing] for payment of recess appointees ... whose nominations were pending at the time of the Senate's recess." Likewise in Evans , the court explained: "That Congress is willing, under certain circumstances to pay recess appointees filling vacancies that have existed while the Senate was in session suggests to us that it is the view of the majority of Congress that the President's making of such appointments is likely not unconstitutional." The D.C. Circuit adopted a different interpretation in Noel Canning , concluding that the statute neither amounted to congressional acquiescence, nor provided any insight into the proper interpretation of the scope of the Recess Appointments Clause. The court questioned whether "our sister circuits are correct in construing this legislation as acquiescent," and instead concluded that the pay statute, which was first enacted in 1940 "sheds no light on the original understanding of the Constitution." Although the D.C. Circuit's actual order in Noel Canning directly implicates only one specific action, against one specific party, within one specific circuit, the court's interpretation of the President's recess appointment authority could have a substantial impact on the future division of power between the President and Congress in the filling of vacancies. If affirmed by the Supreme Court, the likely effect of the reasoning adopted in Noel Canning would be a shift toward increased Senate control over the appointment of government officials and a decrease in the frequency of presidential recess appointments. Most prominently, the President would no longer be permitted to make intrasession recess appointments. Since 1981, 329 appointments—more than half of all recess appointments made during that period—have been made during intrasession recesses of the Senate. In addition, the President would no longer be permitted to exercise his recess appointment authority to fill vacancies that arose while the Senate was in session, or that arose during a different intersession recess. Although CRS has not been able to determine the precise number of appointments that would have fallen into this category, it would appear that few of the 323 intersession recess appointments made since 1981 filled vacancies that arose during the intersession recess in which the appointment was made. Vacancies in positions requiring Senate confirmation that no longer qualify for a recess appointment under Noel Canning would need to be filled through the general process of presidential nomination and Senate confirmation. Thus, by limiting both the periods in which a President may make recess appointments, and the vacancies that may be filled by such appointments, the decision likely would strengthen the Senate's "Advice and Consent" role, while restricting the President's authority to make unilateral appointments. Moreover, the interpretation established in Noel Canning likely would provide Congress with nearly complete control over whether the President's recess authority is triggered in the future. Under the decision, it would appear that the necessary predicate for the President to make a recess appointment (an intersession recess) must be initiated by a sine die adjournment of the Senate. As previously noted, whether the Senate enters a sine die adjournment is a decision left to that body—in cooperation with the House—and one in which the President has no direct role. Therefore, the Senate may effectively control whether the condition necessary to trigger the President's authority to make recess appointments actually transpires. Indeed, if the Senate chooses not to adjourn sine die during a given Congress—a decision well within the Senate's discretion and authority—under Noel Canning no recess appointments may be made. This notion of Senate control over the constitutional contingency necessary to trigger the President's recess appointment authority is not, in and of itself, exceptional. In light of the conditional nature of the Clause, even the executive branch has acknowledged that "Congress can prevent the President from making any recess appointments by remaining continuously in session and available to receive and act on nominations ... " The disagreement, however, is over how to distinguish when the Senate is in "session" and when it is in "recess." The executive argues that it is within the President's power to determine when the Senate is in "recess" for purposes of the Clause and unable to act on nominations. Under the standards established in Noel Canning , the Senate would also appear free to enter extended intrasession recesses without the risk of triggering the President's recess authority. Neither the duration of a recess nor the Senate's ability to receive and weigh nominations were factors in the D.C. Circuit's consideration of what constituted "the Recess" for purposes of the Clause. Instead, the court limited its evaluation only to establishing a distinction between the form of the recess—concluding that intersession recesses trigger the President's authority and intrasession recesses do not. As a result, it could be argued under Noel Canning that while the President is not permitted to make a recess appointment during a multi-month intrasession recess, he may make a recess appointment during even a momentary intersession recess—assuming that the vacancy to be filled arose during that recess. For example, Noel Canning would appear to suggest that the President would not be authorized to make recess appointments during a three-month summer intrasession recess. The same would also appear to be true for a properly scheduled extended intrasession recess held at the end of a session. The Senate could, for instance, adjourn on December 1 st with an agreement to return on January 2. Upon returning, perhaps for a pro forma session, the Senate could then adjourn that pro forma session, but without adjourning sine die . Under Senate precedent, in the absence of an explicit sine die adjournment, the current session of Congress would remain in being until noon on January 3, at which point Noel Canning makes clear that the current session would automatically "expire[] simultaneously with the beginning of the [next] session." Under such a scenario the Senate would not have entered an intersession recess, and thus the President would have no opportunity to make a recess appointment. In addition to simply avoiding intersession recesses, Congress also may discourage future presidential recess appointments by structuring the terms of newly created fixed term offices in a way that decreases the likelihood that they will become vacant during an intersession recess. For example, as opposed to tying the term to the date in which the officer was appointed, Congress could establish a term of service that expires during the middle of the calendar year when the Senate is unlikely to be in an intersession recess. An argument may be forwarded that, by permitting the Senate to use scheduling practices, including pro forma sessions, to consistently prevent the President from making recess appointments, the restrictive interpretation adopted in Noel Canning tends to undermine the President's appointment power in a way that could give rise to constitutional concerns under the separation of powers. It would appear unlikely that the D.C. Circuit, which views the Clause as establishing a purely conditional auxiliary power, would be moved by such an argument. Under its formalistic approach, the purpose of the Clause would not be frustrated simply because the required constitutional condition, identified by the Framers as necessary to trigger the President's power, does not occur. As such, the separation of powers simply is not implicated. By contrast, a court that adopts a more functional interpretation and identifies the primary purpose of the Clause as ensuring the President's ability to maintain the continuity of administrative government and avoid "executive paralysis" may be more receptive to such an argument. A court adopting this view may consider the Senate's failure to act on nominations, coupled with a restrictive interpretation of the President's authority to make recess appointments, as unduly obstructing the President's ability to "take Care that the Laws be faithfully executed" and frustrating what some courts have identified as the overriding objective of the Clause: to allow the President to "fill vacancies to assure the proper functioning of our government." In discussing the boundaries of the constitutional roles of each branch, it should be noted that recess appointments have been governed by a delicate balance of power precisely because the Clause establishes a unique affirmative grant of constitutional power to one branch that is conditional upon the occurrence of a specific action of another. The structure of the appointment process, and the ability of either branch to exercise its enumerated authority in a manner that frustrates the powers of the other branch, has resulted in a framework traditionally governed by political checks and balances, rather than strict legal standards, and is perhaps why substantial ambiguity as to the scope of the Clause persists to this day. Any judicial decision providing additional legal clarity to the question of who determines whether the Senate is in "the Recess" runs the risk of upsetting this balance of power. If the authority to make this determination is accorded to the President, the resulting dynamic could significantly undermine the Senate's advice and consent role under the Appointments Clause. If the decision-making power is accorded to the Senate, the President conceivably could be prevented from making any recess appointments, regardless of the resulting impact on the functioning of the executive branch. If the former would "eviscerate the Constitution's separation of powers," as the Noel Canning court concluded, it would seem the same argument could be made of the latter. Finally, it should be noted that although the President has very little control over when and whether the Senate enters an intersession recess of the type required in Noel Canning , he may be able to influence the timing of certain executive branch vacancies. For example, if the Senate enters an intersession recess, the President may attempt to create a vacancy during that period by encouraging certain officers who have determined to leave the administration to time their resignations to coincide with the Senate recess. In addition, depending on the statutory protections afforded a given office, the President could remove an officer during the intersession recess, thus creating a vacancy that could be filled via a recess appointment. Of course, this method would allow the President to create a vacancy only in an already occupied office and would have no impact on offices that are already vacant or newly established. The Noel Canning decision also could impact the House's ability to influence the President's recess appointment authority. As previously discussed, the Adjournments Clause establishes that "neither House, during the Session of Congress, shall without the consent of the other, adjourn for more than three days." By withholding its consent to an extended Senate recess in recent years, the House has effectively prevented the Senate from entering a recess of a length generally thought sufficient to permit the President to exercise his recess appointment authority. Prior to Noel Canning it was generally thought that a recess of some appreciable length likely was necessary to trigger the President's recess appointment authority. At the very least, the executive branch has drawn from the Adjournments Clause to assert that a recess would likely need to be "longer than 3 days" in order for a recess appointment to be made, although early legal opinions favored a longer period. Given this perceived durational requirement, the Adjournments Clause arguably prevented the Senate from entering a recess of sufficient length to trigger the President's recess authority without the consent of the House. Noel Canning appears to suggest that this perception was in error. Not only did the circuit court explicitly determine that the asserted "link" between the Adjournments Clause and the Recess Appointments Clause "lack[ed] any constitutional basis," nothing in the opinion suggested that "the Recess" needs to be of some minimum duration for recess appointments to be made. Regardless of the length of a recess, so long as it is intersession (adjourned sine die ), Noel Canning suggests that the President's recess appointment authority is triggered. Given these new developments, it can be argued that the House's ability to influence the President's authority to make recess appointments in the future could be weakened were the Senate willing to break from its tradition of obtaining the House's consent for a sine die adjournment. The Adjournments Clause requires the Senate to obtain the consent of the House only to "adjourn for more than three days." Thus, there does not appear to be any constitutional reason why the Senate would not be free to unilaterally enter an intersession recess within three days of the convening of the next session without the consent of the House. In practice, this is not an action the Senate has historically taken, and indeed would appear to be contrary to Senate precedent. Nevertheless, under Noel Canning , this short intersession recess would appear to be sufficient to trigger the President's recess appointment power.
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Under the Appointments Clause, the President is empowered to nominate and appoint principal officers of the United States, but only with the advice and consent of the Senate. In addition to this general appointment authority, the Recess Appointments Clause permits the President to make temporary appointments, without Senate approval, during periods in which the Senate is not in session. On January 4, 2012, while the Senate was holding periodic "pro forma" sessions, President Obama invoked his recess appointment power and unilaterally appointed Richard Cordray as Director of the Consumer Financial Protection Bureau (CFPB) and Terrence F. Flynn, Sharon Block, and Richard F. Griffin Jr. as Members of the National Labor Relations Board (NLRB). The President's recess appointments were ultimately challenged by parties affected by actions taken by the appointed officials, and on January 25, 2013, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) became the first court to evaluate the merits of the President's appointments. In a broad decision entitled Noel Canning v. National Labor Relations Board, the court invalidated the appointment of all three NLRB Board Members. In reaching its decision, the D.C. Circuit concluded that under the Recess Appointments Clause, the President may only make recess appointments during a formal intersession recess (a recess between the end of one session of Congress and the start of another), and only to fill those vacancies that arose during the intersession recess in which the appointment was made. Although the D.C. Circuit's actual order in Noel Canning directly applies only to the NLRB's authority to undertake the single action at issue in the case, the court's interpretation of the President's recess appointment authority could have a substantial impact on the future division of power between the President and Congress in the filling of vacancies. If affirmed by the Supreme Court, the likely effect of the reasoning adopted in Noel Canning would be a shift toward increased Senate control over the appointment of government officials and a decrease in the frequency of presidential recess appointments. This report begins with a general legal overview of the Recess Appointments Clause and a discussion of applicable case law that existed prior to the D.C. Circuit's decision in Noel Canning. The report then analyzes the Noel Canning opinion and evaluates the impact the case could have on the roles of the President and Congress in the appointments context. A companion report, CRS Report R43032, Practical Implications of Noel Canning on the NLRB and CFPB, by [author name scrubbed] and [author name scrubbed], provides a detailed discussion of the impact the Noel Canning decision may have on the functioning of the NLRB and the CFPB.
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Agricultural conservation technical assistance has taken on a number of dimensions over its long and continuously evolving history. Congress continues to take interest in conservation technical assistance given its complexities and impact on the distribution of conservation financial assistance to producers. Frequently, technical assistance for agriculture is discussed in the context of omnibus farm legislation (referred to as farm bills), although most technical assistance is discretionary and funded through the annual agricultural appropriations bill rather than mandatory spending authorized in the farm bill. Questions concerning the current and future capacity of the technical assistance system are highlighted by a perceived lack of boundaries and understanding of what technical assistance is and is not. One challenge for Congress lies in finding an acceptable balance between how much technical assistance capacity currently exists and how much is needed to meet demand. In the search for this balance many policy questions arise regarding what technical assistance is and does, especially in the areas of funding and implementation. This report does not attempt to directly answer these questions, but rather provides a framework for the debate. This report describes the past progressions that made conservation technical assistance what it is today, and also poses questions on where it might be headed in the future. Throughout this report, conservation technical assistance refers to conservation as applied to activities on or affecting agricultural lands. In the most general terms, technical assistance is a technical service. It is a basic service that provides conservation knowledge to producers and landowners. It includes information, technical expertise (e.g., engineering, biological, etc.), and a delivery system for assisting landowners and users to conserve and use natural resources. In broader terms it involves outreach, education, and training in practices and technological advances that create compatibility between production and the land. Perceptions of technical assistance vary by region, land use type, accessibility, and individual stewardship. Technical assistance is considered by some to be science-based and therefore subject to the continuous progression of advances in the field. By this definition, inflexibility and static change is undesirable. Others view conservation technical assistance as limited to preparing a conservation plan. The scientific underpinnings add to the stability of the plan; however, without additional follow-through this definition remains narrow, implying that technical assistance is just a plan, and nothing more. Increasingly, this service is not only provided through the federal government by the U.S. Department of Agriculture's (USDA's) Natural Resources Conservation Service (NRCS), but also by other public and private experts. NRCS is the current federal provider of technical assistance for agriculture conservation. The statutory authority to provide conservation technical assistance is derived from the Soil Conservation and Domestic Allotment Act of 1935 (P.L. 74-46; 16 U.S.C. §590 et seq.). NRCS provides technical assistance at the request of the landowner to conserve and improve natural resources. It includes technical expertise combined with knowledge of local conditions and is provided through a network of federal staff located throughout the United States. Although the 1935 act provided authority for technical assistance it was not until an amendment under the Food, Conservation, and Energy Act of 2008 (2008 farm bill, P.L. 110-246 ) that conservation technical assistance was defined in statute. Through this amendment, technical assistance is currently defined by law as: "(2) TECHNICAL ASSISTANCE.— "(A) IN GENERAL.—The term 'technical assistance' means technical expertise, information, and tools necessary for the conservation of natural resources on land active in agricultural, forestry, or related uses. "(B) INCLUSIONS.—The term 'technical assistance' includes— "(i) technical services provided directly to farmers, ranchers, and other eligible entities, such as conservation planning, technical consultation, and assistance with design and implementation of conservation practices; and "(ii) technical infrastructure, including activities, processes, tools, and agency functions needed to support delivery of technical services, such as technical standards, resource inventories, training, data, technology, monitoring, and effects analyses." Technical assistance is funded through virtually every USDA mandatory and discretionary conservation program. Most of the funding for technical assistance is provided through discretionary conservation programs. Discretionary programs are permanently authorized and receive funding through the annual appropriations process. Mandatory funding for certain conservation programs is currently authorized primarily under the 2008 farm bill, and provided through the USDA Commodity Credit Corporation (CCC). Funding for mandatory conservation programs is provided at the level authorized in law unless limited to a smaller amount during the appropriations process. Mandatory funding for conservation technical assistance often supports financial assistance to producers who provide specified forms of conservation. Authorizing legislation for mandatory programs does not set specific spending levels for technical assistance. Funding allocated to technical assistance in mandatory programs is determined by the Administration, not through appropriation or authorization. Conservation Operations (CO) is the largest discretionary account, and also provides the greatest amount of technical assistance through the Conservation Technical Assistance (CTA) program. CTA provides technical support, conservation planning, and implementation assistance through local field offices in almost every county in the United States (and territories). CTA also funds many of NRCS's collaborative research and data collection projects, such as the Natural Resources Inventory (NRI), which tracks natural resource conditions and trends on non-federal land in the United States. CTA also funds compliance status reviews under highly erodible cropland compliance and wetlands compliance provisions and was funded at close to $756 million in FY2010 ( Figure 1 ). The second-largest activity conducted under CO is the Soil Survey program, which maintains an inventory of the soil resources on all U.S. land. This information is publically available and is utilized by not only agricultural interests but increasingly by developers and planners, as well as the transportation industry. Scientists are using soil survey information in studying climate change and evaluating the environmental impacts of land use and management practices. Other discretionary programs include four watershed programs (Watershed Surveys & Planning, Watershed & Flood Prevention Operations, Watershed Rehabilitation, and Emergency Watershed Protection) that provide technical assistance using various approaches to watershed planning, local coordination efforts, and flood prevention structures. Most watershed program funding is provided as financial assistance through contracts with local partners. The watershed programs were largely created in the 1940s and 1950s in response to flood control and water quantity concerns. Reduced appropriations and an increasing number of congressional earmarks have reduced program support within recent administrations. Congress, however, continues to fund many of these programs through annual appropriations. The Resource Conservation and Development (RC&D) Program is another discretionary program that establishes or improves coordination systems in rural areas for the development and utilization of natural resources. Funding for the RC&D program largely provides staff support for local RC&D councils across the United States. Very little, if any, financial assistance is provided though this program. Unlike discretionary programs, mandatory programs derive their funding authority from legislation that specifies an annual amount, unless reduced in the appropriations process. Authorizing legislation for mandatory programs does not set specific spending levels for technical assistance. Funding allocated to technical assistance in mandatory programs is determined by the Administration, not through appropriations. Conservation program advocates prefer mandatory funding to discretionary because supporters believe that it is easier to protect mandatory funding levels than it is to protect spending subject to annual appropriations. Discretionary funding for agriculture conservation technical assistance has remained relatively constant in recent years compared to mandatory funding, which continues to increase. The 2008 farm bill provided much of this increase in mandatory conservation funding and continues to shift NRCS staff from technical assistance funded though discretionary programs to those funded through mandatory programs. Despite this shift, discretionary funding still remains the larger source of technical assistance funding ( Figure 2 ). Most technical assistance activities within mandatory programs are in support of delivering some level of financial assistance as part of a contract or agreement. These activities could include providing designs, standards, and specifications needed to install scheduled conservation practices and activities. According to NRCS policy, all technical assistance prior to a producer entering into a contract for financial assistance is considered to be part of CTA. It is not until after a producer signs a contract for financial assistance, that technical assistance is funded from the individual mandatory program rather than CTA. Once the contract is completed—defined as one year after the last conservation practice or activity is implemented—mandatory program funds are no longer available to support ongoing assistance in maintaining the conservation plans, practices, and activities implemented under the financial assistance program. If these activities continued to receive technical assistance it would be through CTA. One exception is that mandatory program funding my still be used to follow up on easements, which create an ongoing obligation for management and monitoring. Section 2701 of the 2002 farm bill stated that the Secretary shall provide technical assistance to eligible producers either directly (through NRCS) or through approved third party providers. In late 2002, the Office of Management and Budget (OMB) determined that technical assistance funding for mandatory programs was limited by a cap established in Section 11 (15 U.S.C. 714i) of the CCC Charter Act and enacted in the 1996 farm bill. In the mid-1990s, the Farm Service Agency (FSA), which manages the operations of the farm commodity support programs, began to utilize CCC funding for large computer expenditures. These purchases were met with criticism for being too expensive and outdated. An amendment to the CCC Charter Act was made in the 1996 farm bill that limited the amount of funds that could be transferred for reimbursement of administrative expenses, referred to as the "Section 11 cap." The 1996 amended language states that "the total amount of all allotments and fund transfers from the Corporation under this section (including allotments and transfers for automated data processing or information resource management activities) for a fiscal year may not exceed the total amount of the allotments and transfers made under this section in the fiscal year 1995." While this cap was not specifically directed toward NRCS and technical assistance, the agency was affected because FSA had been reimbursing NRCS for technical assistance provided in support of the Conservation Reserve Programs (CRP) and Wetlands Reserve Program (WRP), both funded through the CCC. In late 2002, following the enactment of the 2002 farm bill, OMB determined that the Section 11 cap was still in effect, and used it to limit technical assistance funding within mandatory conservation programs. OMB was supported in an opinion by the Department of Justice, which stated that CO appropriations (discretionary funds) could fund technical assistance for farm bill programs (mandatory funds). Congress disagreed with this determination, believing that the language it had added in the 2002 farm bill allowed for technical assistance for each program to be funded out of allocations for each program. Congress was supported by a Government Accountability Office (GAO, then known as the General Accounting Office) opinion stating that USDA improperly obligated CO appropriations to fund technical assistance for farm bill programs. For three years following these opinions, the President's budget included a proposal to fund farm bill program technical assistance through a new separate account using annual appropriations. Congress rejected these proposals and prohibited using any discretionary CO appropriations for technical assistance to implement mandatory farm bill program technical assistance. The combination of this congressional prohibition and OMB's opinion on the Section 11 cap led to the "shifting" of funds for technical assistance between mandatory programs, thereby reducing the amount of financial assistance funding available in the "donor" programs. In FY2003, the Environmental Quality Incentives Program (EQIP), authorized at $700 million, used $145 million for technical assistance. However, technical assistance shortfalls in other programs led to the shifting of more than $107 million in additional technical assistance funding from EQIP to those programs, thereby reducing the available EQIP financial assistance funding to $442 million. The Farmland Protection Program (FPP), Grassland Reserve Program (GRP), and Wildlife Habitat Incentives Program (WHIP) shifted a total of $50 million to other programs in FY2003. In late 2004, Congress addressed the funding situation with a new law ( P.L. 108-498 ) requiring technical assistance for each mandatory program to be paid from funds provided to that program each year. It prohibits the use of discretionary program funds for technical assistance in mandatory programs, and the transfer of funds among mandatory programs. Despite the P.L. 108-498 amendment and the enactment of the 2008 farm bill ( P.L. 110-246 ), the issue of whether CCC funds could be used for technical assistance remained. Congress again addressed it, this time through section 103 of the American Recovery and Reinvestment Act of 2009 (Recovery Act, P.L. 111-5 ). The Recovery Act states that CCC funds may be used "for the purpose of covering salaries and related administrative expenses, including technical assistance, associated with the implementation of the program, without regard to the limitation on the total amount of allotments and fund transfers contained in section 11" of the CCC Charter Act. The provision only applies to FY2009 and FY2010 and does not include activities under Title I of the 1985 farm bill, as amended. Congress might address this issue again because funding authority for most farm bill programs expires at the end of FY2012. Since FY2002, annual agriculture appropriations acts have placed limits on funding below authorized levels for certain mandatory conservation programs. Many of these reductions support Administration requests through the President's proposed budget each year. While program reductions vary from year to year, two trends are clear: (1) a gap exists between authorized and appropriated levels; and (2) despite this gap, overall funding for conservation continues to grow. Technical assistance for mandatory programs is determined by NRCS as a percentage of the overall authorized funding. NRCS uses a model (referred to as the cost of programs model) to estimate the total cost of technical assistance necessary to administer each mandatory program. This model came under scrutiny by GAO in 2004, when it reported the model's inaccuracies in estimating technical assistance costs. According to GAO, these inaccuracies were a result of delays in technical assistance work, the inclusion of external costs not reported in actual costs, and inaccurate assumptions. In 2006, NRCS conducted a national update to more accurately ascertain the true workload cost of providing technical assistance, called Activity Based Costing (ABC) data. These data were collected at national, state, and county levels. Though NRCS uses the updated model to estimate the level of technical assistance funding needed for each program, the agency does not have total control in determining the actual level of funding provided for technical assistance. Instead, this level is set nationally by an OMB apportionment. After NRCS receives an apportionment, the funding available for both financial and technical assistance is allocated to NRCS state offices. The NRCS State Conservationist is then responsible for administering the state allocation. In FY2009, technical assistance funding for mandatory programs was distributed to states, by program, using the formulas unique to each program. Based on correspondence with USDA, a similar method of allocating funds was also used in FY2010. Between 1935 and 1994, the primary function of NRCS (then known as the Soil Conservation Service, SCS) was to provide conservation technical assistance to landowners. This assistance shifted slightly in the 1940s and 1950s with the small watershed programs, and again in 1985 with the introduction of conservation compliance. It was not until the 1990s that NRCS assumed greater responsibility in USDA's financial assistance programs for conservation. As part of the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 ( P.L. 103-354 ), USDA was reorganized. On October 13, 1994, through a USDA memorandum (1010-1) the Soil Conservation Service was renamed the Natural Resources Conservation Service. The newly created NRCS also received responsibility for the Wetlands Reserve Program (WRP), Water Bank, Colorado River Basin Salinity Control, and Forestry Incentives programs from the Agricultural Stabilization and Conservation Service (now known as the Farm Service Agency). While leadership for these programs transferred to NRCS, the function of making payments to program participants remained with FSA. Following enactment of the 1996 farm bill ( P.L. 104-127 ), NRCS became responsible for administering the Environmental Quality Incentives Program (EQIP), a combination of several financial assistance programs. NRCS was given the leadership role for the financial as well as the technical aspects of the conservation programs, including developing the type of practices available, assisting producers with preparation of applications, ranking applications, and checking on installation of practices. The payment function for EQIP, WRP, and other conservation programs administered by NRCS remained with FSA. It was not until the enactment of the 2002 farm bill ( P.L. 107-171 ) that NRCS became responsible for most of the conservation programs under the conservation title, including payment responsibility. FSA retained the administration of the Conservation Reserve Program (CRP), with NRCS continuing to provide technical assistance; administration of the Grasslands Reserve Program (GRP) was split between NRCS and FSA. The increase in responsibility following the 2002 farm bill came with an expanding list of natural resource concerns and a significant increase in funding authority. Despite the transition of program leadership, some functions continue to be maintained by each agency. NRCS continues to be the leader for the technical assistance of conservation programs (e.g., planning, practice standards, etc.). FSA continues to be the leader for participant eligibility determinations (e.g., adjusted gross income, compliance records, etc.). For programs that involve both agencies (e.g., CRP and GRP) NRCS and FSA have a memorandum of agreement (MOA) or memorandum of understanding (MOU) that divide responsibilities ( Appendix B ). The current conservation technical assistance network includes more than just the federal USDA component. State and local governments, for-profit businesses, non-profit organizations, universities, and other entities expand the capacity to deliver technical assistance beyond the federal government's abilities. Locally led conservation districts are one of the largest parts of this network. Over 3,000 conservation districts, authorized by the states and administered at the county level, coordinate conservation and natural resource interests among private landowners. These districts traditionally work closely with federal employees in local and county field offices as well as with local officials to provide assistance to private landowners and managers. The conservation district network adds capacity to the federal network providing technical assistance. The 2002 farm bill allowed producers to retain approved third party providers for technical assistance as a way of maintaining and expanding the technical capacity for agricultural conservation programs. NRCS refers to these individuals as technical service providers (TSPs). NRCS and local conservation districts traditionally provide technical services, and continue to do so; however, the addition of TSPs allows USDA to reimburse producers for technical assistance provided by a certified third party. TSPs may be individuals, entities, or public agencies. The majority of TSPs are from the private sector (average of 57% between FY2004 and FY2010). The majority of non-private TSPs are state agencies, non-governmental organizations, and soil and water conservation districts. As of February 2010, 1,141 TSPs were certified by NRCS nationwide. NRCS sets the qualifications for approving individuals and entities to provide specified types of technical assistance. Once a TSP registers with NRCS (through their TechReg website), it must become certified to perform specific technical services. To become certified, a TSP must meet a set of criteria and complete any associated training required. TSPs must recertify with NRCS every three years. Currently, TSPs may be certified in 42 categories. Between FY2004 and FY2010, nutrient management (including various areas of focus) is the largest area of certification. This is due in part to the high demand placed on nutrient management plans and handling animal manure in accordance with the Clean Water Act and EPA's rules for Confined Animal Feeding Operations (CAFO), as well as state-level requirements. Pest management is the second-largest area of certification. TSPs perform a number of technical services, including conservation planning and design, layout, installation, and the monitoring of approved conservation practices. Table 1 includes the three most common conservation practices planned and applied in FY2010 by TSPs based on the total number (without regard to unit of measure), total acres, and total feet. Technical assistance can be provided by TSPs through two primary means: (1) individual producers contract individually with certified TSPs; or (2) NRCS enters into cooperative agreements directly with certified TSPs. If a producer wants to use a TSP instead of NRCS for technical service, it must be established as part of the producer's conservation program contract with NRCS (otherwise the producer might not get reimbursed for the service). The producer would then select a TSP from the approved NRCS list, hire the TSP, and pay the TSP for the technical service provided. The producer would then be reimbursed by NRCS for the technical services. NRCS may not reimburse TSPs for more than it would cost NRCS to perform the same task(s). Funding limitations are specific for each task TSPs are permitted to perform and can vary by county. These limitations are referred to as technical service payment rates (formerly referred to as "not-to-exceed rates"). The TSP can be paid directly if the producer requests a payment assignment for the payment to be made directly to the TSP. NRCS may also enter into cooperative agreements directly with certified TSPs. This is usually done through departmental acquisition of their services through contracts, cooperative agreements, and contribution agreements. The 2008 farm bill authorizes TSPs to be funded through any conservation program under section 1241 of the 1985 farm bill and the Agricultural Management Assistance (AMA) program. EQIP continues to be the primary program using the services of TSPs, accounting for 51% of all TSP funds since FY2003. On average, $46 million is obligated annually for TSPs ( Table 2 ). This is a relatively small portion of the overall level of technical assistance provided annually by USDA. Traditionally, technical assistance provides the planning, design, and technical consultation functions, while financial assistance offers monetary support for implementation capacity. Section 2502 of the 2008 farm bill amends section 1240A(5)(B) of the 1985 farm bill by defining certain conservation activities involving the development of plans as an eligible practice under EQIP. This allows NRCS to pay for conservation planning—previously funded as technical assistance—through financial assistance. Section 2502 specifically includes comprehensive nutrient management planning (CNMP) and allows USDA to include other plans as necessary. NRCS refers to these plans as conservation activity plans (CAPs) and has expanded the list of eligible CAPs to include: comprehensive nutrient management (CNMP); comprehensive air quality management; fish and wildlife management; forest management; grazing management; integrated pest management; drainage water management; irrigation water management; energy management; conservation plans supporting organic transition; transition from irrigation to dryland; and pollinators habitat. CAPs are completed as part of an EQIP contract. EQIP allows program payments to be made for up to 75% of the estimated incurred cost of practice implementation, which for a CAP would be the development of a conservation plan. CAPs must meet NRCS standards and requirements and are performed by a certified TSP. EQIP payments are made to the program participant who then reimburses the TSP for the CAP. NRCS continues to provide the majority of technical assistance for EQIP, including development of plans eligible under CAPs; however, EQIP has historically served as the primary program for funding TSP activities. The use of CAPs funded with financial assistance dollars has increased EQIP's role for TSP service. In FY2010, forest management plans and CNMPs received the highest percentage of participation with 41% and 45% respectively. Another avenue for expanding the technical assistance capacity is through a newly authorized program, Agriculture Conservation Experienced Services (ACES). Section 2710 of the 2008 farm bill authorized the use of technical services provided by individuals 55 and older and not employed by the USDA or a state agriculture department. Tasks preformed under ACES must be technical and not administrative. They must also support current conservation program activities authorized in the 2008 farm bill, with the exception of CRP, WRP, GRP, and CSP. According to NRCS, approximately $7.6 million was obligated for the ACES program in FY2009. Understanding how conservation technical assistance works and is funded addresses only a portion of the misconceptions and questions about this topic. As Congress assesses the current need and demand for technical assistance, many questions remain. A more recent means of addressing the capacity to meet technical assistance demand is through third party providers. The confusion surrounding two terms— technical assistance and administrative support —is also discussed, as well as the current impact of congressional directives on technical assistance and the Administration's technical assistance streamlining initiative. Though these two terms, technical assistance and administrative support , are generally considered separate, in the case of funding technical assistance the terms do not appear mutually exclusive and are occasionally used interchangeably. A debate still continues between USDA and Congress over whether funding provided for technical assistance is preferable to providing funding for salaries and expenses. Within Congress and USDA there are different interpretations of the two terms. USDA/NRCS tends to favor the term technical assistance, while Congress is divided on the issue. Some observers claim that both terms would appear to provide the same service with different titles. The long-standing lack of definition for technical assistance heightened the confusion between technical assistance and administrative support. Following the amendment in the 2008 farm bill, some clarity was reached; however, the debate continues. The 2008 farm bill amendment includes many of the terms associated with administrative support, such as "technical infrastructure, including activities, processes, tools, and agency functions needed to support delivery of technical services." The definition stops short of dividing technical assistance from what some consider administrative support, and much of the debate focuses less on defining technical assistance and more on who should be performing it. Few seem to question the merits of providing technical assistance for agricultural conservation. Many consider ready access to science-based conservation knowledge to be one of the strengths of American agriculture. Much of the debate surrounding technical assistance has shifted to defining the different aspects of administrative support and who (meaning which agency within USDA) should be providing the support. This debate appears to have grown out of the 2002 farm bill, which brought an increase in funding for conservation program financial assistance. Also following the 2002 farm bill, USDA shifted full program administration for many conservation programs to NRCS, including contract administration, a task previously performed by FSA. Because Congress delegates most farm bill programs to the Secretary, not individual agencies, this was an administrative decision regarding the division of labor. Some have testified before Congress that program administration for conservation programs should be shifted back to FSA, citing FSA's long-standing experience processing applications, maintaining records, and making payments to producers for commodity programs as the basis for this change. This point could be countered with evidence about FSA's issues with improper payments and antiquated computing system. Those within the conservation community seem to favor NRCS as the lead for program administration and highlight some of the strides made by the agency since 2002. Despite the advances, NRCS also has had its share of financial issues highlighted in recent financial audits. In January 2009, NRCS responded to concerns about the agency's ability to administer programs by formally initiating the Conservation Delivery Streamlining Initiative. The agency recognizes that its expanded role following the 2002 farm bill led to administration challenges. According to NRCS, delivering both technical and financial assistance programs through one agency (NRCS) simplified program participation for customers and centralized the delivery of most USDA conservation programs. Despite this possible efficiency gain, the development of tools and cumbersome processes overburdened the field technical staff, leaving little time for on-site planning and technical assistance. NRCS reports that field conservationists often spend as little as 20%-35% of their time in the field working with customers. The purpose of the initiative is to define and implement a more effective, efficient, and sustainable business model for delivering conservation assistance. Three overarching objectives were identified for this effort: (1) simplify conservation delivery (for both producers and staff); (2) streamline business processes; (3) ensure science-based assistance (technically sound products and services). In conjunction with the agency-wide initiative, NRCS also reviewed its implementation of the TSP program, which began in the winter of 2003. By October 2004, over 2,100 entities (individuals and businesses) were certified TSPs. In 2009, the number of active TSP entities had fallen to below 1,200. Anecdotal information suggested that TSPs had become frustrated with NRCS and the TSP program. After extensive review, NRCS narrowed program concerns down to six primary areas: registration and certification; training; acquisition of services; payment rates for producers and direct payments to TSPs; quality assurance; and business tools. Most comments centered around regulatory "hoops" required for registration and certification, such as accessing USDA's computer system, security requirements, and training. NRCS points to many of these requirements as being statutory (e.g., confidentiality concerns), governing the relationship between the federal government and the private sector. NRCS is proceeding with streamlining the program to address the identified concerns and is attempting to simplify its TSP business processes where possible. The level of funding that is congressionally directed through conference report and bill language in the annual appropriations act has decreased in recent years. The decline came after reaching a peak in FY2006, when a year-long continuing resolution in FY2007 did not include earmarks ( Figure 3 ). Also in 2007, the House and Senate established new earmark transparency procedures for their respective chambers, which could also account for the decline. As demand for technical assistance continues to grow, the role of congressionally directed funding could place additional strain on the current capacity to deliver technical assistance if earmarks return to historical levels. What impact these directives have on this capacity remains to be seen. Virtually all of the directed funding in agricultural conservation programs is for discretionary programs. These congressional directives can be divided into three categories. The first type is when congressional language dictates the specific amount of technical assistance funding and for what purpose. For example, in FY2010 the manager's report directed technical assistance funding for the NRCS plant materials center in Hawaii. A second type is similar to the first, but it directs financial assistance funding to specific projects. These directives are seen more in the watershed programs. For example, in FY2010, congressional language directed over $5.5 million in Watershed and Flood Prevention Operations program funding to specific watershed projects located in West Virginia. A third type is what the Administration calls "pass-through" funding, in which the agency is directed to enter into agreements with specific external entities (ranging from non-profits to state or local governments) for congressionally specified amounts. These funds are not used for technical assistance provided by NRCS and are therefore passed through directly to the external entity. In FY2010, "pass-through" agreements were directed in Conservation Operations program funding for over $14 million. Congressional directives direct most funding within the Watershed Operations programs (P.L. 78-534 and P.L. 83-566). In FY2010, approximately 74% of appropriations funding (both financial and technical assistance) for these programs was directed by Congress to specific projects. In FY2009, congressional directives for Watershed Operations projects peaked at 97% of appropriated funding. Conservation Operations (CO) had seen an increase in congressional directives between FY2001 and FY2006, but they have leveled off in recent years (see Figure 3 ). CO contains the largest number of pass-through directives and the highest level of funding directed. While recent years are below the highest level of directives in FY2006 ($127 million), the resulting reduction in available technical assistance funding creates concerns as the demand for technical assistance continues to grow (see Figure 4 ). Technical assistance varies in its activity, implementation, and funding across conservation programs. When conservation programs received a large increase in funding in the 2002 farm bill, some questioned whether the traditional technical assistance infrastructure could meet the increase in demand that would accompany additional conservation funding. Now, as the 2008 farm bill is implemented and the 2012 farm bill is debated, an evaluation of this capacity will likely influence how technical assistance will look in the future. Capacity refers to the ability to serve the needs of customers in a timely manner. In the case of technical assistance, customers include private landowners, tribes, state and local governments, and cooperative partners. Multiple factors contribute to the capacity to provide technical assistance: human capital, technology, mission goals, and funding. Additional questions about this capacity are raised during this discussion, and though the availability of data somewhat limits answering these questions, they are intended to shape and inform future discussions on technical assistance. Currently NRCS employs roughly 11,800 full- and part-time employees. Most employees—approximately 11,400—are located in state, area, county, or regional technology service offices. According to NRCS, 82% of its offices directly provide financial and technical assistance service. This network of local field and state offices has been used to provide conservation technical assistance for decades. A traditional approach to expanding the capacity to provide technical assistance had been to draw on the capabilities of partnering organizations, such as local soil and water conservation districts. Increasingly private, for-profit firms are playing an active role in providing technical assistance. Other organizations at state levels, such as state departments of natural resources and wildlife, water districts, and environmental and land management interests contribute to the overall network of technical assistance providers. Section 2701 of the 2002 farm bill ( P.L. 107-171 ) expanded the human capital capacity that provides conservation technical assistance with the authorization of third party providers, referred to by NRCS as technical service providers (TSPs), described earlier. Whether the program may expand in the future will likely be important in any discussion about how much additional capacity might be available. In 1985, SCS employed roughly 13,900 full- and part-time employees. In 2009, its successor agency, NRCS, had approximately 11,800 full- and part-time employees. Considering the advances in technology, expansion of mission, and increases in funding, if mandatory conservation programs were fully funded and provided all authorized financial assistance, would there be enough technical assistance capacity currently available to implement them properly? Certified third party providers have expanded the pool of available technical assistance to private landowners. How much additional capacity has been provided by third parties and how much additional capacity could they provide? What additional technical services could be provided? In 2004, over 2,100 entities were certified as TSPs. In 2009, the number had fallen below 1,200. What has caused this reduction in TSP participation and is this an issue that Congress should address? If increased capacity is sought using TSPs, related issues are the location and availability of providers. In some cases, third party providers are not available locally. What are the practical limits of the TSP option given the potential limits on availability? Is the cost of certification too high, causing technical providers to not apply, or is the reimbursable fee schedule too low, discouraging potential TSPs from participating? The ACES program is intended to support the technical assistance capacity for farm bill conservation programs by utilizing qualified retired individuals. With many technical assistance organizations, both public and private, experiencing high levels of retirement, does the ACES program provide adequate technical capacity to fill the gap created by retirement? How has the loss of technical knowledge due to retirement affected the capacity to provide technical assistance, and is this trend expected to continue? Are there other replenishing mechanisms to help fill the need for technical personnel? With a growing demand on resources and time, organizations look to more efficient ways to deliver service by streamlining and reorganizing business processes. Historically, local conservation districts provided a local entity through which conservation technical assistance could be delivered. Different landscapes and limited resources do not allow for multiple specialists to be on hand for each conservation plan or technical consultation. As local soil conservationists (employees of NRCS) were placed throughout the country, usually at the county level in conservation district offices, materials and handbooks were developed to provide guidance across disciplines. This guidance, known as the field office technical guide, contains technical information about the conservation of soil, water, air, and related plant and animal resources tailored to each county. These guides represent the collective knowledge of technical assistance. Specialists in areas such as engineering, agronomy, and rangeland management are available at the state or regional level for specific consultation. The field office technical guide remains the primary source of localized information on conservation technical assistance and is available online for every county. In addition to the field office technical guide, technology has helped provide technical assistance to more producers in many other ways. How technological advances get put into practice on lands is another function of technical assistance. Technology transfer and education have historically been a service of NRCS, local conservation districts, and partnering organizations, most notably USDA Extension Service. NRCS has developed a Science and Technology Consortium to acquire, develop, and transfer technology. The consortium, consisting of NRCS technology specialists and cooperating scientists, communicates within NRCS and with external partners, including colleges, universities, non-government organizations, and the private sector to transfer technological advances into practical applications. The number of producer organizations with interest in conservation technology is growing, with many groups organizing relevant management practice and applications. The Iowa Soybean Association, for example, has a program called the On-Farm Network that assists farmers in organizing and conducting on-farm research about nutrient use in order to document changes in the efficiency of nitrogen use on crops. The goal is to reduce nitrogen applications for both positive environmental effects and reduced input costs. The beneficial management practices resulting from this on-farm research are then presented to other association members. Conservation Innovation Grants (CIG) within EQIP awards grants to stimulate innovative approaches in environmental enhancement and protection, in conjunction with agricultural production. Following the completion of these grants, the results are intended to provide a return on federal investment, as findings are expected to be incorporated into the NRCS consortium of technical tools available. Technical assistance historically has been based on science-based principles and application of proven techniques. Conservation Innovation Grants have drawn support since the initial awards in 2004. How has the technology transferred from these individual projects been incorporated into the national technical assistance toolbox? Has this helped or hindered producer application of new technology through federal programs? Producer organizations have had mixed success with their own conservation technology initiatives. What, if any, solutions are available to promote or expand the private sector interest in supporting technology transfer within existing producer organizations? Over $300 million was provided to upgrade existing technology and streamline the Commodity Credit Corporation's (CCC's) program delivery business processes. How will this effort improve the delivery of conservation programs? How will this system interact with the NRCS program delivery system? Is there overlap or duplication with the NRCS streamlining initiative? NRCS, formerly SCS, was authorized in the Soil Conservation and Domestic Allotment Act of 1935 (P.L. 74-46, 49 Stat. 163). This legislation gave SCS responsibility for soil erosion prevention, surveys, and investigations. The 2008 farm bill amended the 1935 act to include a broader definition of technical assistance. NRCS continues to address new and expanding resource concerns that require additional technical capacity. Questions have been raised about whether these expanded responsibilities should be concentrated or other responsibilities should be removed. One suggested solution to expanding technical capabilities and meeting the need of additional technical assistance is to reduce or remove the administrative support functions associated with conservation programs. For this suggestion, administrative functions are limited to distributing financial assistance in contractual agreements to producers. Some have suggested that these functions be moved to FSA or competitively contracted to the private sector. Reception to this suggestion varies. In January 2009, NRCS formally initiated the Conservation Delivery Streamlining Initiative. The purpose of this initiative is to define and implement a more effective, efficient, and sustainable business model for delivering conservation assistance. No cost saving estimates were provided based on this initiative; however, the agency defines success as having technical field staffs spend as much as 75% of their time in the field with customers, and over 80% of the time/tasks currently spent by technical staff on administrative or clerical financial assistance tasks eliminated, automated, or reassigned to other staff. As additional resource concerns require additional technical assistance, will the technical capacity need to be expanded as well? New resource concerns such as nutrient management, animal waste, air quality, climate change, and energy are placing increased demands on technical assistance. In what capacity should the current technical assistance system (federal capacity, partnerships, technical service providers) expand to meet this need? Upon enactment of the Soil and Water Resources Conservation Act (RCA, P.L. 95-192 ) in 1977, USDA was directed to develop a national soil and water conservation program and to periodically assess the condition of the nation's soil, water, and other natural resources. Under RCA, reports guide the department's soil and water conservation priorities. Authority under the RCA was extended in the 2008 farm bill to 2018. Has the required reporting mechanism of RCA better organized USDA's natural resources activities? Would additional reporting measures for technical assistance be helpful for Congress, and if so, should they be tied to changes in spending on technical assistance? Discussion continues about administrative support tasks and their impact on technical assistance. Congress has historically delegated responsibility for the division of labor and tasks between agencies to the Secretary of Agriculture. Should Congress define this role instead of the Secretary? What benefits are experienced by producers having one agency fully control conservation programs? Would a reduced administrative burden increase the efficiency of technical assistance? Should Congress authorize separate accounts to fund both technical assistance and administrative support, or should the two be combined and titled differently? In 2009, NRCS initiated a conservation delivery streamlining initiative designed to implement a more effective and efficient method of delivering technical assistance. What actions is NRCS undertaking as part of its streamlining initiative to simplify conservation delivery? Are there particular areas or regions that have an overly complex system of delivering conservation? How will this system interact with FSA's program delivery system? Is there overlap or duplication with FSA's modernization project? Congress continues to discuss funding for technical assistance. Several interests would like to see funding increased; however, given current federal budget constraints this action seems unlikely in future appropriation acts. Discretionary funding for technical assistance still provides the majority of funding for conservation technical assistance; however, funding for farm bill programs continues to increase, closing the gap between the two sources. Section 2502 of the 2008 farm bill allows certain technical assistance activities involving the development of plans to be considered an eligible practice under EQIP and paid for with financial assistance. These Conservation Activity Plans, or CAPs, are now performed primarily by TSPs. Have CAPs performed by TSPs freed up NRCS staff time for other technical assistance activities? Do the additional administrative measures to write CAP contracts offset time savings devoted to technical assistance? Does the expansion of financial assistance funding for technical assistance contracts reduce the backlog for technical assistance? If CAPs prove successful, could the contracting of technical assistance work using financial assistance funding be extended into other areas or programs? What other areas would seem most appropriate? Technical assistance is increasingly being offered for a fee in the private sector. The FY2011 President's budget proposal included proposed legislation to charge a user fee for conservation plans What technical assistance costs, if any, are producers willing to cover financially without government compensation? Are more producers willing to cover these costs to meet regulation requirements (nutrient management) or to bypass a slow response and possible limited resources on the part of the federal government? The debate regarding technical assistance funding for conservation under the Section 11 cap (15 U.S.C. 714i) in the Commodity Credit Corporation Charter Act continues. The ARRA provision (sec. 103) that provides technical assistance under title II to be funded through CCC expired September 30, 2010. Should this authority be extended? Will the limitations of the cap continue to affect other agencies funded through the CCC? If additional legislative changes are made to the Section 11 cap, what effect would this have on conservation technical assistance? Appendix A. Historical Context The complexities of technical assistance emerged through incremental policy changes over time. When the federal agriculture conservation effort was limited primarily to soil erosion control and water supply, technical assistance was limited in the number of resource concerns addressed as well as funding. Technical assistance has expanded in both scope and funding recently, and has been brought to the forefront of the debate for both implementation and funding levels. How this process evolved is discussed below. Federal Conservation Assistance Not until the 1930s and the occurrence of the Dust Bowl did soil conservation become a national priority. On August 25, 1933, through the use of public works program funding, the Department of the Interior (DOI) created the Soil Erosion Service. In March 1935, the President ordered Soil Erosion Service moved to the USDA. The severity of soil erosion at the time helped gain congressional support for the passage of the Soil Conservation and Domestic Allotment Act (P.L. 74-46, 49 Stat. 163) in April 1935, establishing the Soil Conservation Service (SCS) within the USDA. The SCS was established for the purpose of providing "permanently for the control and prevention of soil erosion and thereby to preserve natural resources, control floods, prevent impairment of reservoirs, and maintain the navigability of rivers and harbors, protect public health, public lands and relieve unemployment." Following the enactment of the 1935 legislation creating the SCS, most of the services provided to landowners were through demonstration projects. Agreements (usually five years in length) were entered into with landowners who agreed to contribute access to their land, labor, and some resources in exchange for following a conservation plan. The SCS provided technical assistance, materials, labor (using the Civilian Conservation Corps and Emergency Conservation Work camps). The overlapping mission with other federal and state agencies (the Extension Service and land grant universities in particular) and limited landowner buy-in forced the USDA to look toward more localized entities to carry out these demonstrations. This brought about the establishment of the soil conservation districts. Model state legislation to create and operate districts was presented to state governors in February 1937 by President Franklin D. Roosevelt, who encouraged adoption. This level of interest directly from the President highlights the significant level of political support for soil conservation during this time. In 1937, twenty-two states passed legislation creating districts. Following the creation of these districts, SCS increasingly concentrated on providing technical assistance to farmers through these new local entities. The current role of Conservation Districts is discussed in the " Outlook for Technical Assistance " section, above. Expansion of Technical Assistance The SCS mission has expanded beyond soil erosion and conservation assistance through multiple legislative and administrative mandates. The focus of conservation technical assistance has shifted with changes in national priorities. Technical assistance has fluctuated between addressing a limited number of resources and most or all natural resources on agricultural lands. Small Watershed Programs (P.L. 83-566) The addition of water resources as a technical assistance responsibility added to the scope of SCS functions. The enactment of the Flood Control Act of 1936 (P.L. 74-738) authorized SCS to measure, study, and plan run-off and erosion prevention activities in selected watersheds through technical assistance. The Flood Control Act of 1944 (P.L. 78-534) and the Watershed Protection and Flood Prevention Act of 1954 (P.L. 83-566) expanded the watershed program to include not only the traditional planning function created in the 1936 act but also added financial assistance funding for projects. These projects involved a holistic approach to watershed planning and included a multi-disciplinary team consisting of a wide range of technical experts (e.g., geologists, hydrologists, engineers, economists, etc.). SCS provided this technical assistance and federal support through a coordination role. Local communities were expected to provide land rights and maintenance responsibility upon project completion. Projects were intended to treat the whole watershed, thereby providing benefits beyond flood control and prevention, including drainage, recreation, municipal and industrial water supply, fish and wildlife enhancement, irrigation, and water quality protection. Compliance Provisions in the 1985 farm bill ( P.L. 99-198 ) dramatically changed technical assistance functions and responsibilities. It authorized conservation compliance (commonly referred to as sodbuster) and wetlands compliance (commonly referred to as swampbuster) regulations, transforming many technical assistance functions that SCS historically performed by requiring enforcement of conservation under certain circumstances. Sodbuster prohibits participation in numerous specified USDA programs when annually tilled commodity crops are produced on highly erodible land (HEL) without adequate erosion protection. Swampbuster provisions prohibit participation in numerous specified USDA programs when annually tilled commodity crops are produced, or land is drained to make production possible, on certified wetlands. SCS had, and NRCS (successor to SCS) continues to have, primary responsibility for providing technical assistance for determining whether land should be classified as highly erodible or a wetland. This task of certifying and determining cropland across the country required time and shifted resources away from the whole-farm planning approach to a narrower focus on soil erosion. Whereas the conservation technical assistance movement had begun with the Dust Bowl and soil erosion, over time it had broadened and expanded to include other resource concerns. With the emergence of conservation compliance much of the focus had moved back to an old issue, soil erosion (and a new one, wetlands). New Name, Expanded Responsibilities The 1990s brought about a new trend in technical assistance, linking financial incentives to technical assistance in many new ways. Traditionally, technical assistance provides the planning, design, and technical consultation functions, while financial assistance offers monetary support for implementation capacity. In 1994, national priorities changed and the Soil Conservation Service was reorganized by Congress as part of an overall reorganization of USDA. Its name was changed to reflect its expanded responsibilities; the Natural Resources Conservation Service (NRCS). Also, NRCS assumed additional responsibilities for administration and leadership of some conservation programs from FSA. One such program was the Wetlands Reserve Program (WRP), which expanded technical assistance responsibility into easement management. Authorized in the 1990 farm bill, the WRP purchases long-term or permanent easements and funds restoration on wetlands. Following the 1996 farm bill, NRCS became responsible for administering the Environmental Quality Incentives Program (EQIP), a combination of several financial assistance programs. Following the 2002 farm bill, NRCS became responsible for not only technical assistance and the administration of many conservation programs, but also for making payments on contractual agreements. Along with this additional increase in responsibility and an expanding list of natural resource concerns came a significant increase in funding authority. Appendix B. Reimbursements between NRCS & FSA Two conservation programs directly involve both FSA and NRCS—the Conservation Reserve Program (CRP) and the Grassland Reserve Program (GRP). To better define each agency's role in program implementation, an MOA or MOU is signed, usually following each farm bill. The memorandum is typically valid until the program expires, there is congressional action on the program, or there is a major administrative change to the program. The following outlines each agency's role in implementing CRP and GRP as defined by the respective MOA and MOU. Conservation Reserve Program (CRP) In the case of CRP, FSA retains leadership control over the program and has responsibility for overall implementation. These activities include but are not limited to program policy development, signup establishment, application approval, contract administration, county rate determinations, and program payments. NRCS provides technical assistance, either directly or through TSPs, and ensures that all work is performed in accordance with technical standards. FSA reimburses NRCS on a monthly basis based on the NRCS cost of program model (described above) and the amount of work performed. These costs include activities related to new general and continuous enrollments, re-enrollments and extensions for general signup, and re-enrollments for continuous signup. According to the MOA, activities may include determining program eligibility for continuous CRP, Conservation Reserve Enhancement Program (CREP), and the Farmable Wetland Program (FWP); conservation planning; conservation practice design system implementation and certification of 10% of all practice; or providing policy and program support. During FY2009, NRCS was reimbursed for approximately $56 million for technical assistance provided to CRP activities. Changes in the 2008 farm bill to FWP are expected to increase technical assistance costs because constructed wetlands are considerably more expensive than other conservation practices. This, in addition to the general signup (number 39) in FY2010 and another possible signup in FY2011, could increase the amount of technical assistance from NRCS and increase reimbursements from FSA. Grassland Reserve Program (GRP) The Grassland Reserve Program (GRP) is different from CRP in that functions of the program are not split along financial and technical assistance lines. FSA has lead responsibility for rental contract administration, and NRCS has lead responsibility on technical assistance issues and easement administration. An MOU is signed by both NRCS and FSA describing these functions in detail. Generally, responsibilities include FSA —accepting applications; issuing payments; assessing penalties and liquidated damages as applicable; accepting, modifying, and terminating rental contracts; landowner eligibility determinations on easement and rental contracts; acreage determination on rental contracts; maintaining GRP records and reports and enforcement of violations on rental contracts. NRCS —accepting applications; providing technical assistance to the participant; evaluating and ranking applications for rental contracts and easements; ensuring conservation treatment is in accordance to program requirements; ranking and selecting applications for funding; providing payment documentation to FSA; and establishing quality assurance and control procedures to monitor land enrolled in easements or rental contracts. GRP operates under a continuous sign up and both FSA and NRCS develop the state ranking criteria to select eligible projects. NRCS supplies the technical assistance for developing a grazing management plan and any technical assistance following the producer signing a contract or easement. Under the MOU, NRCS reimburses FSA for administrative costs incurred with implementing GRP. These costs are based on historic workload data and the number of applications and contracts provided by FSA.
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Agricultural conservation technical assistance has taken on a number of dimensions over its long and continuously evolving history. In the most general terms, technical assistance is a service assisting landowners and agricultural producers in conserving natural resources. Addressing natural resource concerns across different landscapes frequently requires multiple disciplines working together to provide a collective pool of conservation knowledge. The current federal framework for applying this conservation knowledge lies with the U.S. Department of Agriculture (USDA). Several agencies within USDA support conservation technical assistance, however, the Natural Resources Conservation Service (NRCS) is the federal lead. NRCS provides conservation technical assistance to producers through various programs using field staff located across the country. Some level of technical assistance is required for participation in all of USDA's conservation programs; however, there is no single overarching description of technical assistance for all programs. Similarly, there is no single method of providing technical assistance. The full scope of technical assistance is best understood by examining how it operates within each conservation program. Some see the lack of technical assistance as the foremost barrier to adoption of conservation practices and enrollment in federal conservation programs. While most technical assistance work is funded through annually appropriated programs, an increasing amount is funded through mandatory programs authorized through omnibus, multi-year, farm bills. The seemingly complex manner in which USDA implements and pays for technical assistance through its conservation programs has created general confusion on the subject. Congress continues to take interest in conservation technical assistance given its complexities and impact on the distribution of conservation financial assistance to producers. Technical assistance has been discussed extensively at congressional hearings on agriculture conservation. Producers, ranchers, environmentalists, and wildlife advocates continue to raise the issue of technical assistance and the need or desire for additional support. The question of which federal agency should be involved with administering technical assistance and how this relates to the administration of conservation programs continues to be of interest. The expanding use of non-federal, third party providers of technical assistance is also of interest, especially when addressing the demand for additional capacity without an expansion of the federal workforce. A broader perspective on technical assistance raises questions about the capacity of the current technical assistance structure as well as future limitations. Historically, technical assistance has evolved in the range of topics addressed; it currently addresses a wide variety of natural resource concerns. Recent farm bills have repeatedly added natural resource concerns to the conservation mission, leaving many to question whether the current technical assistance delivery system has retained the capacity to function effectively. Demands on available capital (both human and financial), combined with additional questions for technological capacity and an ever-expanding list of natural resource concerns, have generated an ongoing discussion in the current congressional debate.
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This report provides an overview of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) budget and operations. The report chronicles congressional action on the FY2011 Commerce, Justice, Science (CJS), and Related Agencies Appropriations bills, as well as an FY2010 supplemental appropriations bill, that have included funding for ATF. On April 14, 2011, Congress passed the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( H.R. 1473 ; P.L. 112-10 ). Under this act, for FY2011 Congress has funded the ATF salaries and expenses account at slightly below its FY2010 enacted level of funding (reduced by two-tenths of a percent). Hence, ATF's FY2011 appropriation is $1.113 billion. In addition, during consideration of a Full-Year Continuing Appropriations Act, 2011 ( H.R. 1 ) on February 19, 2011, the House adopted an amendment that would have prohibited funds provided under that act from being used to require federally licensed gun dealers in the four Southwest border states to submit multiple rifle or shotgun sales reports. The House went on to pass H.R. 1 , but the Senate rejected this bill on March 9, 2011, for budgetary considerations that went well beyond concerns about this policy rider. Nevertheless, Congress did not include a similar rider as part of P.L. 112-10 . Besides ATF's multiple rifle sales reporting proposal, another emerging issue related to the ATF budget and operations includes the agency's conduct of a Phoenix, AZ-based investigation known as "Operation Fast and Furious." Located in DOJ, the ATF is the lead federal law enforcement agency charged with administering and enforcing federal laws related to the manufacture, importation, and distribution of firearms and explosives. As part of the Homeland Security Act, Congress transferred ATF's enforcement and regulatory functions for firearms and explosives to DOJ from the Department of the Treasury (Treasury), adding "explosives" to ATF's title. ATF is also responsible for investigating arson cases with a federal nexus, as well as criminal violations of federal laws governing the manufacture, importation, and distribution of alcohol and tobacco. The regulatory aspects of those alcohol and tobacco laws are the domain of the Tax and Trade Bureau (TTB), which was established at Treasury following ATF's transfer to DOJ. As a law enforcement agency within DOJ, ATF's first priority is preventing terrorist attacks within the United States. ATF is responsible for countering the illegal use and trafficking of firearms and explosives, and the criminal diversion of alcohol and tobacco products as an illegal source of funding for terrorist activities. In criminal investigations, ATF agents have reportedly uncovered foreign terrorists and their supporters bootlegging cigarettes as part of larger terrorist-financing operations in the United States. With those responsibilities, ATF special agents are partners on DOJ's Joint Terrorism Task Forces. As shown below, however, the lion's share of ATF's resources are allocated to its firearms compliance and investigations program. While the ATF periodically checks the records of federally licensed gun dealers, the major focus of the firearms program is the reduction of firearms-related violence. In the 10-year period from FY2001 through FY2010, Congress increased direct appropriations for the ATF by 50.2%, from $771.0 million to $1.158 billion. Moreover, over three fiscal years, FY2008 through FY2010, Congress provided ATF with about $86.5 million in program increases to address firearms trafficking, or the diversion of firearms from legal to illegal markets. Most of this funding has been dedicated to ATF efforts to reduce firearms trafficking from the United States to Mexico. To these ends, under the Mérida Initiative ATF released a Spanish-language version of its firearms trace request software (e-Trace 4.0) to Mexico, Guatemala, and Costa Rica and established a U.S.-Mexico ballistic evidence exchange capability under the National Integrated Ballistic Imaging Network (NIBIN) program. For FY2010, Congress also provided ATF with nearly $30 million for the construction of a National Center for Explosives Training and Research (NCETR). In the 110 th Congress, the House passed a bill ( H.R. 6028 ) that would have authorized increasing ATF appropriations over three years, for FY2008 through FY2010, by nearly $74 million to address Southwest border gun trafficking. As a DOJ bureau, the ATF authorization of appropriations expired for FY2010. Previously, Congress provided annual appropriations authorizations, for FY2006 through FY2009, in the Department of Justice Authorization Act of 2005 ( P.L. 109-162 ) (see Appendix ). In the 111 th Congress, no action was taken on bills to reauthorize or increase ATF appropriations. However, the 111 th Congress granted ATF greater authority to inspect the businesses and records of "cigarette deliverers" in the Prevent All Cigarette Trafficking Act ( P.L. 111-154 ). For oversight purposes, it is also notable that in the fall of 2009 the DOJ Office of Inspector General (OIG) released three reports on ATF operations. The first examined Project Gunrunner, an ATF initiative to reduce illegal gun trafficking from the United States to Mexico. The second examined ATF's efforts to investigate contraband cigarette trafficking. The third examined ATF's concurrent jurisdiction with the Federal Bureau of Investigation (FBI) for explosives-related investigations. In November 2010, moreover, the OIG released another review of Project Gunrunner, recommending among other things that ATF ought to work with DOJ to explore options to require reporting of multiple long gun sales from federally licensed gun dealers in the four Southwest border states. Congress appropriates funding annually for ATF in a salaries and expenses account and, for some, but not all years, in a construction account. Both accounts are given a line item in the CJS appropriations bill. With regard to salaries and expenses, the ATF subdivides this account into three budget decision units: firearms compliance and investigations, arson and explosives investigations, and alcohol and tobacco diversion. Although Congress does not appropriate monies for the ATF (or any other DOJ agency) by decision unit, the appropriators often address whether program increases requested specifically by the Administration are to be provided in report language and more rarely in bill language for the salaries and expenses account itself. As a consequence, the amounts requested for decision units are binding in the sense that the appropriators are aware of the increases that were provided in the annual bureau appropriation and how those increases would affect the decision unit totals. If funding is shifted from one decision unit to another, statutory budget reprogramming requirements are usually triggered, under which DOJ and its agencies are required to notify the appropriations committees about such shifts. ATF budget decision units are described in greater detail below. In February 2010, DOJ released the ATF Congressional Budget Submission, Fiscal Year 2011 . The FY2011 budget request included $1.163 billion for ATF. At the time of the budget request, this amount represented an increase of $42.2 million, or 3.8%, compared to the FY2010-enacted appropriation of $1.121 billion. Figure 1 shows proposed budget decision unit allocations accompanying the FY2011 budget request. Of these programs, the firearms compliance and investigations decision unit was to be allocated the lion's share, 72%, of appropriated funding. The arson and explosives investigations decision unit and the alcohol and tobacco diversion decision unit were to be allocated 26% and 2%, respectively, of the requested appropriation. As Table 1 shows, the FY2010 appropriation of $1.121 billion included $1.115 billion for salaries and expenses and $6 million for construction. The Administration, however, requested no funding for ATF construction for FY2011. Compared to the $1.115 billion Congress initially appropriated for ATF salaries and expenses for FY2010, the Administration's FY2011 budget request proposed a net increase of $48.2 million and 86 full-time equivalent (FTE) positions for ATF. This amount included $35.2 million in base adjustments (less certain offsets and other reductions) and 46 FTE positions; $11.8 million and 37 FTE positions for Project Gunrunner; and and $1.2 million and 3 FTE positions for Emergency Support Function #13. The $13.0 million in proposed program increases are broken out by budget decision unit in Table 1 in the "FY2011 Increases" column. The $1.2 million for Emergency Support Function #13 is spread across all three budget decision units: $854,000 for firearms, $320,000 for arson and explosives, and $24,000 for alcohol and tobacco. The $35.2 million in base adjustments and other offsets is the difference between the "FY2010 Enacted" and "FY2011 Base" columns. In March 2010, the House CJS subcommittee held a hearing on the ATF FY2011 budget submission. Members of the subcommittee raised questions about gun trafficking on the Southwest border, regulatory backlogs, violent crime impact teams, and inter-agency coordination on gang violence. On July 22, 2010, the Senate Appropriations Committee reported its 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. However, no further action was taken on this measure. Also, on June 22, 2010, the Administration requested an FY2010 supplemental appropriation of $39.1 million for ATF to increase Southwest border gun trafficking investigations. The House Appropriations Committee included this amount in the Emergency Border Security Supplemental Appropriations Act, 2010 ( H.R. 5875 ), and the House passed this measure on July 28, 2010. The Senate passed its version of H.R. 5875 (adopting the text of S. 3721 as a substitute amendment) on August 5, 2010. The Senate-passed version of H.R. 5875 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. H.R. 6080 contains identical language 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, 2010, the President signed H.R. 6080 into law ( P.L. 111-230 ). It provided ATF with an additional $37.5 million for Project Gunrunner. This supplemental brought total FY2010 appropriated funding for the ATF to $1.158 billion. In the absence of an enacted FY2011 CJS appropriations bill, the 112 th Congress passed a series of CRs, which the President signed into law ( P.L. 111-242 , P.L. 111-290 , P.L. 111-317 , P.L. 111-322 , P.L. 112-4 , P.L. 112-6 , and P.L. 112-8 ). These CRs temporarily funded most federal agencies, including ATF, at their FY2010 enacted level of funding. On April 14, 2011, Congress passed the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( H.R. 1473 ; P.L. 112-10 ). Under this act, for FY2011 Congress has funded the ATF salaries and expenses account at slightly below its FY2010 enacted level of funding (reduced by two-tenths of a percent). ATF's FY2011 appropriation is $1.113 billion. As Table 2 shows, from FY1999 to FY2010 Congress more than doubled ATF's appropriations from $541.6 million to nearly $1.158 billion. With some fluctuation, ATF staffing increased from 3,969 to 5,078 FTE positions, a 28% increase. Since its transfer to DOJ in FY2003, ATF has also reported permanent positions, in addition to FTE positions. The FY2010 appropriation under P.L. 111-117 initially funded 5,101 permanent positions, including 2,485 special agents (SAs), 834 industry operations investigators (IOIs, formerly inspectors) and investigative research specialists (IRIs), and 1,782 "other" positions. For FY2010, Congress also provided ATF with an additional 105 positions through a $35.5 million supplemental appropriation to address Southwest border gun trafficking. These positions included 77 SAs, 14 IOIs, and 14 other positions. In addition, as has been the case in recent years, 55 ATF permanent positions (54 SAs and one other position) were funded through reimbursable resources. On March 4, 2010, the House CJS Appropriations Subcommittee held a hearing on the Administration's FY2011 ATF budget request. As in past hearings, the subcommittee chair, Representative Alan Mollohan, observed that the request did not include any additional positions dedicated to regulation writers, despite a regulatory backlog. He observed that 15 of 16 ATF positions previously associated with such duties had remained at Treasury, following ATF's transfer to DOJ in January 2003. (With the exception of two positions, those positions have not been backfilled.) If ATF previously needed anywhere near 16 positions for such purposes, Representative Mollohan asked rhetorically, was not the ATF request "woefully inadequate?" ATF Deputy Director Kenneth Melson did not comment on the regulatory backlog, but conceded that the agency needed additional "regulation writers." With regard to the regulatory backlog, it is significant to note that, in most cases, ATF IOIs serve as the "subject area experts," who are usually tasked with drafting regulations. ATF's capabilities to regulate U.S. firearms and explosives commerce adequately and deter the illegal use of these commodities is undergirded by its ability to promulgate clear and concise regulations. Although most of the ATF subject area experts on alcohol and tobacco remained with the Department of Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB), ATF is still responsible for the bulk of enforcement of criminal statutes related to these commodities. Other issues raised by subcommittee members included the scope of gun trafficking on the Southwest border, the effectiveness of violent crime impact teams, and inter-agency coordination on gang violence. These issues are discussed below. ATF's firearms budget program funds activities related to administering and enforcing federal laws related to the manufacture, importation, and distribution of firearms. The principal focus of ATF's firearms-related activities, however, is the reduction of firearms-related violence. As part of this focus, the ATF has dedicated increased resources in recent years toward investigating the criminal activities of violent street gangs, ensuring that federally licensed gun dealers comply with the law, and suppressing gun trafficking. ATF's authority to regulate firearms commerce in the United States is derived generally from three statutes: (1) the National Firearms Act of 1934 (NFA), (2) the Gun Control Act of 1968 (GCA), and (3) the Arms Export Control Act of 1976. The proposed FY2011 firearms program allocation accompanying the Administration's budget request is $837.4 million, or 72% of the FY2011 budget request ($1.163 billion). The proposed allocation includes an increase of $12.7 million over base ($11.8 million for Project Gunrunner and $854 thousand for Emergency Support Function #13). As a full partner in the President's Project Safe Neighborhoods (PSN), which was initiated in FY2001, ATF has joined with DOJ attorneys and other federal law enforcement agencies, along with state, local, and tribal authorities, to investigate and prosecute offenders, with a particular focus on armed violent and career criminals. ATF also leads the Attorney General's Violent Crime Impact Teams (VCITs) in 31 cities in an effort to reduce the number of homicides and other violent crimes committed with firearms. According to ATF, the VCITs assist state and local authorities by systematically investigating all firearms-related leads; responding to all street recoveries of firearms and interviewing those involved to determine the source of the firearms; targeting and investigating violent and career criminals, and removing them from the streets; infiltrating criminal groups through undercover operations and confidential informants; tracing all recovered guns used in crime to determine their origin; imaging and storing all ballistic evidence in the National Integrated Ballistic Information Network (NIBIN); and inspecting and, when appropriate, investigating corrupt federal firearms licensees. Under the VCIT initiative, defendants referred by ATF for prosecution in gang-related investigations have increased from 403 in FY2000 to 4,381 in FY2007, nearly a tenfold increase. In FY2008, ATF referred over 4,100 gang members and their associates for prosecution. For FY2010, Congress provided ATF with a $10 million increase to expand VCITs. During the March 4, 2010, CJS appropriations hearing, Representative Frank Wolf questioned ATF Deputy Director Melson about how the FBI and ATF divided their anti-gang responsibilities. Melson responded that, when operating in the same city, the two agencies usually divide their respective operational areas geographically, so that an ATF-led VCIT would work one high-crime area and an FBI-led Safe Streets Task Force would work another. Representative Wolf also asked about ATF's presence at the FBI-led National Gang Intelligence Center (NGIC). Melson responded that ATF has a presence at NGIC, as well as at the DOJ-led National Gang Targeting Enforcement and Coordination Center (GangTECC), and that ATF and its partner agencies were satisfied that the center was a success. It is noteworthy that FY2010 conference report language accompanying the FY2010 Consolidated Appropriations Act directs ATF to coordinate with the FBI and other DOJ entities on efforts to maximize the effectiveness of anti-gang efforts and to report back to the Appropriations Committees within 120 days (April 16, 2010). ATF indicated that the report's target release date was May 16, 2010. Also, for FY2008, Congress appropriated $373,000 for ATF to assign two positions to GangTECC. This program increase was incorporated into ATF's base budgets for FY2009, FY2010, and the FY2011 request. ATF inspects federal firearms licensees (FFLs) to monitor their compliance with the GCA and to prevent the diversion of firearms from legal to illegal channels of commerce. In the past, 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 investigators 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 leads in homicide and other criminal investigations. In addition, by inspecting those records, ATF investigators are often able to uncover evidence of corrupt FFLs transferring firearms "off the books," straw purchases, and other patterns of suspicious behavior. In July 2004, the DOJ Office of Inspector General (OIG) reported on ATF inspections of FFLs. Among other things, the OIG reported that ATF inspected the operations of 4.5% of the 104,000 FFLs in FY2002. Since then, according to ATF, 10,106 firearms compliance inspections were conducted in FY2007, covering about 9.3% of the nearly 109,000 FFLs in that fiscal year; 11,169 compliance inspections in FY2008, covering nearly 10% of the 111,600 FFLs; and 11,375 compliance inspections in FY2009, covering nearly 10% of the 115,101 FFLs. Notwithstanding progress, at a March 2010 CJS Appropriations Subcommittee hearing, ATF Deputy Director Melson testified that many FFLs are not inspected for five years or more because of a lack of ATF personnel. On the Southwest border with Mexico, firearms violence has reportedly spiked in recent years as drug trafficking organizations (DTOs) have competed for control of key smuggling corridors into the United States. Beginning in December 2006, Mexican President Felipe Calderón responded by deploying elements of the Mexican Army and federal police to trouble spots around Mexico, including on the northern frontier. The DTOs and other criminals, however, are reportedly buying semiautomatic versions of AK-47 and AR-15-style assault rifles, other military style firearms, and .50 caliber sniper rifles in the United States. With those rifles and other small arms, the DTOs are reportedly achieving parity in terms of firepower in shootouts with the Mexican Army and law enforcement. In March 2008, President Calderón called upon the United States to increase its efforts to suppress the flow of illegal U.S. firearms into Mexico. ATF reports that there are 6,647 FFLs in the United States operating in the Southwest border region of Texas, New Mexico, Arizona, and California. Moreover, ATF reports that DTOs are increasingly using surrogates (straw purchasers) in the United States to buy 10 to 20 military-style firearms at a time from FFLs. These firearms are reportedly routinely smuggled into Mexico in smaller shipments of four or five firearms as part of a process known as the "ant run." For FY2006, ATF dedicated 84 SAs and 15 IOIs to a Southwest border initiative known as "Project Gunrunner" to disrupt the illegal flow of guns from the United States to Mexico. For FY2007, ATF increased those numbers to 103 SAs and 36 IOIs for this effort. Those agents investigated 187 firearms trafficking cases and recommended 465 defendants for prosecution. By the end of FY2008, ATF had deployed 148 SAs and 47 IOIs to the Southwest border to bolster Project Gunrunner at an estimated cost of $32.2 million. According to the DOJ Office of Inspector General, ATF has established five main objectives for Project Gunrunner: investigate individuals responsible for illicit firearms trafficking along the Southwest border; coordinate with U.S. and Mexican law enforcement along the border in firearms cases and violent crime; train U.S. and Mexican law enforcement officials to identify firearms traffickers; provide outreach education to gun dealers; and trace all firearms to identify firearms traffickers, trends, and patterns, and networks. The ATF FY2009 budget request was $1.028 billion, including $948,000 to fund 12 industry operations investigator positions to bolster efforts already underway as part of Project Gunrunner. This was the only program increase/budget enhancement in the ATF FY2009 budget request. As described above, the Omnibus Appropriations Act, 2008 ( P.L. 111-8 ) included $1.054 billion for ATF, including an increase of not less than $5.9 million for Project Gunrunner. Also, to ramp up Project Gunrunner, the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ) included $10 million for ATF and $30 million to assist state and local law enforcement with counter-narcotics efforts. In addition, the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ), included $6 million for Project Gunrunner. As a result, Congress provided a total of $21.9 million in increasing funding for Project Gunrunner for FY2009. In congressional testimony, ATF Deputy Director Kenneth Melson summed up the results of Project Gunrunner: Between fiscal year 2005 and fiscal year 2009, ATF has had [a] significant impact on the trafficking in Southwest Border States. ATF has recommended 984 cases involving 2,034 defendants for prosecution. To date, 1,397 defendants have been arrested, 1,303 defendants have been indicted, 850 defendants have been convicted, and 636 defendants have been sentenced to an average of 86 months incarceration. Three-hundred and seven of the cases and 881 of the defendants recommended for prosecution involve gang related offenses. Four hundred and ninety-seven cases have [been] charged [with] violations related to trafficking of an estimated 14,923 firearms. One hundred and fifty-nine of these cases involved gang-related trafficking of over 3,665 firearms. In all investigations, over 6,688 firearms have been seized and are no longer available to violent criminals and gang members. The ATF FY2010 budget request was $1.121 billion for ATF, including a proposed increase of $17.9 million and 92 permanent positions (including 34 SAs) to support Project Gunrunner. Congress matched this request in the Consolidated Appropriations Act, 2010 ( H.R. 3288 ), including the $17.9 million for Project Gunrunner. According to the House Committee, this increase would bring total funding for Southwest border firearms trafficking efforts to $59.9 million. This amount includes one-time stimulus funding of $10 million provided in the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ). By comparison, Senate report language noted that this increase would bring total Project Gunrunner funding to over $61 million. By mid-February 2010, ATF reported that it had deployed approximately 190 SAs, 145 IOIs, and 25 support staff to Project Gunrunner in the four contiguous border states. DOJ reported that the final FY2010 allocation for Project Gunrunner included 224 SAs, 165 IOIs, and 32 other positions. The ATF FY2011 budget request included $1.163 billion, including $11.8 million to annualize the 37 positions (21 SAs) previously funded under the ARRA ( P.L. 111-5 ). During a March 2010 CJS appropriations hearing, Representative Mollohan questioned ATF Deputy Director Melson about emerging gun trafficking patterns and ATF initiatives, like Project Gunrunner, undertaken to respond to related criminal activity. Melson observed that while firearms were being illegally trafficked principally from Southwest border states into Mexico, they were also being trafficked from other states within the interior of the United States. Representative Mollohan noted that, despite the apparent success of ATF's efforts, the request did not include any additional positions to bolster ongoing efforts to address illegal gun trafficking. As described above, Congress provided ATF with $37.5 million in supplemental appropriations for FY2010 ( P.L. 111-230 ) for Project Gunrunner, as requested by the Administration. ATF maintains a foreign attaché in Mexico City to administer an Electronic Trace Submission System (ETSS), also known as the eTrace program, for Mexican law enforcement authorities. From FY2005 through FY2007, ATF traced just over 11,700 firearms recovered by Mexican authorities, and approximately 90% of those firearms were either manufactured in, or imported into, the United States. Caution should be exercised when drawing conclusions from ATF firearm trace data, however. Although it is valid to say that 90% of traced firearms originated in the United States, it would be incorrect to conclude that 90% of all guns used in crime in Mexico originated in the United States. Although crime gun trace data are useful measurements of crime gun trends, in most cases the issues of consistent, random, and unbiased data collection have not been adequately addressed through comprehensive tracing and other controls. Hence, it is often not possible to test for statistical significance. Nevertheless, even though a statistically valid percentage estimate of U.S.-sourced firearms used in crime in Mexico cannot be made based on trace data, criminal investigations have documented that there is great demand for certain firearms that are available in normal (non-military) commercial channels in the United States and that those firearms have been illegally trafficked to Mexico in large numbers. Moreover, successful firearm traces are instrumental in developing investigative leads in homicide and gun trafficking cases. According to ATF, some of those cases uncover corrupt FFLs who were involved in larger criminal conspiracies to smuggle firearms into Mexico. In January 2008, ATF announced that e-Trace technology would be deployed to an additional nine U.S. consulates in Mexico (Mérida, Juarez, Monterrey, Nogales, Hermosillo, Guadalajara, Tijuana, Matamoros, and Nuevo Laredo). The number of traces performed by ATF for Mexican authorities during FY2008 increased markedly. For FY2008, preliminary data showed that ATF had traced 7,743 firearms recovered by Mexican authorities, as compared with the 11,700 firearms traced over a three-year period, FY2005-FY2007. Of those firearms, 63.5% were determined to have been manufactured in the United States and 29.5% were determined to have been manufactured abroad, but imported into the United States. Consequently, 93% of firearms traced by ATF during FY2008 for Mexican authorities were either made in, or imported to, the United States. In March 2010, ATF released eTrace 4.0, a Spanish language version of the software, to Mexico, Guatemala, and Costa Rica. ATF anticipates that trace requests from these countries will increase markedly in FY2010 and FY2011 with this new software. Also, as part of the National Integrated Ballistic Imaging Network (NIBIN) program, ATF is currently establishing a U.S.-Mexico ballistic information exchange capability that will allow firearms technicians to acquire and compare digital images of markings left on fired bullets and cartridges either gathered in test-firings or recovered at crime scenes. Canada already participates in ATF's NIBIN program. In November 2010, the OIG released another review of Project Gunrunner, in which updated Mexican firearms trace data were reported. According to the new data, ATF traced 64,510 firearms for Mexican authorities that were reportedly seized during FY2006-FY2009. For firearms traced between December 1, 2006, and December 31, 2009, and sold for the first time, OIG analysis showed that those firearms included 973 rifles (77%) and 279 handguns (23%). It also indicated that traced long guns had a shorter time-to-crime interval than handguns. While the OIG was somewhat critical of ATF's eTrace progam 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 IG also recommended that ATF focus its investigative efforts on more complex criminal conspiracies involving high-level traffickers rather than on low-level straw purchasers. On December 17, 2010, DOJ and ATF requested that the Office of Management and Budget approve on an expedited basis a "60-day emergency notice of information collection" by January 5, 2011. This expedited approval was requested under provisions of the Paperwork Reduction Act. Under the proposal, ATF would require federal firearms licensees (FFLs) to report whenever they make multiple sales or other dispositions of more than one rifle within five consecutive business days to an unlicensed person. Such reporting would 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. 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. When DOJ and ATF finished considering an initial round of comments, a subsequent 30-day comment period was initiated on April 29, 2011. Following this period, OMB will have up to 30 days (until the end of June 2011) to issue a decision on the ATF proposal. Several Members of Congress strongly oppose this proposal. They maintain that if Congress authorized multiple handgun sales reporting in statute in 1986, then it is incumbent upon ATF to request from Congress similar statutory authority for multiple rifles sales reporting. In February 2011, ATF and Project Gunrunner came under renewed 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 possibly smuggled into Mexico. Two of these firearms—AK-47 style 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 style 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. U.S. and Mexican policymakers have expressed their dismay over the circumstances surrounding Operation Fast and Furious. Senator Charles E. Grassley, the ranking minority member on the Senate Judiciary Committee, wrote letters to 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. Attorney General Holder instructed the DOJ OIG to review ATF's gun trafficking investigations. On March 8, 2011, however, 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, chair 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. On April 1, 2011, Representative Darrell Issa, chair of the House Oversight and Government Reform Committee, issued a subpoena 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. In the 110 th Congress, the House Committee on Foreign Affairs reported the Mérida Initiative to Combat Illicit Narcotics and Reduce Organized Crime Authorization Act of 2008 ( H.R. 6028 ; H.Rept. 110-673 ) on May 14, 2008. This bill would have authorized a total of $73.5 million to be appropriated over three years, for FY2008 through FY2010, to increase the number of ATF positions dedicated to Project Gunrunner ($45 million) and assign ATF agents to Mexico ($28.5 million). The House passed this bill on June 10, 2008, by a roll call vote: 311 to 106 (Roll no. 393). Similar authorizations were included in the Southwest Border Violence Reduction Act of 2008 ( S. 2867 , H.R. 5863 , and H.R. 5869 ). In the 111 th Congress, similar bills were introduced ( S. 205 , H.R. 495 , H.R. 1448 , and H.R. 1867 ). The three-year Mérida Initiative expired at the end of FY2010. In recent talks, Mexican and U.S. officials have agreed to refocus and continue the initiative, however. ATF's arson and explosives budget program covers activities related to administering and enforcing federal laws governing the manufacture, importation, and distribution of explosives, as well as investigating arson cases with a federal nexus. The federal statutory provisions regulating explosives commerce in the United States were enacted under Title XI of the Organized Crime Control Act of 1970 (often referred to as the Explosives Control Act of 1970). The Anti-Arson Act of 1982 amended this act to create a federal crime of arson. The act was amended further by the Safe Explosives Act, which was included in the Homeland Security Act of 2002. The proposed FY2011 allocation for the ATF arson and explosives program is $302.4 million, or about 26% of the FY2011 budget request ($1.163 billion). The proposed FY2011 allocation includes a program increase of $320,000 for Emergency Support Function #13. Among law enforcement agencies, the ATF is recognized for its investigative expertise in responding to both arson and explosive incidents. The Attorney General (AG), for example, made the ATF responsible for maintaining a consolidated database of all arson and explosive incidents that occur in the United States. Reportedly, as part of the department's law enforcement information-sharing program, this and other databases are to be linked and made Web-accessible, and first responders anywhere in the United States are to have access to critical information about arson and explosive cases nationwide. Nevertheless, as described below, both ATF and the FBI share concurrent jurisdiction over federal criminal investigations involving explosives, and both bureaus have maintained separate databases on explosives incidents. At times, this shared jurisdiction appears to have resulted in an inter-agency rivalry. Under the Safe Explosives Act, Congress made ATF responsible for more closely regulating the U.S. explosives industry. This act made ATF responsible for fully investigating all explosive thefts and losses, as well as providing background checks for licensees and permittees to prevent prohibited persons from acquiring explosives. In FY2008, ATF completed 68,645 explosives employee/possessor background checks and 3,231 responsible persons background checks. The act also requires ATF to inspect explosive licensees and permittees every three years to ensure that all explosive materials are properly stored and accounted for. ATF reports that there are about 12,000 licensees and permittees nationwide, so that to comply with the act, about 4,000 inspections would need to be conducted by ATF annually. ATF conducted 3,291 explosives compliance inspections in FY2007 (or about 28% of licensees/permittees), 3,055 in FY2008 (27%), and 2,640 in FY2009 (22%). As described above, ATF was transferred from Treasury to DOJ in January 2003. This transfer, however, did little to ameliorate the perennial source of tension between the ATF and FBI over their concurrent jurisdiction over explosives. In March 2003, then Attorney General John Ashcroft convened an Explosives Review Group (ERG) to develop recommendations to improve coordination between the ATF and FBI. In August 2004, the Attorney General responded to the ERG's report and directed (1) the ATF and FBI to consolidate all of DOJ's arson and explosives incidents databases into a single database; (2) that all consolidated arson and explosives incident databases be maintained by the ATF; and (3) both agencies coordinate post-blast explosives training and explosives detection canine training. In response to this directive, ATF established the U.S. Bomb Data Center (USBDC) as the sole repository of arson and explosives related incident data. On the other hand, the Attorney General also directed the FBI to take the lead on any terrorism-related cases (domestic and international) that involved explosives, and directed ATF to take the lead on all other criminal cases involving explosives. Notwithstanding the Attorney General's directives, the partnership on federal explosives-related investigations between the FBI and ATF continues to be marked by what has been described as an acrimonious rivalry and competition for mission share and resources. The FBI apparently had not transferred its bomb data to the ATF, arguing that such a transfer would be detrimental to the FBI's ability to conduct counterterrorism investigations. In response to this, the Senate Judiciary Committee chair, Senator Patrick Leahy, and ranking minority member of that committee, Senator Arlen Specter, wrote a letter to the then Attorney General, Michael Mukasey, urging that an end be brought to this inter-agency rivalry. Meanwhile, FBI and ATF officials at the headquarters level have maintained that their partnership produces examples of interagency cooperation on a daily basis. They point to their jointly administered Terrorist Explosive Device Analytical Center (TEDAC), which is based at the FBI laboratory in Quantico, VA. This center was established to process and evaluate evidence from improvised explosive devices (IEDs) that have been recovered in Iraq and Afghanistan. In October 2009, the DOJ OIG found that ATF and FBI are not adequately coordinating explosives investigations and related operations and that the two agencies have developed parallel capabilities to respond to explosives incidents. As noted above, both agencies maintain separate explosives-related databases, despite the Attorney General's May 2004 directives. Nor have the agencies coordinated post-blast explosives training and explosives detection canine training, despite a directive from the Attorney General to do so. The OIG also observed that investigative jurisdictional disputes, lack of information sharing, and lack of coordination between the two agencies hinders DOJ's ability to effectively respond, investigate, and prevent explosives crimes. The OIG underscored that these circumstances could increase the risk that DOJ would not meet the requirements set out by then President George W. Bush in Homeland Security Directive (HSPD)-19, which envisions a comprehensive U.S. government strategy to mitigate the threat, and prevent the use, of explosives by terrorists. The ATF alcohol and tobacco budget program covers expenses related to agency efforts to counter a rising trend in the illegal diversion of tobacco products, as well as the illegal movement of distilled alcohol products. The FY2010 allocation for the Alcohol and Tobacco program totals $22.3 million, or about 2% of ATF's direct appropriation ($1.115 billion) for salaries and expenses, which is in line with historical budget trends (FY2004 through FY2010). The proposed FY2011 allocation accompanying the Administration's budget request is $23.3 million, or again about 2% of the request ($1.163 billion). In addition, through DOJ's asset forfeiture authority, ATF also has "churning budget authority," or the authority to obligate the proceeds of seized assets to fund tobacco diversion and other long-term, complex undercover investigations. Notwithstanding this additional funding authority, in September 2009, the DOJ OIG issued a report on ATF's efforts to prevent tobacco diversion, which includes contraband cigarette trafficking. In this report, the Inspector General found that tobacco diversion investigations, along with alcohol diversion investigations, are accorded a low priority at ATF, as compared to its other mission areas, such as investigating firearms- and explosives-related crime, particularly violent crime, and arson. This low priority is partly the result of the view that tobacco diversion is largely a nonviolent crime, despite its connections with terrorist financing and organized crime. Between FY2004 and FY2008, ATF conducted 645 alcohol and tobacco diversion investigations, or about 1% of ATF's investigative caseload. Of these cases, 566 investigations (88%) involved tobacco and 79 (12%) involved alcohol. With regard to the greater number of tobacco cases than alcohol cases, ATF observed that tobacco diversion is much more lucrative to criminal enterprises than is alcohol, as the latter is much more difficult to transport in large quantities. Alcohol diversion, moreover, is also limited to certain geographic areas and generally such cases today are handled by state and local authorities. The FY2011 budget request includes a program increase of $24,000 for Emergency Support Function #13. It is significant to note that the OIG reported that the FY2010 departmental budget request to the Office of Management and Budget (OMB) included $28.3 million for tobacco diversion, but this request was denied by OMB and was not included in the ATF's FY2010 congressional budget submission (request). The federal statutes that address the diversion of distilled spirits (alcohol) are many. They include, but are not limited to, the Internal Revenue Code (IRC), the Federal Alcohol Administration (FAA) Act, the 21 st Amendment, the Webb-Kenyon Act, the Federal Criminal Code, and federal Indian laws. Although ATF has primary jurisdiction for illegal interstate transportation of liquor and related racketeering activities, the regulatory statutes underlying those violations are found in the IRC. In addition, the Department of the Treasury has primary jurisdiction over the IRC, as well as the FAA and Webb-Kenyon Act. While historically ATF traces its roots back to Eliot Ness and other Treasury agents who battled organized crime during the era of prohibition and illegal liquor production (moonshining), since its transfer to DOJ, ATF's role in enforcing liquor laws has been diminished, as is evident in part by its small investigative caseload. Most of the ATF personnel dedicated to the regulation of alcohol and tobacco remained at Treasury within the Alcohol and Tobacco Tax and Trade Bureau (TTB). According to ATF, it has primary jurisdiction over criminal provisions related to tobacco in the Contraband Cigarette Trafficking Act (CCTA) of 1978. In May 2004, the General Accounting Office (now the Government Accountability Office) reported that the illegal diversion and smuggling of cigarettes in the United States results in an unknown but significant loss in tax revenues. ATF criminal intelligence indicates that cigarette bootlegging is a lucrative criminal venture that terrorist groups have used and would possibly use to finance their future criminal activities, including drug and weapons trafficking, identity theft, and various types of fraud. ATF has investigated Armenian, Chinese, Middle Eastern, Russian, Taiwanese, Ukrainian, and Native American organized crime groups engaged in diverting large quantities of contraband and counterfeit cigarettes and counterfeit tax stamps. These activities have become increasingly lucrative as states and the federal government have raised excise taxes on cigarettes. According to the Inspector General, transporting contraband cigarettes from low-tax states to high-tax states, and reselling those cigarettes on the black market, can yield high profits: a car load of 10 cases can yield an estimated $18,000 to $23,000; a van load of 50 cases, an estimated $90,000 to $115,000; and a small truck load of 200 cases, an estimated $360,000 to $465,000. Nonetheless, the Inspector General described the ATF's tobacco diversion efforts as "ad hoc," and underscored that there is no systematic method within the agency to share intelligence and information between field divisions. The Inspector General reported, moreover, that ATF headquarters is not facilitating information sharing between its field agents and personnel at Treasury's TTB, which maintains a database on tobacco licensees, and had not coordinated with tobacco companies, which often provide cigarettes for undercover operations. The 110 th and 111 th Congresses considered legislation to strengthen federal laws that address contraband cigarette trafficking. Representative Anthony Weiner introduced the Prevent All Cigarette Trafficking (PACT) Act ( H.R. 1676 ). The House Judiciary Committee reported this measure ( H.Rept. 111-117 ) on May 18, 2009, and the House passed it on May 21, 2009, by a recorded vote (two-thirds required): 397-11 (Roll no. 287). Senator Herb Kohl introduced a similar measure ( S. 1147 ). The Senate Judiciary Committee amended the bill with substitute language and reported it without a written report on November 11, 2009. It was passed by the Senate on March 11, 2010. It was passed by the House on March 17, 2010, by a recorded vote (two-thirds required): 387-25 (Roll no. 124). On March 31, 2010, President Obama signed S. 1147 into law ( P.L. 111-154 ). The House-passed H.R. 1676 included two sections that addressed ATF's tobacco diversion mission, but only one of these sections (section 5) was included in the Senate- and House-passed bill ( S. 1147 ) that was signed into law by the President. Section 7 of the House-passed H.R. 1676 , which was not included in P.L. 111-154 , would have authorized ATF to establish six regional contraband tobacco trafficking teams over a three-year period in New York City; Washington, DC; Detroit; Los Angeles; Seattle; and Miami; a tobacco intelligence center to serve as the "nerve center" for all ongoing tobacco diversion investigations; a covert national warehouse for undercover operations; and a computer database to track the retail sale of tobacco products through the Internet, by mail-order, or in any other non-face-to-face transaction. For these purposes, section 7 would have also authorized to be appropriated $8.5 million for five years beginning with FY2010. By comparison, the other section, which was included in P.L. 111-154 , authorizes ATF to enter the business premises of "delivery sellers" and inspect their records and information and any cigarettes or smokeless tobacco stored at such premises. It also authorizes federal district courts to compel such inspections, and imposes a civil penalty for failure to comply with inspections. In the 110 th Congress, the House passed a similar bill ( H.R. 4081 ) on September 10, 2008, by a recorded vote (two-thirds required): 379 to 12 (Roll no. 584). This bill was reported by the House Judiciary Committee on the previous day ( H.Rept. 110-836 ). The Senate Judiciary Committee reported a similar bill on September 11, 2007 ( S. 1027 ; S.Rept. 110-153 ), but the Senate took no further action on this bill. Congress last provided authorizations for ATF's annual appropriation in the Violence Against Women and Department of Justice Reauthorization Act of 2005. This act authorized appropriations for DOJ as a whole and ATF as a DOJ agency for FY2006 through FY2009. Congress did not associate authorized dollar amounts with FTE or permanent positions. The annual authorization for appropriations lapsed for FY2010, as the 110 th and 111 th Congresses have not considered legislation to reauthorize appropriations for either DOJ or ATF. As Table A-1 shows, Congress has generally appropriated more money for ATF than has been authorized.
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The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the lead federal law enforcement agency charged with administering and enforcing federal laws related to the manufacture, importation, and distribution of firearms and explosives. Congress transferred ATF's enforcement and regulatory functions for firearms and explosives from the Department of the Treasury to the Department of Justice (DOJ) as part of the Homeland Security Act (P.L. 107-296). ATF is also responsible for investigating arson cases with a federal nexus, as well as criminal violations of federal laws governing the manufacture, importation, and distribution of alcohol and tobacco. Congress authorized appropriations for ATF in the Department of Justice Authorization Act of 2005 (P.L. 109-162) for FY2006 through FY2009; however, the 111th Congress did not consider legislation to reauthorize annual appropriations for DOJ or ATF. From FY2001 through FY2010, Congress increased direct appropriations for the ATF from $771.0 million to $1.158 billion. The FY2010 appropriation amount includes $37.5 million in supplemental appropriations for Project Gunrunner (P.L. 111-230). With this supplemental, Congress has provided ATF with $86.5 million in budget increases over three fiscal years, FY2008 through FY2010, to combat gun trafficking. Most of this funding has been allocated to Project Gunrunner, an ATF initiative to reduce gun trafficking across the Southwest border, or other projects to assist the government of Mexico. For FY2011, the Administration requested $1.163 billion for ATF, an increase of 3.8% over the agency's initial FY2010 appropriation ($1.121 billion), which included $1.115 billion for salaries and expenses and $6 million for construction. For Project Gunrunner, the request included $11.8 million to annualize 37 positions that were previously funded by the American Recovery and Reinvestment Act (P.L. 111-5). It also included $1.2 million to enable ATF to coordinate state and local law enforcement efforts in the event of a national emergency and, thus, fulfill the Attorney General's Emergency Support Function (ESF) #13 obligations under the National Response Framework (NRF). The FY2011 request assumed $35.2 million and 46 FTE positions in base adjustments, less offsets and other reductions. The Senate Appropriations Committee reported a bill (S. 3636) that would have matched the FY2011 request, but no further action was taken on that bill. In the absence of an enacted FY2011 CJS appropriations bill, Congress passed a series of continuing resolutions (CRs) that temporarily funded ATF at its FY2010 enacted level. On April 14, 2011, Congress passed the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (H.R. 1473; P.L. 112-10) and funded ATF for the rest of FY2011 at its FY2010 enacted level, reduced by two-tenths of a percent. Hence, ATF's FY2011 appropriation is $1.113 billion. Other emerging issues related to the ATF budget and operations include a proposal to require multiple rifle sales reports from Southwest border state gun dealers and the agency's conduct of a Phoenix, AZ-based investigation known as "Operation Fast and Furious." This report complements CRS Report RL34514, The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF): Budget and Operations for FY2008, FY2009, and FY2010. For the FY2011 budget cycle, this report will be updated as needed. For coverage of ATF's FY2012 budget request, see CRS Report RL32842, Gun Control Legislation.
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There are approximately 30 types of entities that qualify for federal tax-exempt status as organizations described in section 501(c) of the Internal Revenue Code (IRC). The most common types are § 501(c)(3) charitable organizations, § 501(c)(4) social welfare organizations, § 501(c)(5) labor unions, and § 501(c)(6) trade associations. Whether a § 501(c) organization may engage in political activity, such as lobbying or campaign activity, under the IRC depends on the subparagraph in which it is described. This report analyzes the IRC limitations on political activity by tax-exempt organizations, focusing on these four types of organizations. It ends with a discussion of the IRC reporting and disclosure requirements. While this report discusses the political activity limitations in the IRC, it is important to realize that organizations must also comply with applicable election and lobbying laws. For analysis of the intersection between tax and campaign finance laws, see CRS Report R40141, 501(c)(3) Organizations and Campaign Activity: Analysis Under Tax and Campaign Finance Laws , by [author name scrubbed] and [author name scrubbed]; CRS Report RL34447, Churches and Campaign Activity: Analysis Under Tax and Campaign Finance Laws , by [author name scrubbed] and [author name scrubbed]; CRS Report R40183, 501(c)(4) Organizations and Campaign Activity: Analysis Under Tax and Campaign Finance Laws , by [author name scrubbed] and [author name scrubbed]; and CRS Report RS22895, 527 Groups and Campaign Activity: Analysis Under Campaign Finance and Tax Laws , by [author name scrubbed] and [author name scrubbed]. For discussion of the applicability of federal lobbying law to tax-exempt organizations, see CRS Report 96-809, Lobbying Regulations on Non-Profit Organizations , by [author name scrubbed]. The organizations described in IRC § 501(c)(3) are commonly referred to as charitable organizations. The section describes these organizations as organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. There are two types of § 501(c)(3) organizations: public charities and private foundations. Public charities receive contributions from a variety of sources whereas private foundations receive contributions from limited sources. Due to fear of abuse, private foundations are subject to stricter regulation than public charities. This includes additional restrictions on their political activities, as discussed below. The organizational definition in § 501(c)(3) restricts the ability of these organizations to participate in political activity in two ways: (1) they may only conduct an insubstantial amount of lobbying and (2) they may not intervene in political campaigns. Organizations that violate either restriction may lose their tax-exempt status and the eligibility to receive deductible contributions, among other consequences. The lobbying restriction and political campaign prohibition are discussed in detail below. The lobbying limitation was enacted in 1934 and the political campaign prohibition was enacted in 1954. The legislative history of both provisions is sparse. In 1919, the Treasury Department took the position that organizations "formed to disseminate controversial or partisan propaganda" were not "educational" for purposes of qualifying for tax-exempt status under the precursors to § 501(c)(3). One consequence of this rule was that contributions to these organizations were not deductible. Several lawsuits were brought that challenged this treatment, but no clear standard emerged from the court decisions—some courts denied the deduction if the organization advocated for any type of change, whereas others looked at factors such as how controversial the advocacy was or if the organization's actions were intended to influence legislation. In what is generally recognized as the seminal case, Slee v. Commissioner , the U.S. Court of Appeals for the Second Circuit used another rationale. In that decision, the court held that contributions to an organization were not deductible because it did not appear that the lobbying was limited to causes that furthered the organization's charitable purpose. With this background, Congress enacted the lobbying limitation as part of the Revenue Act of 1934. There is very little legislative history for the provision, but it appears that Congress was concerned with organizations that lobby also being able to receive tax-deductible contributions. While discussing the provision on the Senate floor, one Member complained about the deductibility of donations that were made for "selfish" reasons and specifically mentioned an organization with which he was apparently having problems. Although this Member apparently believed the provision was too broad in that it applied to organizations without "selfish motives," other Members argued that all contributions to organizations that lobby should be nondeductible because of the difficulty in trying to distinguish between organizations that deserve the benefit and those that do not. It has also been suggested that Congress enacted the provision in order to codify the Slee decision. Although this may be true, it should be noted that the Slee test and the lobbying provision are not identical. This is because the focus of the test under Slee is whether the lobbying furthers the organization's tax-exempt purpose, whereas the focus of the lobbying provision is whether the lobbying is a substantial part of the organization's activities. The 1934 Act had also included a provision that would have restricted the ability of charities to participate in partisan politics. However, that limitation was removed in conference, apparently because of concerns it was too broad. The political campaign prohibition was enacted as part of the Internal Revenue Code of 1954. The provision was added by Senator Lyndon Johnson as a floor amendment. Upon introducing the amendment, Senator Johnson analogized it to the lobbying limitation; however, he mischaracterized the lobbying limitation by saying that organizations that lobbied were denied tax-exempt status, as opposed to only those organizations that substantially lobbied. The legislative history contains no further discussion of the prohibition, including whether Senator Johnson's overly-broad description of the lobbying provision and inaccurate analogy were noticed. Although Senator Johnson's motives behind the provision are not clear from the legislative history, it has been suggested that he proposed it either as a way to get back at an organization that had supported an opponent or because he wished to offer an alternative to another Senator's proposal that would have denied tax-exempt status to organizations making grants to organizations or individuals that were deemed to be subversive. The organizational definition in IRC § 501(c)(3) states that "no substantial part" of an organization's activities may be "carrying on propaganda, or otherwise attempting, to influence legislation" (i.e., lobbying). Lobbying includes activities that attempt to influence legislation by (1) contacting, or urging the public to contact, legislators about proposing, supporting, or opposing legislation and (2) advocating for or against legislation. Thus, it includes direct lobbying (contacting governmental officials) and grassroots lobbying (appeals to the electorate or general public). "Legislation" includes action by any legislative body and by the public through such things as referenda and initiatives. "Action" includes the introduction, amendment, enactment, defeat, or repeal of such things as acts, bills, and resolutions. It also appears to include Senate confirmation of judicial and executive branch nominations. An organization's advocacy activities may be lobbying even if legislation is not actually pending. Furthermore, an organization may be treated as lobbying if it does such things as make a contribution or lend money on favorable terms to an entity that lobbies. Lobbying generally does not include providing testimony in response to an official request by a legislative body. It also does not include contacting executive, judicial, and administrative bodies on matters other than legislation. Additional examples of activities that may not be lobbying include conducting and publishing nonpartisan analysis, study, or research; discussing broad social issues, so long as specific legislation is not discussed; and contacting legislative bodies about legislation that relates to the organization's existence or status. In order to determine whether lobbying is a substantial part of an organization's activities, the organization may elect under IRC § 501(h) to measure its lobbying expenditures against objective, numerical standards. If the election is not made, the organization is subject to the "no substantial part" test, which has no bright-line standards. Most organizations do not make the election, and some, including churches and private foundations, are not allowed to make it. Organizations that make the § 501(h) election measure their lobbying activities against the limits in IRC § 4911. Organizations whose lobbying expenditures exceed the limits in § 4911 for total lobbying expenditures and grass roots expenditures are subject to an excise tax equal to 25% of the excess. In order to not be taxed for excessive lobbying, an organization may not spend more than 20% of its first $500,000 of expenditures on lobbying, nor more than 15% of its second $500,000 of expenditures, nor more than 10% of its third $500,000 of expenditures, nor more than 5% of its remaining expenditures, and no more than $1 million on lobbying in the year. In order not to be taxed for excessive grass roots lobbying, the organization may not spend more than 5% of its first $500,000 of expenditures on grass roots lobbying, nor more than 3.75% of its second $500,000 of expenditures, nor more than 2.5% of its third $500,000 of expenditures, nor more than 1.25% of its remaining expenditures, and no more than $250,000 on grass roots lobbying in the year. The election also provides a safe harbor so organizations that do not exceed a certain limit will not lose their § 501(c)(3) status due to substantial lobbying. Specifically, an organization will not lose its exempt status so long as its lobbying expenditures do not exceed 150% of the § 4911 limitations over a four year period. Thus, depending on its activities in prior years, an organization could conduct lobbying in the current year that is significant enough to be subject to tax, but not lose its tax-exempt status. For organizations that do not make the election and those that cannot (e.g., private foundations and churches), the determination as to whether they have conducted more than an insubstantial amount of lobbying is dependent on the facts and circumstances of each case. Case law suggests that "no substantial part" is between 5% and 20% of the organization's expenditures. However, there is no bright-line test and the percentage of expenditures spent on lobbying is not necessarily determinative. Rather, courts have examined the lobbying in the broad context of the organization's purpose and activities by looking at such things as how important lobbying is to the organization's purpose, the amount of time devoted to lobbying as compared with other activities, and the extent to which the organization is continuously involved in lobbying. Unlike electing organizations, non-electing public charities are only subject to an excise tax on their lobbying expenditures if they lose their exempt status because of substantial lobbying. The tax equals 5% of the organization's lobbying expenditures, and the same tax may also be imposed on the organization's manager. Some organizations, including churches, are not subject to the tax. Private foundations, on the other hand, must generally pay an excise tax on any lobbying expenditures they make. The tax equals 10% of the expenditures. Additionally, a foundation manager who agrees to the expenditure may individually be subject to a tax equal to 2.5% of the expenditure, limited to $5,000. If the foundation fails to timely correct the expenditure, it is subject to an additional tax equal to 100% of the expenditure and the manager may be subject to an additional tax equal to 50% of the expenditure, limited to $10,000. In 1983, the Supreme Court ruled in Regan v. Taxation With Representation of Washington that the lobbying limitation is constitutional. In that case, the IRS denied the application of Taxation With Representation of Washington (TWR) for § 501(c)(3) status because a substantial amount of the group's activities would be lobbying. TWR argued that the lobbying limitation violated its right to freedom of speech under the First Amendment. The group also argued that it was being denied equal protection under the Fifth Amendment because § 501(c)(19) veterans' organizations were allowed to lobby substantially and still qualify for tax-exempt status and to receive tax-deductible contributions. The Supreme Court rejected both claims. With respect to the First Amendment, the Court found that Congress had not prevented TWR from speaking, but had simply chosen not to subsidize it by means of the tax exemption and tax-deductible contributions. The court also noted that TWR could qualify for exemption under § 501(c)(4) and receive deductible contributions for its non-lobbying activities by setting up a separate § 501(c)(3) organization. With respect to the Fifth Amendment, the Court stated that the test to determine whether the classification was constitutionally permissible was whether it bore a rational relationship to a legitimate governmental purpose. Noting that legislatures have broad discretion when it comes to making classifications for tax purposes, the Court found that it was not irrational for Congress to decide not to extend the taxpayer-funded benefit of unlimited lobbying to charities because of concerns they may lobby for their members' benefit. The Court also stated that distinguishing charities from veterans organizations was permissible because the United States "has a longstanding policy of compensating veterans for their past contributions by providing them with numerous advantages." The organizational definition in IRC § 501(c)(3) prohibits these organizations from "participating in, or intervening in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office," but does not further elaborate on the prohibition. Treasury regulations define candidate as "an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, State, or local." As to what types of activities are prohibited, the regulations add little besides specifying that they include "the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate." Thus, the statute and regulations do not offer much insight as to what activities are prohibited. Clearly, § 501(c)(3) organizations may not do such things as make statements that endorse or oppose a candidate, publish or distribute campaign literature, or make any type of contribution, monetary or otherwise, to a political campaign. On the other hand, § 501(c)(3) organizations are allowed to conduct activities that are political in nature but are not related to elections, such as lobbying for or against legislation and supporting or opposing the appointment of individuals to nonelective offices. Additionally, § 501(c)(3) organizations may engage in certain election-related activities so long as the activities do not indicate a preference for or against any candidate. Whether such an activity is campaign intervention depends on the facts and circumstances of each case. The following examples show some of the ways in which the IRS has indicated that an activity might be biased. As will be seen, some biases can be subtle and it is not necessary for the organization to expressly mention a candidate by name. Section 501(c)(3) organizations may create and/or distribute voter guides and similar materials that do not indicate a preference towards any candidate. The guide must be unbiased in form, content, and distribution. According to the IRS, there are numerous ways in which a guide may be biased, and the determination will depend on the facts and circumstances of each case. For example, a guide could display a bias by not including all candidates on an equal basis. Another way a guide could be biased is by rating candidates, such as evaluating candidates and supporting a slate of the best-qualified candidates, even if the criteria are nonpartisan (e.g., based on professional qualifications). A voter guide could also indicate a bias by comparing the organization's position on issues with those of the candidates. A more subtle way in which a guide may show bias is by only covering issues that are important to the organization, as opposed to covering a range of issues of interest to the general public. Some guides consist of candidate responses to questions provided by the organization. According to the IRS, factors that tend to show these guides are candidate-neutral include the following: the questions and descriptions of the issues are clear and unbiased; the questions provided to the candidates are identical to those included in the guide; the candidates' answers have not been edited; the guide puts the questions and appropriate answers in close proximity to each other; the candidates are given a reasonable amount of time to respond to the questions; and if the candidates are given limited choices for an answer to a question (e.g., yes/no, support/oppose), they are given a reasonable opportunity to explain their positions. Other factors that may be important include the timing of the guide's distribution and to whom it is distributed. For example, the IRS ruled that a § 501(c)(3) organization could include a compilation of Members' voting records on issues important to it and its position on those issues in the edition of its monthly newsletter published after the close of each Congress. The newsletter was sent to the usual small number of subscribers and not targeted to areas where elections were occurring. In this specific situation, the IRS stated that the publication was permissible because it was not timed to an election or broadly distributed. Section 501(c)(3) organizations may conduct unbiased and nonpartisan public forums where candidates speak or debate. According to the IRS, factors that tend to show a public forum is unbiased and nonpartisan include the following: all legally qualified candidates are invited; the questions are prepared and presented by a nonpartisan independent panel; the topics and questions cover a broad range of issues of interest to the public; all candidates receive an equal opportunity to present their views; and the moderator does not comment on the questions or imply approval or disapproval of the candidates. A § 501(c)(3) organization may invite a candidate to speak at its functions without it being prohibited campaign activity. According to the IRS, factors that tend to indicate the event was permissible include the organization provided an equal opportunity to speak at similar events to the other candidates; the organization did not indicate a preference for or against any candidate; and no fund-raising occurred at the event. Section 501(c)(3) organizations may also invite candidates to speak in their non-candidate capacity. Factors indicating that no campaign intervention occurred include (1) the individual was chosen to speak solely for non-candidacy reasons; (2) the individual spoke only in his or her non-candidate capacity; (3) no reference to the upcoming election was made; (4) no campaign activity occurred in connection with the individual's attendance; (5) the organization maintained a nonpartisan atmosphere at the event; and (6) the organization's communications announcing the event clearly indicated the non-candidate capacity in which the individual was appearing and did not mention the individual's candidacy or the election. Section 501(c)(3) organizations may conduct nonpartisan voter registration and get-out-the-vote drives. Again, the activities may not indicate a preference for any candidate or party. According to the IRS, factors indicating that these activities are neutral include the following: candidates are named or depicted on an equal basis; no political party is named except for purposes of identifying the party affiliation of each candidate; the activity is limited to urging individuals to register and vote and to describing the time and place for these activities; and all services are made available without regard to the voter's political preference. Section 501(c)(3) organizations may take positions on policy issues. Because there is no rule that campaign activity occurs only when an organization expressly advocates for or against a candidate, the line between issue advocacy and campaign activity can be difficult to discern. According to the IRS, key factors that indicate an issue advocacy communication does not cross the line into campaign intervention include the following: the communication does not identify any candidates for a given public office, whether by name or other means, such as party affiliation or distinctive features of a candidate's platform; the communication does not express approval or disapproval for any candidate's positions and/or actions; the communication is not delivered close in time to an election; the communication does not refer to voting or an election; the issue addressed in the communication has not been raised as an issue distinguishing the candidates; the communication is part of an ongoing series by the organization on the same issue and the series is not timed to an election; and the identification of the candidate and the communication's timing are related to a non-electoral event (e.g., a scheduled vote on legislation by an officeholder who is also a candidate). Under certain circumstances, § 501(c)(3) organizations may sell or rent goods, services, and facilities to political campaigns. This includes selling and renting mailing lists and accepting paid political advertising. According to the IRS, factors that tend to indicate the activity is not biased towards any candidate or party include the following: the selling or renting activity is an ongoing business activity of the organization; the goods, services, and facilities are available to the general public; the fees charged are the organization's customary and usual rates; and the goods, services, or facilities are available to all candidates on an equal basis. A § 501(c)(3) organization could engage in campaign activity by linking its website to another website that has content showing a preference for or against a candidate. Whether the linking is campaign intervention depends on the facts and circumstances of each case. Factors the IRS will look at include the context of the link on the organization's website, whether all candidates are represented, whether the linking serves the organization's exempt purpose, and the directness between the organization's website and the page at the other site with the biased material. Members, managers, leaders, and directors of § 501(c)(3) organizations may participate in campaign activity in their private capacity. The organization can not support the activity in any way. For example, these individuals may not express political views in the organization's publications or at its functions (this is true even if the individual pays the costs associated with the statement), and the organization may not pay expenses incurred by the individual in making the political statement. Individuals may be identified as being associated with an organization, but there should be no intimation that their views represent those of the organization. An organization that engages in any amount of campaign activity may lose its § 501(c)(3) status and eligibility to receive tax-deductible contributions. It may also be taxed on its political expenditures, either in addition to or in lieu of revocation of § 501(c)(3) status. The tax equals 10% of the expenditures, with an additional tax equal to 100% of the expenditures imposed if the expenditures are not corrected (i.e., recovered and safeguards established to prevent future ones) in a timely manner. The organization's managers may also be subject to tax. Other consequences for the flagrant violation of the prohibition include the IRS immediately determining and assessing all taxes due and/or seeking injunctive and other relief to enjoin the organization from making additional political expenditures and to preserve its assets. There has been ongoing congressional, IRS, and public concern about violations of the campaign intervention prohibition by § 501(c)(3) organizations. These concerns led the IRS to develop the Political Activity Compliance Initiative. It has two parts: the IRS performed educational outreach to § 501(c)(3) organizations about the prohibition and used a fast-track process for reviewing possible violations. The initiative was used during the 2004, 2006, and 2008 election cycles, although the 2008 data have not yet been released. It does not appear the IRS has publicly indicated whether it will use the initiative during the 2010 election cycle. The 2004 initiative involved the expedited review of 110 cases in which § 501(c)(3) organizations were alleged to have violated the campaign intervention prohibition. The IRS issued a written advisory in 69 of these cases, which meant that the agency determined the organization engaged in campaign activity but mitigating factors led to the organization not being penalized. Mitigating factors included that the activity was of a one-time nature or shown to be an anomaly, the activity was done in good faith reliance on advice of counsel, or the organization corrected the conduct (e.g., recovered any funds that were spent) and established safeguards to prevent future violations. The IRS revoked the tax-exempt status of five organizations (one for issues not related to campaign activity) and proposed two more revocations. The IRS did not find substantiated campaign activity in 23 of the cases, and found non-political violations of the tax laws in six other cases. The remaining five cases were still open as of the last IRS update in 2007. While the 2004 initiative was proceeding, there were reports in various media outlets that raised the question of whether the IRS had been politically motivated in investigating the § 501(c)(3) organizations so close to the 2004 election. In response, the IRS Commissioner asked the Treasury Inspector General for Tax Administration (TIGTA) to investigate whether the IRS had engaged in any improper activities while conducting the project. In 2005, TIGTA released its report, which concluded that the IRS had used appropriate, consistent procedures during the initiative. The 2006 initiative involved 100 cases selected for examination. As of the last IRS update in 2007, 60 of these cases remained open. In the 40 closed cases, the IRS issued written advisories in 26 of them, and did not find substantiated political intervention in the other 14 cases. The IRS also identified 269 instances of § 501(c)(3) groups apparently making direct contributions to political candidates. The organizations described in § 501(c)(4) include those that are commonly referred to as social welfare organizations. The section describes: [c]ivic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. [This paragraph] shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual. Treasury regulations clarify that "[a]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community." Section (c)(5) organizations are described as "labor, agricultural, or horticultural organizations." Most of them are labor unions. The organizations described in § 501(c)(6) are generally thought of as trade associations. The section describes these organizations as [b]usiness leagues, chambers of commerce, real estate boards, boards of trade, or professional football leagues ... not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual. The organizational definitions in § 501(c)(4), (c)(5), and (c)(6) do not contain any explicit limitations on lobbying. The organizations described in these three sections may participate in an unrestricted amount of lobbying so long as the lobbying is related to the organization's exempt purpose. In fact, organizations whose sole activity is lobbying may be recognized under these sections so long as they serve the appropriate tax-exempt purpose. For example, a business association whose only activity is lobbying for and against legislation according to its members' interests may qualify for § 501(c)(6) status. If an organization engages in lobbying, it can impact the deductibility of any dues paid by its members. While dues are potentially deductible under IRC § 162, that section disallows a deduction for the portion of dues that represents lobbying expenditures. In general, the organization must either notify its members of the amount that is nondeductible or pay a tax on its lobbying expenditures. The organizational definitions in § 501(c)(4), (c)(5), and (c)(6) do not contain any explicit restrictions on political campaign activity. Thus, these organizations may engage in such activity under the tax laws. However, campaign activity (along with any other activities that do not further an exempt purpose) cannot be the organization's primary activity. Additionally, because a § 501(c)(4) organization must be "primarily engaged in promoting in some way the common good and general welfare of the people of the community," it cannot qualify for § 501(c)(4) status if it primarily serves a private benefit. Thus, it appears an organization that primarily benefits partisan interests could jeopardize its § 501(c)(4) status. While the majority of § 501(c) organizations fall into one of the types discussed above, the IRC describes numerous other types of organizations. The limitations the IRC places on the ability of these organizations to participate in political activity is often less clear, and there is minimal IRS guidance on the topic. This may be because the need for guidance has not arisen due to the fact that there are not as many of these organizations and they do not appear to participate in political activities to the same extent as the organizations discussed above. The other types of § 501(c) organizations appear to fall into two categories. The first are those that seem to be prohibited from participating in most, if not all, types of political activity. This category would likely include the § 501(c) trusts whose funds must be dedicated to their exempt purpose (e.g., § 501(c)(17) supplemental unemployment benefit trusts, § 501(c)(21) black lung benefit trusts, and § 501(c)(22) multi-employer pension plan trusts). It also appears to include the organizations that the IRS has indicated in unofficial guidance may not participate in political activities "because the subparagraph in which they are described limits them to an exclusive purpose (for example, IRC 501(c)(2) title holding companies, IRC 501(c)(20) group legal services plans)." This rationale could also prohibit § 501(c)(10) domestic fraternal societies, for example, from participating in political activities because their net earnings must be devoted exclusively to certain purposes. To the extent that any organizations are precluded from participating in political activities, there could still be exceptions for such things as lobbying for legislation that affects the organization's existence or status. The second category are those § 501(c)s that appear able to participate in political activity under the rules applicable to § 501(c)(4), (c)(5), and (c)(6) organizations. Examples would appear to include § 501(c)(7) social and recreational clubs, § 501(c)(8) fraternal benefit societies and associations, and § 501(c)(19) veterans' groups. Even though certain § 501(c) organizations may engage in political activity, they are subject to tax if they make an expenditure for a § 527 "exempt function." An "exempt function" is the "influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office or office in a political organization, or the election of Presidential or Vice-Presidential electors.... " The tax is imposed at the highest corporate rate on the lesser of the organization's net investment income or the total amount of "exempt function" expenditures. Thus, for organizations with little or no net investment income or those making low-cost expenditures, the tax is of minimal import. For others groups, however, it might serve as a disincentive to directly engage in the activities giving rise to the taxable expenditures. Section 501(c) organizations may lawfully avoid the tax by setting up a separate segregated fund under § 527(f)(3) to conduct the taxable political activities. Assuming the fund is set up and administered properly, it will be treated as a separate § 527 political organization and the § 501(c) organization will not be subject to tax. However, a § 501(c) organization may not set up such a fund to accomplish activities the organization itself may not do. Thus, for example, a § 501(c)(3) organization may not use such a fund as a way to get around the prohibition on campaign intervention. Under the IRC, § 501(c) organizations are generally required to file an annual information return (Form 990) with the IRS. Filing organizations are required to report information regarding their political activities on the Form's Schedule C. On the Schedule C, § 501(c)(3) organizations are required to describe their direct and indirect political campaign activities and report information on their political expenditures, volunteer hours, and any § 4955 excise taxes incurred. Section 501(c)(3) organizations must also report information about their lobbying activities on the Schedule. The specific information that must be reported differs depending on whether the organization made the § 501(h) election. Meanwhile, organizations other than those described in § 501(c)(3) must: (1) describe their direct and indirect political campaign activities; (2) report the amount spent conducting campaign activities and the number of volunteer hours used to conduct those activities; (3) report the amount directly spent for § 527 exempt function activities; (4) report the amount of funds contributed to other organizations for § 527 exempt function activities; (5) report whether a Form 1120-POL (the tax return filed by organizations owing the § 527 tax) was filed for the year; and (6) report the name, address, and employer identification number of every § 527 political organization to which a payment was made and the amount of such payments, and indicate whether the amounts were paid from internal funds or were contributions received and directly transferred to a separate political organization. There is also space for § 501(c)(4), (c)(5), and (c)(6) organizations to report information regarding their lobbying activities with respect to the deductibility of dues paid by their members. On the Form 990's Schedule B, § 501(c) organizations must report the names and addresses of significant donors, which are generally individuals who contributed at least $5,000 during the year. These are all donors meeting this threshold, and not just those who contributed for political activities. The organization and the IRS must make the organization's Form 990 and accompanying schedules publicly available. However, identifying information about the donors reported on the Schedule B is not subject to public disclosure, except for donors to private foundations.
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As the 2010 election cycle heats up, attention is focused on the political activities of tax-exempt § 501(c) organizations. This is due in large part to a recent Supreme Court case, Citizens United v. FEC, which invalidated long-standing prohibitions in federal campaign finance law on corporate and labor union campaign treasury spending. These prohibitions had affected § 501(c) organizations because many are incorporated and because all organizations (regardless of corporate status) could not serve as conduits for corporate or labor union treasury funds. Thus, post-Citizens United, § 501(c) organizations are among the entities operating with less restriction under federal campaign finance law. As a result, it is expected there will be increased political activity by the tax-exempt sector in 2010 in comparison with past election cycles. Due to this expectation, significant attention is being paid to the regulation of § 501(c) groups under the Internal Revenue Code (IRC). Under the IRC, the ability of § 501(c) organizations to engage in political activity, such as electioneering and lobbying, depends on the type of organization. For example, the charitable organizations described in § 501(c)(3) may not engage in any campaign activity and may only conduct a limited amount of lobbying. Meanwhile, § 501(c)(4) social welfare organizations, § 501(c)(5) labor unions, and § 501(c)(6) trade associations may engage in campaign activity (so long as such activity and any other non-exempt purpose activity is not their primary activity) and an unlimited amount of lobbying. Other types of § 501(c) organizations appear to either be subject to restrictions like those imposed on § 501(c)(3) organizations or treated similarly to § 501(c)(4), (c)(5), and (c)(6) organizations. While some types of organizations are permitted to engage in election-related activities under the IRC, § 501(c) organizations are subject to tax for making certain political expenditures. The tax is imposed on the lesser of the taxable expenditures or the organization's net investment income. Thus, for organizations with little or no net investment income or those making low-cost expenditures, the tax is of minimal import. For other groups, however, it might serve as a disincentive to directly engage in the activities giving rise to the taxable expenditures. Finally, § 501(c) organizations must report information regarding their political activities to the IRS on Schedule C of the Form 990. This information must be made publicly available by the organization and the IRS. While information on certain donors also must be reported to the IRS on the Form's Schedule B, any identifying information about those donors is generally not subject to public disclosure. While this report discusses the political activity limitations in the IRC, it is important to realize that organizations must also comply with applicable election and lobbying laws. For analysis of the intersection between tax and campaign finance laws, see CRS Report R40141, 501(c)(3) Organizations and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by [author name scrubbed] and [author name scrubbed]; CRS Report RL34447, Churches and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by [author name scrubbed] and [author name scrubbed]; CRS Report R40183, 501(c)(4) Organizations and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by [author name scrubbed] and [author name scrubbed]; and CRS Report RS22895, 527 Groups and Campaign Activity: Analysis Under Campaign Finance and Tax Laws, by [author name scrubbed] and [author name scrubbed]. For discussion of the applicability of federal lobbying law to tax-exempt organizations, see CRS Report 96-809, Lobbying Regulations on Non-Profit Organizations, by [author name scrubbed].
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The No Child Left Behind Act of 2001 (NCLB, P.L. 107-110 ) established the Rural Education Achievement Program (REAP) under Title VI-B of the Elementary and Secondary Education Act of 1965 (ESEA). Congress created this program to address the unique needs of rural schools that disadvantage them relative to nonrural schools. To compensate for the challenges facing rural schools, REAP awards two types of formula grants; one goes directly to eligible school districts, or local educational agencies (LEAs), and a second grant goes to states, which then award subgrants to LEAs. The authorization for REAP, along with the rest of the ESEA, expired at the end of FY2008. However, these programs continue to operate as long as appropriations are provided. Congress is expected to consider whether to amend and extend the ESEA programs, including REAP. This report will discuss the challenges facing rural schools, the manner in which REAP addresses these challenges, and reauthorization issues that may arise as Congress takes up the ESEA. Much of the discussion of reauthorization considerations centers on allocation of funds, given that allocation issues tend to factor prominently in deliberations about REAP. According to their proponents, rural schools have some advantages over their urban and suburban counterparts. Rural teachers are key members of the community and tend to know students and their families well. Rural schools have less complex organizational structures with fewer layers than nonrural school systems, and are able to adjust or adapt relatively quickly to change. Additionally, the schools within rural communities are very visible and strongly connected with the community. However, rural schools also confront significant challenges. Many face the worst of local fiscal limitations due to tax base constraints. Resource shortages produce various problems, including limited range of curricular options (such as a lack of advanced placement course offerings) and difficulties providing competitive salaries to attract and retain highly qualified teachers. Rural schools tend to have declining enrollment due to net out-migration and an aging of the population. Rural schools' low population density results in other problems, such as high transportation costs and limited access to cultural and educational resources. In addition to these general challenges, rural LEAs may face particular problems meeting NCLB requirements, such as standards of adequate yearly progress (AYP). They may also find it difficult to implement NCLB's consequences for failure to make AYP (such as providing public-school choice and supplementary educational services), and they often experience difficulty in attracting and retaining qualified teachers of core academic subjects (such as math and science). A study by the Government Accountability Office (GAO) confirmed these problems. The GAO study reached five main conclusions. Achieving NCLB goals for large enrollments of economically disadvantaged students presents more challenges for rural LEAs than for nonrural LEAs. Some rural districts lack the community resources, such as libraries and museums, that may support improved academic performance. Compared with nonrural LEAs, rural LEAs are more likely to experience problems recruiting teachers because of difficulties offering competitive salaries. Small rural districts are more likely to report that factors related to school size and geographic isolation, such as limited personnel, make it difficult to release teachers and administrators for attending conferences and training, impeding their ability to implement NCLB requirements. Some rural districts indicated that limited numbers of staff created difficulties completing NCLB requirements, such as reporting on school progress. The U.S. Department of Education (ED) has sought to address concerns of rural school districts. In response to the GAO report, ED has attempted to provide additional flexibility for rural LEAs. For example, ED allows teachers in rural LEAs "extra time—up to 3 years—to meet teacher qualification requirements," and permits states to "use a single state test for teachers to demonstrate subject matter competency for core academic subjects." Congress created REAP to meet many of the challenges identified in the subsequent GAO study. According to the statute, REAP funds are to address "the unique needs of rural school districts that frequently (1) lack the personnel and resources needed to compete effectively for Federal competitive grants; and (2) receive formula grant allocations in amounts too small to be effective in meeting their intended purposes." REAP authorizes two rural education programs under ESEA Title VI-B. Subpart 1 authorizes the Small, Rural School Achievement Program (SRSA), which focuses on LEAs with less than 600 students. Subpart 2 authorizes the Rural and Low-Income School Program (RLIS), which focuses on larger rural LEAs with relatively high poverty rates (at least 20% of children from families below the poverty line). Funds are to be divided equally between the SRSA and RLIS programs. NCLB authorized REAP at $300 million for FY2002 and "such sums as necessary" for FY2003-FY2007; however, the program continues to operate as long as appropriations are provided. In FY2012, $179 million was appropriated for REAP. Table 1 shows the history of appropriations for the program. Appropriations have grown modestly, except for FY2006 and FY2011. Overall, appropriations for FY2012 represent about a 10% increase over FY2002, the first year of program funding. To be eligible for REAP funds, LEAs must be designated rural by the ED. The National Center for Education Statistics (NCES) has devised a typology to classify schools based on their geographic location. Using Census Bureau geographic data, NCES assigns so-called "locale codes" to each school. Locale codes are used to classify schools along an eight-point urban-to-rural scale that is based on their proximity to metropolitan areas. These so-called "metro-centric" locale codes are defined as follows: 1 = Large City : A central city of a core based statistical area (CBSA) or metropolitan statistical area (MSA), with the city having a population greater than or equal to 250,000. 2 = Midsize City : A central city of a CBSA or MSA, with the city having a population of less than 250,000. 3 = Urban Fringe of a Large City : Any territory within a CBSA or MSA of a Large City and defined as urban by the Census Bureau. 4 = Urban Fringe of a Midsize City : Any territory within a CBSA or MSA of a Midsize City and defined as urban by the Census Bureau. 5 = Large Town : An incorporated place or Census-designated place with a population greater than or equal to 25,000 and located outside a CBSA or MSA. 6 = Small Town : An incorporated place or Census-designated place with a population less than 25,000 and greater than or equal to 2,500 and located outside a CBSA or MSA. 7 = Rural, Outside MSA : Any territory designated as rural by the Census Bureau that is outside a CBSA or MSA of a Large or Midsize City. 8 = Rural, Inside MSA : Any territory designated as rural by the Census Bureau that is within a CBSA or MSA of a Large or Midsize City. An LEA is eligible for the Small Rural School Achievement (SRSA) program if all schools served by the LEA have a locale code of 7 or 8 and either its average daily attendance (ADA) is less than 600 or the county or counties in which the LEA is located has a population density of fewer than 10 people per square mile. The SRSA statute allows the Secretary of Education to waive the locale code requirement (but not the ADA or population density requirements) based on a state government agency's determination that the LEA is located in a rural area. An LEA is eligible for the Rural Low-Income School (RLIS) program if all its schools have locale codes of 6, 7, or 8 and at least 20% of the children the LEA serves are from families below the poverty line. Unlike the SRSA program, the RLIS statute does not provide the Secretary with waiver authority for the locale code requirement. Finally, an LEA that receives a grant under the SRSA program is not eligible for RLIS funding. Table 2 shows estimates of LEAs eligible for the SRSA and RLIS programs based on CRS analysis of Common Core of Data (CCD). As the table illustrates, compared with determination by locale alone, combining eligibility criteria significantly reduces the number of LEAs that are eligible for assistance. In the case of the SRSA program (as noted below), actual grants for eligible LEAs can be reduced or even eliminated depending on funds eligible LEAs receive under offsetting ESEA formula grant programs. Amounts that LEAs receive and aggregate state amounts are determined differently under the SRSA and RLIS programs. Under the SRSA program, an initial amount is calculated for each eligible LEA and then funds are added based on enrollment and subtracted based on "offsetting" amounts received from other ESEA programs. Under RLIS, grants are first made to states based on a formula and then subgranted to LEAs either on a formula or competitive basis. To the initial SRSA base grant of $20,000, an additional amount is added based on the number of students in the LEA for LEAs with more than 50 students. The additional amount is equal to $100 for each student over 50; however, no grant amount may exceed $60,000. The following are some examples of initial amount calculations: LEAs with 50 students or fewer have initial amounts of $20,000. An LEA with 55 students has an initial amount of $20,500 (i.e., $20,000 plus $500, which is $100 times the five students over 50). An LEA with 449 students has an initial amount of $59,900 (i.e., $20,000 plus $39,900, which is $100 times the 399 students over 50). LEAs with between 450 and 599 students have initial grants of $60,000 (e.g., the calculation based on 451 students would be $20,000 plus $40,100, which is $100 times the 401 students over 50; since this exceeds the maximum amount of $60,000, the amount of the award would be $60,000). Congress intended the SRSA program to be a supplement to certain other ESEA grant funds. Thus, an LEA's final grant is based on adjusting its initial amount by the total amount it received from the following ESEA grant programs in the prior fiscal year: LEA subgrants under the Teacher and Principal Training and Recruiting Fund (Subpart 2 of Title II), LEA technology grants (Section 2412(a)(2)(A) of Title II), LEA grants under the Safe and Drug-Free Schools and Communities program (Section 4114), and Innovative Programs under the Promoting Informed Parental Choice and Innovative Programs (Part A of Title V). As a result of this "offset" provision, an LEA receiving a total of $60,000 or more from these four ESEA programs would not receive any additional funds under the SRSA program. As SRSA-eligible, these LEAs would also not receive funds under the RLIS program. State amounts for the SRSA program are the sum of amounts allocated to LEAs in each state. Unlike the SRSA program, the statute instructs the Secretary to reserve funds from the total RLIS appropriation for Bureau of Indian Education (BIE) schools (0.5%) and for outlying areas (0.5%). The remainder is allotted to states based on each state's share of students attending schools in eligible LEAs nationwide. Thus, for example, a state with 2% of the national enrollment in RLIS-eligible LEAs would receive 2% of funds remaining after reserving BIE and outlying area funds. States then award subgrants to eligible LEAs either competitively or based on a formula selected by the state, and approved by the Secretary. Note that this procedure makes it impossible to estimate individual LEA grants. In a number of cases, states receive funds under one program but not under the other. For example, Alabama receives no SRSA grants but does receive RLIS funding. This is because none of Alabama's 132 LEAs have enrollments less than 600. This is also true for other southeastern states, which tend to have larger consolidated or countywide LEAs and few or no small LEAs. On the other hand, Alabama has about 60 LEAs for which all schools have metro-centric locale codes of 6, 7, or 8 and poverty rates of at least 20%. Thus, Alabama receives a substantial grant under the RLIS program, as do other southeastern states. On the other end of the spectrum, some states receive little, if any, RLIS funding and comparatively large SRSA awards. One reason is that some states have very few high-poverty LEAs. For example, Connecticut, which receives no RLIS funding, has only six of its 193 LEAs with poverty rates of 20% or more and none of them are rural. Minnesota, which receives relatively little RLIS funding, has 159 of its 168 LEAs eligible for SRSA grants, which results in a relatively large amount of SRSA funding. Some states have many LEAs that are eligible for both programs but can only be eligible for SRSA grants, as required under the statute. For example, South Dakota, which has about 30 of its 179 LEAs eligible under RLIS, has only four that receive RLIS funds because the rest are eligible under both the RLIS and SRSA programs. Finally, there are several states that receive little or no funds from either program. In FY2010, Hawaii, Maryland, Vermont, and the District of Columbia receive no REAP funding. Recipients of SRSA grants may use funds for activities authorized by several ESEA programs: Improving Basic Programs Operated by Local Educational Agencies (Part A of Title I), Teacher and Principal Training and Recruiting Fund and Enhancing Education Through Technology (Part A or D of Title II), Language Instruction for Limited English Proficient and Immigrant Students (Title III), Safe and Drug-Free Schools and Communities and 21 st Century Community Learning Centers (Part A or B of Title IV), and Innovative Programs (Part A of Title V). In addition, under the so-called REAP-Flex provision, all LEAs that are eligible for SRSA grants (whether or not they receive grants because offsetting ESEA funding exceeds initial grant calculations) have the flexibility to use "offsetting funds" from other ESEA programs for any activities authorized by the above ESEA programs. ED provides the following example of use of funds under REAP-Flex: "[A]n LEA may use funds under the Safe and Drug-Free Schools Program (Title IV, Part A) to incorporate technology into its early reading program—an authorized local activity under the Educational Technology State Grant (Title II, Part D)." The GAO found that flexibility under the SRSA program allowed small, rural LEAs to redirect funds to crucial NCLB needs. "[I]n one rural state contacted, officials reported that many of their districts used Safe and Drug-Free School Program funds to support their technology initiatives, which, in turn, helped with implementing some of the provisions of NCLB." RLIS grant recipients may use funds for the following purposes: teacher recruitment and retention, including the use of signing bonuses and other financial incentives; teacher professional development, including programs that train teachers to utilize technology to improve teaching and to train special needs teachers; educational technology, including software and hardware, as described in Part D of Title II (Enhancing Education Through Technology); parental involvement activities; activities authorized under the Safe and Drug-Free Schools program under Part A of Title IV; activities authorized under Part A of Title I; and activities authorized under Title III (Language Instruction for Limited English Proficient and Immigrant Students). The GAO reported other uses of REAP funds to help meet costs associated with NCLB requirements, including 86% of responding rural superintendents reported spending REAP funds on student and teacher technology needs; 66% reported using REAP funds for NCLB supplementary services for students; 94% said they used these funds for professional development related to helping teachers meet NCLB highly qualified teacher requirements; and 60% used REAP funds for student remedial services to prepare them for annual assessments. According to statute, REAP aims to compensate rural school districts because they often "receive formula grant allocations in amounts too small to be effective in meeting the intended purposes" of these grant programs. CRS analysis of ED Budget Service data reveal that SRSA-eligible LEAs indeed receive substantially smaller formula grant amounts than SRSA-ineligible LEAs due to their substantially smaller enrollments. On the other hand, hold harmless provisions in programs like Title II-A mean that SRSA-eligible LEAs receive substantially higher awards than SRSA-ineligible LEAs on a per-pupil basis. Whether Congress chooses to reauthorize this hold-harmless provision could determine whether SRSA-eligible LEAs continue to receive a higher per-pupil share of these federal funds, in addition to funds awarded under REAP. In addition, Congress may consider whether the supplemental funds provided under REAP are spread too thinly to make a difference. While the average award per student for SRSA grants is $81, the average award per pupil for RLIS grants is only $28. Since the 1980s, NCES has used the "metro-centric" locale codes described earlier in this report as having eight urban-to-rural classifications. In recent years, NCES and the Census Bureau have devised a new "urban-centric" locale code system with 12 classifications. NCES contends that the new codes more accurately depict a school's geographic context for three reasons: (1) improved geocoding technology, (2) reflection of recent residential developments and population shifts, and (3) additional classifications allow for finer distinctions between the edges of suburb land and the beginnings of rural territory. The new urban-centric locale codes are as follows: 11 = Large City : Territory inside an urbanized area and inside a principal city with population of 250,000 or more. 12 = Midsize City : Territory inside an urbanized area and inside a principal city with population of less than 250,000 and greater than or equal to 100,000. 13 = Small City : Territory inside an urbanized area and inside a principal city with population of less than 100,000. 21 = Large Suburb : Territory outside a principal city and inside an urbanized area with population of 250,000 or more. 22 = Midsize Suburb : Territory outside a principal city and inside an urbanized area with population of less than 250,000 and greater than or equal to 100,000. 23 = Small Suburb : Territory outside a principal city and inside an urbanized area with population of less than 100,000. 31 = Fringe Town : Territory inside an urban cluster that is less than or equal to 10 miles from an urbanized area. 32 = Distant Town : Territory inside an urban cluster that is more than 10 miles and less than or equal to 35 miles from an urbanized area. 33 = Remote Town : Territory inside an urban cluster that is more than 35 miles from an urbanized area. 41 = Fringe Rural : Census-defined rural territory that is less than or equal to 5 miles from an urbanized area, as well as rural territory that is less than or equal to 2.5 miles from an urban cluster. 42 = Distant Rural : Census-defined rural territory that is more than 5 miles but less than or equal to 25 miles from an urbanized area, as well as rural territory that is more than 2.5 miles but less than or equal to 10 miles from an urban cluster. 43 = Remote Rural : Census-defined rural territory that is more than 25 miles from an urbanized area and is also more than 10 miles from an urban cluster. NCES has planned on phasing out the metro-centric codes, but continues to make them available solely for operation of REAP. Should Congress reauthorize the program, it will likely consider moving to the new locale codes. In doing so, policy makers may want to consider which of the new codes are comparable to the old codes and the impact that switching codes may have on REAP eligibility. NCES contends that the old metro-centric locale codes for rural locations correspond closely with the new urban-centric rural locale codes. CRS analysis of CCD data confirms this position. Table 3 reveals a great deal of overlap between rural schools identified under the old and new systems. Of the schools classified as rural under the metro-centric system (i.e., coded as 7 or 8), over nine-in-ten (92.5%) were also classified as rural under the urban-centric system (i.e., coded as either 41, 42, or 43). Similarly, nearly nine-in-ten (89.5%) schools given city or urban fringe codes under the metro-centric system (i.e., codes 1 through 4) were given city or suburban codes under the urban-centric system (i.e., codes 11-23). Correspondence among the old and new town categories is not quite as straightforward; however, it appears the best match for the old "small town" code (6) is the new codes for "distant" and "remote" towns (32 and 33, respectively). Of the schools coded "small town" under the urban-centric system, three-quarters were given a metro-centric code of "distant town" (38.5%) or "remote town" (38.3%) and an additional 12.0% were coded "rural." Based on these data, some have proposed replacing the metro-centric rural codes with the urban-centric rural codes in the following manner: (1) to be SRSA-eligible, all schools in an LEA must have an urban-centric code between 41 and 43, and (2) to be RLIS-eligible, all schools in an LEA must have an urban-centric code between 32 and 43. Table 4 presents the estimated number of LEAs that would be eligible using the old and new locale codes while retaining all other aspects of current law (i.e., the ADA, population density, and poverty requirements remain unchanged). According to the CRS analysis presented in Table 4 , the proposed switch to the new locale codes would increase the number of eligible LEAs in both the SRSA and RLIS programs from 4,538 to 4,611 and 1,399 to 1,563, respectively. Although there is a very large amount of overlap among these LEAs, replacing metro-centric codes with the newer and arguably more accurate urban-centric codes will remove hundreds of LEAs from eligibility and add hundreds of others. As a result, some LEAs and states will lose funding, others will gain funding. Unless there are significant increases in REAP funding, any formula change will produce "winners" and "losers." Since the Census Bureau is eliminating the metro-centric codes, continued use of these data is not an option unless legislation specifically mandates their continued production. To mitigate the impact of the new codes, Congress could choose to hold harmless those eliminated LEAs indefinitely or for a period of time (perhaps at a decreasing percentage of their prior year grants) so they can adjust to the funding loss. While hold-harmless provisions would soften the blow to these LEAs, a formula change based on the new locale codes would result in lower grants overall (assuming level or near-level funding) to other remaining LEAs as funds are distributed among the two groups already served and the newly eligible LEAs. The current SRSA formula often does not permit all appropriated funds to be allocated to LEAs. In part, this is because SRSA grants are capped at $60,000. The act does not specify how to deal with the allocation of excess funds. As a result, ED has had to make policy on how these excess funds should be distributed. Apparently to adhere to the statute, the ED "ratable increase" procedure maintains both the $60,000 cap and $20,000 floor for the SRSA grants and ratably increases grants falling between these two amounts. The statute could be amended to reflect ED's current procedures. This would ensure that ED continues to follow this procedure in the future. Alternatively, the statute could be amended to provide a different policy for dealing with additional appropriations. For example, the statute could specify a ratable increase procedure under which the minimum and maximum grants could be ratably increased along with all other grants. Presumably, this approach would slightly reduce LEAs' grants that fall between the minimum and maximum grants. Another option would be to increase the cap in current law from $60,000 to some higher amount. LEAs that are eligible for the SRSA program (based, in part, on enrollment below 600) are not eligible for grants under the RLIS program (which targets rural LEAs with relatively high poverty rates). Since it can be argued that these LEAs are triply disadvantaged—being rural, small, and poor—a possible change in the statute could recognize this by allowing small, poor rural LEAs to benefit from both programs. This would add hundreds of LEAs to the RLIS eligibility list and redistribute RLIS state grants by increasing grants to states with large numbers of small, poor LEAs and reducing grants to states with few small LEAs (mostly states in the Southeast). If further targeting were desired, a higher poverty threshold could be set for small, poor LEAs. For example, a poverty rate of 30% or greater would add far fewer LEAs to the RLIS eligibility pool. The SRSA formula has resulted in some distributional anomalies, which might be addressed by formula modifications. For example, the minimum grant of $20,000 results in some very large per-pupil grants. While the average per-pupil grant is about $80, a few LEAs receive per-pupil grants as high as $19,000. This results because they have only one or a few students. One approach for reducing this result would be to limit LEA participation to LEAs with a minimum total enrollment. Another anomaly occurs when LEAs have offsetting program amounts that are just a few dollars less than their final SRSA grant. For example, some LEAs receive grants as low as $39. A solution to this would be to eliminate final grants that are deemed to be below a size to be effective. These funds could then be distributed to other LEAs to enhance their grants. Some have considered the circumstance in which LEAs eligible for the SRSA program have offsetting grants larger than their initial grant to be problematic. While such LEAs can still use the REAP Flex provision, they receive no additional REAP funds. Although this is in keeping with the intent of the REAP purposes, some argue that such LEAs are still in need of additional assistance. One alternative to this situation would be to calculate the SRSA initial grants without the minimum and maximum grants of $20,000 and $60,000, subtract the offsetting grant amounts, then apply the minimum and maximum grant amounts. This would reduce the number of LEAs that are eligible but receive no funding. A final concern that some states have is that, unlike the RLIS program, states receive no state administration funding under the SRSA program, despite having to provide ED with much of the data used to allocate funds (such as offsetting program grant amounts). This could be addressed by reserving 2% (or some other percent) of the appropriation for the SRSA program for state administration. Of course, this would reduce funds going to small, rural LEAs by the percentage reserved for state administration. Although some argue that national poverty thresholds overstate poverty in rural areas compared to cities, others have suggested that the measure used to identify "low-income" LEAs for RLIS eligibility does not adequately reflect poverty in very small, rural locations. The measure used for RLIS eligibility is the same as that used for many federal programs (including ESEA Title I-A); that is, the Census Bureau's Small Area Income and Poverty Estimates (SAIPE). The SAIPE program provides annual estimates of income and poverty statistics for all states, counties, and school districts. For states and counties, these estimates combine survey data with population estimates and administrative records. For school districts, the county estimates are combined with data from the decennial census and federal tax information to produce estimates of the number of related children ages five to 17 in families in poverty. For purposes of the REAP program, what is important to know about the SAIPE school district poverty estimates is that they are generated through a process in which data at broad levels of aggregation (i.e., from national, regional, or state sources) are progressively distributed to more narrow geographic levels (i.e., to counties and school districts). This process inevitably involves some degree of distributional error as it moves from large, populous areas to smaller, sparsely populated areas. Some rural program proponents contend that in small, sparsely populated school districts, child poverty could be better estimated using data from the National School Lunch Program, commonly referred to as Free and Reduced-Price Lunch (FRPL) data. State agencies that administer the program submit data on the number of FRPL-eligible students to NCES through its Public Elementary/Secondary School Universe Survey (part of the CCD). One proposal to use FRPL data is contained in S. 1052 , the Rural Education Achievement Program Reauthorization Act of 2009. This bill proposes replacing the 20% poverty threshold using SAIPE data with a 40% low-income threshold using FRPL data for RLIS eligibility. Table 5 presents the estimated number of LEAs which would be eligible using the SAIPE and FRPL data under both the old and new locale codes. According to CRS analysis, the proposed switch to the FRPL data would substantially increase the number of eligible LEAs using either the old or new locale codes. Using the old locale codes, a switch from SAIPE data to FRPL data would add nearly 800 LEAs. Using the new locale codes, this switch would add over 900 LEAs. Should Congress decide to switch to FRPL data, it could set a threshold higher than 40% to reduce the number of newly eligible LEAs. Given the well documented problems with the quality of these data (see the Appendix at the end of this report for a discussion of these issues), Congress may wish to analyze the distributional impacts of using FRPL data more closely. Even if the threshold were set high enough to keep the number eligible LEAs about the same as the current number, there would undoubtedly be significant shifts in the distribution of RLIS funds across regions and states. Through the 1994 ESEA amendments ( P.L. 103-382 ), Congress directed the National Research Council (NRC) to examine the use of SAIPE data for Title I allocations and for other purposes. The NRC concluded that SAIPE data were the best currently available; however, it recommended that research be conducted into possible improvements that may result from incorporating additional income-related information, including FRPL data, into the SAIPE procedures. Despite noting several reporting and enrollment problems with these data (documented both by the Department of Agriculture and NCES ), analysts at the Census Bureau undertook research to determine whether FRPL data may improve SAIPE data. The researchers concluded: Through regression analysis we estimate a positive relationship between FRPL data and Census 2000 poverty estimates with a median prediction error of 30 percent. The high degree of prediction error suggests the FRPL data are not sufficiently precise for formal use in producing school district poverty estimates at this time. Since some have proposed that FRPL data replace SAIPE data for determining LEA poverty and RLIS eligibility, it is worth taking a closer look at the limitations of FRPL data. In its CCD documentation, NCES notes the following with respect to the counts of students eligible for the free school lunch program: "These counts of students [eligible for the free school lunch program] may be taken by the schools at a different time than the membership counts [a measure of enrollment], therefore the count of free lunch and membership students may not be comparable in a given school." In a 2005 Federal Register notice, the Secretary of Education described additional problems with FRPL data as follows: First, the family income threshold needed to qualify for the FRPL program is 185 percent of the poverty level used by the Census Bureau. Hence, many more children qualify for the FRPL program than are considered poor under the census definition, which makes FRPL eligibility too expansive a measure of poverty. Second, FRPL data tend to undercount children in middle and high schools, because children in the upper grades tend to participate in the school lunch program in significantly lower numbers. Therefore, the number of poor children in high school districts are typically not accurately represented by FRPL counts. Third, FRPL data are self-reported data. The number of children included in the FRPL count depends on how many families apply for the program. The extent to which school districts and schools reach out and recruit families to apply for the program will affect the number. Because of this factor, the USDA, which administers the school meals programs, has raised concerns about the accuracy of these data. Several data sources, including the eligibility verifications performed by school districts, indicate that a significant number of ineligible children appear to have been certified for free and reduced meals and, therefore, that these data may not be an adequate measure for poverty for other program uses. USDA believes that the authority for school officials to use counts of children eligible for free and reduced-price meals in determining Title I within-district allocations may provide an incentive for those officials to inflate those counts. Finally, because FRPL are self-reported data, the relationship between census poverty and FRPL is not consistent across geographic areas. Nationally, for example, the number of children eligible for the FRPL in school year 2000–01 among the States ranges from 1.5 to 41 times the number of children who meet the census criteria for poverty. Census Bureau analysis put the discrepancy between official poverty estimates and FRPL estimates this way: Between 1994 and 2004, the ratio of school-age children receiving free or reduced-price lunch increased from 28.6 to 32.2 percent, using state-level data from the [Food and Nutrition Service]. For the same time period, the estimated poverty rate for related children ages 5 to 17 decreased from 19.8 to 16.2 percent, using data from the [Current Population Survey]. As official estimates of poverty declined during the economic expansion of the late 1990s, the FRPL data collected during that time suggest that there was an increase in the number of low-income children.
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The No Child Left Behind Act of 2001 (NCLB, P.L. 107-110) established the Rural Education Achievement Program (REAP) under Title VI, Part B of the Elementary and Secondary Education Act of 1965 (ESEA). Congress created this program to address the unique needs of rural schools that disadvantage them relative to nonrural schools. To be eligible for REAP funds, a local education agency (LEA) must be designated rural and must meet one of three additional requirements involving enrollment size, population density, and poverty status. Currently, REAP provides awards to nearly 6,000 LEAs, out of a total of about 14,000 nationwide. REAP authorizes formula grants through two subprograms: the Small Rural School Achievement (SRSA) program provides grants directly to LEAs and the Rural Low-Income School (RLIS) program provides grants to states, which then award subgrants to LEAs. The amount of funds received by eligible LEAs is determined differently by the SRSA and RLIS programs. Under the SRSA program formula, an initial amount is calculated for each eligible LEA based on enrollment; these amounts are then reduced based on offsetting amounts received from other ESEA programs. Under RLIS, formula grants are awarded to states based on the state's share of eligible students; states then subgrant funds to LEAs either on a formula or competitive basis. REAP funds may be used for a wide range of activities authorized throughout the ESEA, including Titles I-A, II-A, II-D, III, IV-A, IV-B, and V-A. In addition, the so-called REAP-Flex provision (ESEA, Sec. 6211) allows SRSA-eligible LEAs to use ESEA funds for certain activities not authorized by the program through which the LEA received such funds. A Government Accountability Office (GAO) study found that a large majority of LEAs use REAP funds to meet the NCLB highly qualified teacher requirement as well as the district's technology needs. The authorization for REAP, along with the rest of the ESEA, expired at the end of FY2008. However, these programs continue to operate as long as appropriations are provided. Congress is expected to consider whether to amend and extend the ESEA programs, including REAP. This report will conclude with a discussion of reauthorization issues related to REAP that may arise as Congress takes up the ESEA.
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T he Family and Medical Leave Act of 1993 (FMLA; P.L. 103-3 , as amended) entitles eligible employ ees to unpaid, job-protected leave for certain family and medical needs, with continuation of group health plan benefits. The 114 th Congress considered several bills to amend the FMLA. These proposals sought to create new entitlements (i.e., provide additional leave time); expand categories of permissible leave by creating new FMLA-qualifying uses of leave and by expanding the circumstances under which existing leave categories may be used; and modify employee eligibility requirements, generally and for specific worker groups. The FMLA requires that covered employers grant up to 12 workweeks of leave in a 12-month period to eligible employees for one or more of the following reasons: the birth and care of the employee's newborn child, provided that leave is taken within 12 months of the child's birth; the placement of an adopted or fostered child with the employee, provided that leave is taken within 12 months of the child's placement; to care for a spouse, child (generally a minor child), or parent with a serious health condition; the employee's own serious health condition that renders the employee unable to perform the essential functions of his or her job; and qualified military exigencies if the employee's spouse, child, or parent is a covered military member on covered active duty. In addition, the act provides up to 26 workweeks of leave in a single 12-month period to eligible employees for the care of a covered military servicemember (including certain veterans) with a serious injury or illness that was sustained or aggravated in the line of duty while on active duty. In general, to be eligible for FMLA leave, an employee must work for a covered employer; have 1,250 hours of service in the 12 months prior to the start of leave; work at a location where the employer has 50 or more employees within 75 miles of the worksite; and have worked for the employer for 12 months. Private-sector employers are covered by the act if they engaged in commerce and had 50 or more employees for 20 weeks in the current or last calendar year. The FMLA also applies to public agencies (i.e., federal, state, and local governments), which are covered employers regardless of their staffing levels in the previous or current calendar year. However, public-sector employees must still meet the worksite coverage requirement (i.e., 50 employees within 75 miles of the worksite) to be eligible for FMLA leave. Since its passage in 1993, the FMLA has been amended four times to cover certain legislative branch employees ( P.L. 104-1 ); create and then modify a new entitlement for military family leave ( P.L. 110-181 and P.L. 111-84 , respectively); and modify the hours-of-service eligibility requirement for airline flight crew ( P.L. 111-119 ). Table 1 summarizes the act's legislative history. Several bills were introduced in the 114 th Congress to amend the FMLA. These proposals sought to create new entitlements (i.e., provide additional leave time), expand categories of permissible leave by creating new FMLA-qualifying uses of leave or expanding the circumstances under which existing leave categories may be used, and modify employee eligibility requirements. Some proposals would have amended the act in multiple areas; bill-by-bill summaries are in Table A-1 . Currently, eligible employees are entitled to 12 workweeks of FMLA leave in a 12-month period to address certain family and medical needs and 26 workweeks in a single 12-month period to provide care to a seriously ill or injured servicemember. Two bills would have created an additional entitlement to leave for similar purposes, with some differences: Parental Involvement and Family Wellness Leave. H.R. 5518 would, among other things, have entitled eligible employees to up to four hours of leave during any 30-day period, with a maximum of 24 hours during any 12-month period to (1) participate in or attend a school conference or an activity that is sponsored by a school or community organization attended by the employee's child or grandchild, or (2) to attend to the employee's own routine medical care needs (including appointments) or those of a spouse, minor child, or grandchild, or the general care needs of an "elderly relative." Parental Involvement Leave. H.R. 5535 would have entitled eligible employees to up to eight hours of leave during any 30-day period, with a maximum of 48 hours during any 12-month period, to participate in or attend a school conference or an activity that is sponsored by a school or community organization attended by the employee's child or grandchild. In both cases, employees would be required to notify employers of their intention to use such leave at least seven days in advance of the leave, where possible. This 7-day notice requirement is shorter than the 30-day notice required, where possible, for a foreseeable need to use FMLA leave for the arrival of a new child, a serious health condition, or the serious injury or illness of a servicemember. Under current law, eligible employees may use FMLA leave to care for and bond with a new child, for a serious health condition that renders the employee unable to perform at least one essential function of his or her job, to provide care to a close family member with a serious health condition, and for certain military family needs. The 114 th Congress considered several proposals to expand this set of qualifying uses of FMLA leave by (1) creating new leave categories, and (2) broadening the circumstances under which employees may use existing leave categories. Bills introduced in the 114 th Congress would have allowed employees to use the existing FMLA leave entitlement for bereavement, needs related to domestic violence experienced by the employee or a close family member, family involvement, and medical needs related to certain service-connected disabilities for veterans. The following proposals would have permitted eligible employees to use the existing FMLA leave entitlement for the death of a close family member (or members): S. 1302 / H.R. 2260 would have allowed employees to use their 12-week entitlements for the death of a son or daughter. S. 473 would have allowed employees to use their 12-week entitlements for the death of a son or daughter (of any age), parent, or sibling. The bill would not have allowed employees to use FMLA for the death of a spouse. S. 473 would have further allowed employees to use the existing 12-workweek entitlement to address medical, legal, and other needs related to domestic violence experienced by the employee or the employee's child (including an adult child) or parent. S. 473 would have granted employees limited use of the existing 12-workweek leave entitlement for family involvement, which the bill defined as leave to (1) participate in school-related activities or school-sponsored extracurricular activities for a son or daughter, where school refers to an elementary or secondary school, Head Start program, or a licensed child care facility; or (2) provide transportation to or attend a medical or dental appointment for a spouse, child of any age, or a parent. Employees would be able to use family involvement leave for up to 24 hours in a 12-month period. The bills discussed in the " Proposals to Create New FMLA Leave Entitlements " section of this report would have created an additional entitlement to leave for similar family involvement purposes. H.R. 5165 would have permitted employees to use the current 12 - workweek entitlement for " hospital care or medical services as a veteran for a service-connected disability" that is currently rated at 30% or for which the veteran retired from the Armed Forces by reason of service-connected disability and which was rated at 30% or higher at the time of retirement. Several proposals sought to expand employees' options for using the current set of FMLA-qualifying uses of leave by either (1) expanding the set of relationships for which an employee may use family leave or (2) amending definitions related to the current entitlement. Under current law, an employee may use FMLA leave to assist or provide care to the following sets of family members: Leave for the arrival of a new son or daughter by birth or placement. A son or daughter, as defined by the act, is a "biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis, who is (A) under 18 years of age; or (B) 18 years of age or older and incapable of self-care because of a mental or physical disability." Leave related to a family member's serious health condition may be taken for the employee's spouse, son or daughter, or parent. Military exigency leave (i.e., related to the deployment of certain military members to a foreign country) may be used in relation to a covered military member who is the employee's spouse, son or daughter, or parent. Military caregiver leave (i.e., care of a servicemember with a serious illness or injury) may be used for a servicemember who is the employee's spouse, son or daughter, or parent, or for whom the employee is next of kin. The following legislative proposals would have expanded the groups of family members for whom FMLA leave may be used for caregiving purposes. For the arrival of a new son or daughter by birth or placement (within 12 months of arrival): S. 473 and H.R. 5519 would have amended the definition of son or daughter to include the child of a domestic partner (as well as adult children) and would therefore allow the employee to use leave for the arrival by birth or placement of a domestic partner's new child , and the placement of an adult child. H.R. 5701 would have allowed an employee to use leave for the arrival by birth or placement of a grandchild, including the placement of an adult grandchild. Because the bill would have amended the FMLA definition of son or daughter to include adult children, leave would also be permitted for the placement of an adult child. For needs related to a family member's serious health condition: S. 473 proposed to add a domestic partner, adult child, child of a domestic partner, parent-in-law, grandparent, and sibling. H.R. 5519 proposed to add domestic partner, adult child, child of a domestic partner, parent-in-law, grandparent, grandchild, sibling, and "any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship." H.R. 5701 proposed to add adult child, grandchild, and grandparent. For military exigency leave: S. 473 proposed to add a domestic partner, adult child, child of a domestic partner, parent-in-law, grandchild, and sibling. H.R. 5519 proposed to add domestic partner, adult child, child of a domestic partner, parent-in-law, grandchild, sibling, and "any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship." H.R. 5701 proposed to add adult child, grandchild, and grandparent. For military caregiver leave: S. 473 proposed to add a domestic partner, adult child, child of a domestic partner, son-in-law, daughter-in-law, grandparent, and sibling. H.R. 5519 proposed to add domestic partner, adult child, child of a domestic partner, son-in-law, daughter-in-law, parent-in-law, grandparent, sibling, and any covered servicemember for whom the employee is in a relationship that is "the equivalent of a family relationship." H.R. 5701 proposed to add adult child, grandchild, and grandparent. The 114 th Congress considered legislation that would have broadened or clarified current FMLA-qualifying uses of leave by amending FMLA definitions of son or daughter and serious health condition . Under current law, FMLA defines son or daughter as a "biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis, who is (A) under 18 years of age; or (B) 18 years of age or older and incapable of self-care because of a mental or physical disability." As noted elsewhere in this report, S. 473 , H.R. 5519 , and H.R. 5701 would have amended the FMLA definition of son or daughter to include children of "any age," effectively expanding current FMLA-qualifying uses of leave to include adult children. S. 473 and H.R. 5519 would also have amended the definition to include a child of a domestic partner; likewise broadening the applicability of this leave. The act defines serious health condition as "an illness, injury, impairment, or physical or mental condition that involves (A) inpatient care in a hospital, hospice, or residential medical care facility; or (B) continuing treatment by a health care provider." Neither the act nor its accompanying regulations provide an exhaustive list of conditions that meet this definition; consequently, the determination of a serious health condition is typically treated on a case-by-case basis. S. 2584 and H.R. 4616 would have , among other things , amend ed the act to specify that a " physical or mental condition" as referenced in the statutory definition of a serious health condition includes recovery from surgery related to organ donation . S. 2584 and H.R. 4616 would not have provided that such recovery, on its own, constitutes a serious health condition; statutory tests concerning inpatient care or continuing treatment by a health care provider would still need to be met. The 114 th Congress considered two proposals to amend general eligibility requirements for employees seeking to use FMLA leave and two proposals to amend eligibility requirements for specific worker groups. In general, to be eligible for FMLA leave, an employee must work for a covered employer; have at least 1,250 hours of service in the 12 months prior to the start of leave; have worked for the employer for 12 months; and work at a location where the employer has 50 or more employees within 75 miles of the worksite. The 114 th Congress considered two proposals to amend these general eligibility requirements for employees seeking to use FMLA leave. They are 1. H.R. 5518 , which would have reduce d the minimum number of employees (of the same employer) within 75 miles of an employee's worksite from 50 employees to 15 employees ; and 2. H.R. 5496 , which proposed to amend the general hours - of - service requirement to remove reference to " 1,250 hours of service ... during the previous 12-month period" , and include part-time and full-time employees as "eligible employees . " The bill did not propose changes to hours-of-service requirements for airline flight crew. Two bills proposed new eligibility requirements for certain veterans with service-connected disabilities and for education support professionals. As described earlier, H.R. 5165 proposed to provide a new FMLA-qualifying use of leave for veterans with a service-connected disability rated at 30% or higher. The bill further provided separate eligibility requirements that would have allowed certain veterans to access this new FMLA-protected leave without meeting the standard 12 months and 1,250 hours (over the last 12 months) of employment requirement. The bill proposed that for employees who are veterans with a service-connected disability rated at 30% or higher by the Secretary of Veterans Affairs: A veteran with a service-connected disability rated at 30%-50% would be eligible to use leave for medical care related to his or her service-connected disability if employed for 8 months (with the current employer) and for least 833 hours in the previous 8 month period. A veteran with a service-connected disability rated at 60% or higher would be eligible to use leave for medical care related to his or her service-connected disability if employed for 6 months (with the current employer) and for least 625 hours in the previous 6-month period. Employees using leave for medical needs related to a service-connected disability rated at 30% or higher would be required to provide certification from a VA medical provider or from a non-Department of Veterans Affairs (VA) medical facility "through which the Secretary of Veterans Affairs has furnished hospital care or medical services". For employees who are veterans with a service-connected disability that is not currently rated at 30% or higher by the Secretary of Veterans Affairs, but retired from the Armed Forces by reason of service-connected disability that was rated at 30% or higher using the schedule in use by the VA at the time of retirement, the bill proposed that: A veteran whose service-connected disability was rated at 30%-50% at the time of retirement would be eligible to use leave for medical care related to his or her service-connected disability if employed for 8 months (with the current employer) and for least 833 hours in the previous 8-month period. A veteran whose service-connected disability was rated at 60% or higher at the time of retirement would be eligible to use leave for medical care related to his or her service-connected disability if employed for 6 months (with the current employer) and for least 625 hours in the previous 6-month period. Employees using leave for medical needs related to a service-connected disability rated at 30% or higher at the time of retirement would be required to provide certification from the Department of Defense that describes the terms of the veteran's retirement from the Armed Forces. The effect of the separate eligibility requirement is twofold. First, it would have permitted veterans (e.g., who are new employees) to access FMLA leave for service-connected-disability medical needs sooner than the standard 12-month requirement. Second, because the hours-of-service requirement is also adjusted, it might have facilitated some veterans' year-to-year use of this leave. S. 3444 would have created a separate hours-of-service requirement for educational support professionals (ESP). The bill defined an ESP as an employee of "a public elementary or secondary school or public institution of higher education, that may include (aa) a para educator that provides instructional or non-instructional support; and (bb) a member of the secretarial, clerical, or administrative support staff." Pursuant to S. 3444 , an ESP would meet the hours-of-service requirement for eligibility if during the previous 12 months, the employee worked (for the current employer), at least (1) an average of 60 hours per month or (2) 60% of the "applicable total monthly hours expected for the employee's job description and duties (as assigned for the school year preceding the school year during which the hours of service are calculated)" on average. The proposal would also have allowed the Secretary of Labor to create separate rules for calculating the leave entitlement of ESPs, but would not change the size of the entitlement available to them.
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The Family and Medical Leave Act of 1993 (FMLA; P.L. 103-3, as amended) entitles eligible employees to unpaid, job-protected leave for certain family and medical needs, with continuation of group health plan benefits. Through the act, Congress sought to strike a balance between workplace responsibilities and workers' growing need to take leave for significant family and medical events. Subsequently, Congress added new categories of leave that allow eligible employees to address certain military exigencies stemming from the deployment of a close family member to a foreign country and to care for a servicemember with a serious injury or illness who is a close family member. The act has also been amended to expand access to certain legislative branch employees and to clarify eligibility criteria for airline flight crew. FMLA was last amended in 2009. FMLA remains an issue of interest for Members, and the 114th Congress considered several proposals to amend the act in various ways: Additional leave entitlements. Two bills would have created a new entitlement to take leave for certain family members' school or community activities (H.R. 5535, H.R. 5518) and for the employee's own routine medical needs or that of certain family members (H.R. 5518 only). New FMLA-qualifying uses of the existing leave entitlement. Several proposals aimed to allow employees to use the existing entitlement for new categories of leave, including bereavement (S. 1302/H.R. 2260, S. 473), domestic violence and its effects (S. 473), family involvement (S. 473; in addition to new leave entitlements in H.R. 5535, H.R. 5518), and medical leave for veterans with service-connected disabilities rated at 30% or higher (H.R. 5165). Broader application of existing FMLA-qualifying uses of leave. Five bills proposed to expand employee's options for using the current set of FMLA-qualifying uses of leave by either broadening the set of relationships for which an employee may use family leave (S. 473, H.R. 5519, H.R. 5701) or amending definitions referenced in the descriptions of the current entitlement (S. 473, H.R. 5519, and H.R. 5701 sought to amend the definition of son or daughter to include adult children; and S. 2584/H.R. 4616 proposed amending the definition of serious health condition to reference the recovery from organ donation surgery as a possible condition). Less-restrictive eligibility requirements, generally, and separate requirements for certain worker groups. For general eligibility, H.R. 5518 aimed to reduce the minimum number of employees required within 75 miles of an employee's worksite from 50 employees to 15 employees and H.R. 5496 sought to amend the general hours-of-service requirement to remove the minimum of "1,250 hours of service ... during the previous 12-month period" and allow eligible workers to be "part-time or full-time" employees. H.R. 5165 would have provided new eligibility requirements for certain veterans that allowed them to use FMLA leave for medical treatment related to a service-connected disability rated at 30% or higher sooner than the standard 12-month employment requirement. S. 3444 would have created a separate hours-of-service requirement for educational support professionals.
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Figure 1. Map of Haiti Source: Map Resources. Adapted by CRS. Haiti shares the island of Hispaniola with the Dominican Republic; Haiti occupies the western third of the island. Since the fall of the Duvalier dictatorship in 1986, Haiti has struggled to overcome its centuries-long legacy of authoritarianism, extreme poverty, and underdevelopment. While significant progress has been made in improving governance, democratic institutions remain weak. Poverty remains massive and deep, and economic disparity is wide. Attempts at democratic rule have been intermittent and only partially successful. In 1991, a military coup interrupted the first term of Haiti's first democratically-elected President, Jean-Bertrand Aristide; the threat of a U.S. military intervention allowed him to return three years later and finish his term. In 1996, the first transition between two democratically elected presidents in Haitian history occurred when René Préval assumed the presidency. Five years later, in 2001, Aristide was re- elected. Political conflict led to the collapse of his government in 2004, which was followed by an interim government. Charges of corruption against Aristide, dissolution of the parliament by Préval in his first term, questions of the interim government's legitimacy, and flawed elections under all of them contributed to their inability to establish a fully accepted or functioning government. Since 2004, however, Haiti has made what the International Monetary Fund (IMF) and others call "remarkable progress" toward political stability and economic stabilization. The government has conducted democratic presidential and parliamentary elections, and enacted wide-ranging reforms, especially in economic governance. Although crime and violence continue to undermine Haitian development, security has improved significantly enough that the United Nations Stabilization Mission in Haiti (MINUSTAH) is shifting the focus of its biggest contingent from security to development. The fundamental inequality of Haitian society has remained basically unchanged, though, and Haiti remains the poorest country in the hemisphere. In proximity to the United States, and with such a chronically unstable political environment and fragile economy, Haiti has been a constant policy issue for the United States. The U.S. Congress views the stability of the nation with great concern and commitment to improving conditions there. In May 2006, René Préval began his second five-year term as President of Haiti. During his first three years in office, Préval has established relative internal political stability. He outlined two main missions for his government: (1) to build institutions, and (2) to establish favorable conditions for private investment in order to create jobs. In November 2007, his Administration published its Poverty Reduction Strategy, a key step in meeting IMF requirements for debt relief. International donors pledged more than $1.5 billion in economic assistance to Haiti. With the support of the MINUSTAH, which arrived in Haiti in 2004, security conditions have improved and reform of the country's police force has begun. Former President George W. Bush praised Préval for his efforts to improve economic conditions and establish the rule of law in Haiti. Préval pledged to cooperate with U.S. counternarcotics efforts. Both President Barack Obama and Secretary of State Hillary Clinton have met with President Préval and indicated strong support for development in Haiti. The Préval government worked with international donors and agencies to update its poverty reduction strategy to take into account the damage done by the hurricanes and storms and the reconstruction that is being done. The government presented the revised strategy and received $353 million in new aid commitments at a donors' conference on April 21, 2009. Haiti's fragile stability has been repeatedly shaken, however, if not by political problems, then by climatic ones. In April 2008, a worsening food crisis led to violent protests and the removal of Haiti's Prime Minister. UN officials said political opponents and armed gangs infiltrated the protests and fired at UN peacekeepers in an effort to weaken the government. Without a Prime Minister, Haiti could not sign certain agreements with foreign donors or implement programs to address the crisis for over four months. Parliament, having rejected Préval's first two choices for a new prime minister, finally confirmed Michele Pierre-Louis, a highly-regarded educator and economist who has worked on behalf of Haitian poor and youths, as Prime Minister in September 2008. They were spurred to act in part so that the government could respond to natural disasters: in late August and September, four major storms directly hit or passed close to Haiti, causing widespread devastation. There are some19 political parties in the legislature competing for influence and positioning themselves for legislative and presidential elections in 2010 and 2011, respectively, further complicating governability. In June, student protests against university budget cuts expanded into broader protests demanding the departure of United Nations forces in Haiti and that President Préval sign a bill increasing the minimum wage raising the minimum wage from about $1.75 to $5.00 a day. The Congress passed the law in May, but it does not become law until the President signs it. Some critics believe he is bowing to pressure from textile manufacturers to delay the bill's implementation. The average daily wage for textile assembly workers is $5.25, above the new minimum wage. Some manufacturers, noting that they would have to raise wages proportionally, had asked for a gradual implementation of the law so that they could negotiate new contracts incorporating the new wages into their costs. The Congress passed the bill with no transition phase in it. After the collapse of the Aristide government in 2004, the Parliament was not fully functioning. It was reestablished with elections in April 2006. The Haitian parliament comprises a Senate, with 30 seats, and the Chamber of Deputies, with 99 seats. One-third of the Senate is elected every two years; the Senate has operated with only one-third of its members for about a year and a half, as unrest, hurricanes, and divisions with the electoral council delayed elections for the other two-thirds. Préval dissolved the electoral council last year and formed a new one. Since then, technical preparations for the elections went well, but the process was fraught with political tensions. The provisional electoral council, with the support of MINUSTAH and donors, completed the election preparation, including voter registration, ballot printing, and training of election workers. But the council also caused controversy by barring former President Jean-Bertrand Aristide's Fanmi Lavalas party from participating for mostly technical reasons. Part of the problem is that two rival factions submitted separate lists of candidates. The council rejected both lists because neither faction had documents signed by the party's head, Aristide. Aristide lives in exile in South Africa. Although technically correct, some observers felt the decision had a politically motivated element, to prevent the once powerful Lavalas from gaining more seats. A UN Security Council delegation in Haiti praised the Lavalas party for seeking a reversal of the decision through legal means, and urged a resolution to the impasse to avoid yet another electoral crisis, of which Haiti has had many in the last couple of decades. In the end, Lavalas was still not allowed to run, and Lavalas supporters boycotted the elections. for 12 of the Haitian Senate's 30 seats that were held on April 19, 2009. About 4,000 electoral security workers and 6,500 UN peacekeepers helped maintain order on election day. The process was relatively peaceful, but protests and the shooting of a poll official led the government to cancel the vote in one rural department. Apathy, the boycott, and the closing of public transportation out of concern for security contributed to extremely low voter turnout, averaging 11% nationwide. Only one candidate won a majority of the vote, so a runoff vote is scheduled to be held on June 21. A clash between the ruling party and an opposition party, the Struggling People's Organization, OPL, resulted in the death of one person, increasing concerns about violence around the elections. Opposition parties have filed claims of voting fraud, and at least four have vowed to vote against seating the winners of the elections. Some critics have called for the election to be postponed. The elections could give President Préval's coalition, Lespwa ("Hope" in Haitian Creole), a majority in the Senate. Lespwa currently controls one-third of the chamber's seats. Lespwa candidates in the runoff could give the party five to nine more seats. Préval hopes such wins would give him the support he needs in Parliament to pass constitutional reforms and support his economic agenda. Lingering disputes over the elections could dampen that support, however. In addition, several members of Parliament have defected recently from the coalition. He also wishes to strengthen the executive, which some in Parliament oppose. Elections for the Chamber of Deputies are due to be held in 2010. There are no term limits for either chamber; re-election rates are extremely low, however. Parliamentarians are already positioning themselves for the next presidential elections in 2011 as well. Plagued by chronic political instability and frequent natural disasters, Haiti remains the poorest country in the Western Hemisphere. Haiti's poverty is massive and deep. Over half the population (54%) of 9 million people live in extreme poverty, living on less than $1 a day; 78% live on $2 or less a day, according to the World Bank. Poverty among the rural population is even more widespread: 69% of rural dwellers live on less than $1 a day, and 86% live on less than $2 a day. Hunger is also widespread: 81% of the national population and 87% of the rural population do not get the minimum daily ration of food defined by the World Health Organization. In remote parts of Haiti, children are dying of malnutrition. In order to reach its Millennium Development Goal of eradicating extreme poverty and hunger by 2015, Haiti's Gross Domestic Product (GDP) would have to grow 3.5% per year, a goal the International Monetary Fund (IMP) says Haiti is not considered likely to achieve. Over the past 40 years, Haiti's per capita real GDP has declined by 30%. Therefore, economic growth, even if it is greater than population growth, is not expected to be enough to reduce poverty. Haiti has experienced economic growth since 2004. Economic growth for FY2007 was 3.2%, the highest rate since the 1990s, but the forecasted growth for FY2008-2009 is only 1.9%, reflecting the impact of recent storms and the global economic crisis. The global economic crisis has also led to a drop of about 10% in remittances from Haitians abroad, which last year amounted to about $1.65 billion, more than a fourth of Haiti's annual income. The likelihood that economic growth will contribute to the reduction of poverty in Haiti is further reduced by its enormous income distribution gap. Haiti has the second largest income disparity in the world. Over 68% of the total national income accrues to the wealthiest 20% of the population, while less than 1.5% of Haiti's national income is accumulated by the poorest 20% of the population. When the level of inequality is as high as Haiti's, according to the World Bank, the capacity of economic growth to reduce poverty "approaches zero." In November 2007, the Préval government issued a "Growth and Poverty Reduction Strategy Paper," one of the qualifications for debt relief through the World Bank's Heavily Indebted Poor Country (HIPC) initiative and the IMF's Poverty Reduction and Growth Facilities. Its implementation cost for 2007 to 2010 is just under $4 billion; the international community has contributed or pledged about half of that amount. The poverty reduction strategy focuses on three "priority pillars." The first is areas for growth, focusing on agriculture and rural development; tourism; infrastructure modernization; and science, technology and innovation. The second pillar is human development, concentrating on education and training; health; water and sanitation; persons with disabilities; childhood poverty; young people; HIV/AIDS; and gender equity. The third pillar calls for investment in democratic governance, focusing on the establishment of an equitable justice system; creation of a climate of security; modernization of the state; and political and economic decentralization. In August and September 2008, four major hurricanes or tropical storms directly struck or passed close to Haiti, killing hundreds of Haitians and affecting hundreds of thousands more. The storms caused flooding in all ten of the country's departments. Tropical Storm Fay struck Haiti on August 16 while Hurricane Gustav struck on August 26 with heavy rains and winds. In the first days of September, Tropical Storm Hanna brought more torrential rain, causing floods as deep as almost ten feet in Gonaives. Hurricane Ike did not directly strike Haiti, but significantly increased water levels in areas that were already flooded. Overall, almost 500 people died. At the time, Haiti was already experiencing a food crisis, and the impact of the storms greatly exacerbated the problem, mainly due to flooding. The storms destroyed approximately one-third of the country's rice crop, essentially used for domestic consumption, as well as livestock, other crops, seeds, and farm equipment. The storms hit during harvest season, meaning that farmers would not have had capital from that crop to reinvest in future crops. The Growth and Poverty Reduction Strategy—and its budget—was developed prior to the devastating hurricanes of 2008. World Bank Group President Robert Zoellick visited Haiti in October 2008, and called on the Haitian government and donors to reinvigorate short-term recovery and reconstruction efforts and long-term development programs, and promote a new "vision" for medium-term growth and development. To help it do this, the Haitian government requested a Post-Disaster Needs Assessment that was published in November 2008. Damages and losses were estimated at almost $900 million ($897.39 million). The greatest damage was done to agricultural production, with almost $200 million in damages and losses, and housing, with about $180 million in damages and losses. Needs were assessed at approximately $269 million for immediate relief efforts, and approximately $494 million for reconstruction and rehabilitation, for a total of $763 million. Priorities for immediate relief projects are food security, social welfare, and watershed protection, The overarching goal of the reconstruction and rehabilitation projects is to rebuild better, so that the living conditions of communities affected by the storms are better than they were beforehand. That is, to reestablish the basic infrastructure while also fostering economic development and reducing the risks of the next disasters. Some analysts argue that Haiti needs its own economic stimulus package, an extraordinary level of aid committed over a long period of time to establish security and achieve poverty reduction. According to Hedi Annabi, the UN's envoy to Haiti, Haiti needs $3 billion over the next two to three years to recover from the hurricanes, if the $570 million spent yearly on the UN peacekeeping mission is to be at all effective. The President of the Inter-American Development Bank (IDB), Luis Moreno, has also called for extraordinary assistance from the international community for Haiti. Calling Haiti the most fragile of IDB's member countries, Moreno said that no other nation in Latin America and the Caribbean is as vulnerable to economic shocks and natural disasters as is Haiti. In December 2008 the IDB offered Haiti an additional $50 million in assistance for 2009. The World Bank approved an additional $25 million in emergency grants for Haiti in November 2008 to finance rebuilding of key infrastructure, water and sanitation works, and technical assistance to incorporate disaster risk management into Haiti's overall development strategy. The United Nations designates Haiti one of the 50 "least developed countries" in the world, facing a higher risk than other countries of failing to come out of poverty, and therefore needing the highest degree of attention from the international community. Since Haiti's developmental needs and priorities are many, and deeply intertwined, the Haitian government and the international donor community are implementing an assistance strategy that attempts to address these many needs simultaneously. The challenge is to accomplish short-term projects that will boost public and investor confidence, while also pursuing long-term development plans to improve living conditions for Haiti's vast poor population. The challenge has been made more daunting by developments such as rising food and gasoline prices world- wide, internal political crises, and natural disasters. Préval has criticized the donor community for not dispersing funds quickly enough. Some international donors have complained that Préval's government keeps changing priorities -first children's needs, then road-building, then security issues such as high rates of crime and kidnapping, leading Préval's government and MINUSTAH to focus on improving security. There are other frustrations on the part of both donors and the Haitian government regarding foreign assistance. The Haitian government is frustrated that U.S. and other foreign aid is provided through non-governmental organizations (NGOs) rather than directly to the government. The Préval Administration indicates it wants more accountability by NGOs, so that the government knows what projects are being carried out. Donors are worried about the lack of Haitian capacity to design and implement programs, as well as corruption. Furthermore, Préval's style of leadership is viewed by many as a mixed blessing. He encourages national dialogue to develop consensus on strategies rather than imposing policy from above—a welcome departure from Haiti's traditionally autocratic style of leadership—but his lack of forceful leadership means progress on many fronts is limited. Some of these issues were addressed at the international donors conference held in the spring of 2009. International donors asked Haiti to update the Growth and Poverty Reduction Strategy, to clarify priorities and reflect post-hurricane conditions and needs. The government of Haiti presented such a revised strategy incorporating the findings of both the Post-Disaster Needs Assessment and the UN's "Haiti: From Natural Catastrophe to Economic Security" report, at a donors conference held April 21, 2009 in Washington, DC. The Haitian government outlined the priorities of its new two-year plan, "Haiti: a New Paradigm," which include investing in strategic infrastructure, improving economic governance and the business environment, improving the provision of basic services, and ensuring environmental sustainability. The government and donors hope to generate up to 150,000 jobs through such actions, and by taking advantage of the investment opportunities created by the HOPE II Act ( P.L. 110-246 ), the trade law that grants trade preferences for U.S. imports of Haitian apparel. The government's new plan also call for job creation through higher productivity in agriculture. Donors from 28 countries and multilateral organizations pledged $353 million in new aid to Haiti over the next two years. Although the amount was less than the Haitian government had said it needed, Prime Minister Pierre-Louis said that, considering the global economic crisis, it was more than she had expected, and pledged to use the funds properly. Donors agreed to coordinate assistance more effectively, with each other and with the Haitian government. World Bank President Robert Zoellick urged donors to reduce the burden on Haiti's government by working with the Haitian government to track results and accountability of foreign assistance better, and by developing joint benchmarks, and conducting joint assessments. One of the government's immediate priorities was to get pledges to help bridge its $125 million budget gap; according to the Inter-American Development Bank, Haiti received about $83 million in such support for FY2008 to FY2010. The United States pledged $68 million in new FY2009 assistance, including $20 million in targeted budget support, in addition to the $245.9 million already requested for FY2009. Some analysts emphasize that the Haitian government and civil society must be partners in designing any development strategy if they are to succeed and be sustainable. They also warn that job creation and other development efforts must occur not only in the cities, but also in rural areas, to reduce urban migration, dependence on imported food, and environmental degradation. As mentioned above, economic growth alone is unlikely to reduce poverty in Haiti. Therefore, the Haitian government and many in the international donor community maintain that donors must continue to make a long-term commitment to Haitian development. Furthermore, in order to reduce poverty across the board, some observers say that development strategies must specifically target improving the living conditions of the poor, and address the inequities and prejudices that have contributed to Haiti's enormous income disparity. Despite the current economic and social problems currently existing in Haiti and the comprehensive and complex challenges facing the country today, prominent analysts note with optimism the progress Haiti has made and its potential for sustainable development. The UN Security Council conducted a fact-finding visit to Haiti in March 2009, and noted that the country had made significant improvements in security and judicial reform, although it still needs to contend with widespread poverty and susceptibility to natural disasters. Both the Préval and the preceding interim government also made progress toward goals outlined in Haiti's international assistance strategy, including improved macroeconomic management, procurement processes, and fiscal transparency; increased voter registration; and jobs creation. Although the natural disasters caused setbacks, the government had also made progress in providing broader access to clean water and other services. The UN Security Council delegation 's leader said, "[I]t does appear that there is a window of opportunity to enable the consolidation of stability and the undertaking of a process of sustainable development." In addition to the Security Council visit to Haiti, the UN Secretary-General commissioned a report, published in January 2009, that recommends a strategy to move Haiti beyond recovery to economic security. According to the UN report, "the opportunities for [economic development in] Haiti are far more favorable than those of the 'fragile states' with which it is habitually grouped." The report's author, economist Paul Collier, is known for his book, The Bottom Billion, which explores why there is poverty and how it can be reduced. Among his reasons for optimism regarding Haiti: Haiti is part of a peaceful and prosperous region, not a conflictive one; and while political divisions and limited capacity make governing difficult, Collier believes that Haiti's leadership is "good by the standards of most post-conflict situations. Both the President and the Prime Minister have integrity, experience and ability, and a deep concern with the maintenance of social peace." The UN report recommends that modest and focused actions be taken to build economic security on the foundation of social stability that has been built in Haiti over the past five years. Because that stability is fragile, the report mentions such actions should be taken immediately and should focus on strengthening security by creating jobs, especially in the garment and agricultural sectors, providing basic services, enhancing food security, and fostering environmental sustainability. Collier and other analysts note that Haiti has an important resource in the 1.5 million Haitians living abroad, for funds, technical skills, and political lobbying. Eighty percent of the Haitian diaspora remitted $1.65 billion to Haiti in 2006—double Haiti's national budget, and about a third of its gross domestic product. The world economic recession has led to about a 10% drop in Haitian remittances so far in 2009, however. The efforts of Haitian-Americans and others lobbying on Haiti's behalf led to another advantage Haiti has, the most advantageous access to the U.S. market for apparel of any country, through the HOPE II Act (the Haitian Hemispheric Opportunity through Partnership Encouragement Act, P.L. 110-246 ; see Legislation section below). Supporters say the HOPE Act will provide jobs and stimulate the Haitian economy. Critics worry that it will exploit Haitians as a source of cheap labor for foreign manufacturers, and hurt the agricultural economy by drawing more people away from farming. According to the U.S. embassy in Haiti, the HOPE II Act has helped create about 11,000 jobs. The United Nations Stabilization Mission in Haiti (MINUSTAH), has been in Haiti to help restore order since the collapse of former President Jean-Bertrand Aristide's government. Armed rebellion and diminished international support for Aristide led him to flee into exile in February 2004. An international force authorized by the UN arrived shortly after his departure, and was replaced by MINUSTAH in June 2004. MINUSTAH worked closely with the interim government from 2004 to 2006 when, after several delays, elections were held. The Mission has continued to work closely with the Préval Administration since then. Although some Haitians call for the removal of foreign troops, President Préval supports the mission's presence, saying that he "will not adopt a falsely nationalist position," and that MINUSTAH should stay until Haiti is ready to assume responsibility for security. MINUSTAH's mandate includes three basic components: (1) to help create a secure and stable environment; (2) to support the political process by fostering effective democratic governance and institutional development, supporting government efforts to promote national dialogue and reconciliation and to organize elections; and (3) to support government and non-governmental efforts to promote and protect human rights, as well as to monitor and report on the human rights situation. MINUSTAH has played a key role in emergency responses to natural disasters, including facilitating the delivery of emergency humanitarian assistance. As part of its work, the Mission has also conducted campaigns to combat gangs and drug-trafficking with the Haitian police. The Force Commander is Major-General Carlos Alberto Dos Santos Cruz of Brazil. Brazil also supplies 1,200 troops, the Mission's largest contingent. Sixteen other countries contribute military personnel, and 42 countries supply police personnel. MINUSTAH's current troop strength is 9,055 total uniformed personnel, consisting of 7,044 troops and 2,011 police. They are supported by 506 international civilian personnel; 1,255 local civilian staff; and 194 United Nations volunteers. The Mission's budget for this year (July 1, 2008-June 30, 2009) is $601.58 million. Brazilian officials recently announced that security had improved to the point that their troops would be shifting their focus to development work instead. MINUSTAH's mandate has been extended another year, to October 2009, and will likely be extended again. The main priorities for U.S. policy regarding Haiti are to strengthen fragile democratic processes, continue to improve security, and promote economic development. Other concerns include the cost and effectiveness of U.S. aid; protecting human rights; combating narcotics, arms, and human trafficking; addressing Haitian migration; and alleviating poverty. Some Members expressed concern about the Bush Administration's October 2006 decision to lift partially the 15- year-old arms embargo against Haiti in order to allow arms and equipment to be provided to Haitian security units. The Obama Administration has said that Haiti is an important issue, deserving of support, and has called for a full review of policy toward the country. Both President Préval and Prime Minister Pierre-Louis have asked that the United States change its travel warning on Haiti, arguing that it discourages the foreign investment the United States says it is trying to promote through the HOPE II Act and other forms of assistance. The current advisory warns U.S. citizens of the risks of travel to Haiti and recommends deferring non-essential travel until further notice, citing ongoing security concerns. U.S. assistance for Haiti in FY2007 totaled $225 million. Estimated foreign assistance in FY2008, not including emergency food and humanitarian aid, was approximately $234 million. Among other provisions affecting aid to Haiti, the FY2008 Consolidated Appropriations Act ( H.R. 2764 /P.L. 110-161) stipulated that not less than $201.5 million in economic and military assistance be provided to Haiti. The former Bush Administration' s FY2008 request for Haiti included $83 million to combat HIV/AIDS and $25.5 million for an integrated conflict mitigation program to target urban crime. The previous Administration contributed $45 million in emergency food aid in response to the April food crisis. Humanitarian assistance in response to the 2008 hurricanes was about $33.7 million in FY2008 and FY2009 funds. The estimate for FY2009 is for $287 million, including $18 million and $91 million for Global Health and Child Survival under USAID and State Department, respectively; $121 million in Economic Support Funds; $35.5 million in P.L. 480 food aid; $17.5 million for International Narcotics Control and Law Enforcement; $0.22 million for International Military Education and Training, and $0.4 million in Foreign Military Financing. The Omnibus Appropriations Act of 2009 ( P.L. 111-8 ), signed into law on March 11, 2009, provides "not less than $251.126 million" in bilateral economic and international security assistance for Haiti, providing $41 million more than the original request. About $2 million will be provided to Haiti through the Merida Initiative for counter narcotics efforts. The request for FY2010 assistance for Haiti is for $293 million, including $21 million and $91 million for Global Health and Child Survival under USAID and State Department, respectively; $125 million in Economic Support Funds; $35.5 million in P.L. 480 food aid; $18.5 million for International Narcotics Control and Law Enforcement; $0.22 million for International Military Education and Training, and $1.6 million in Foreign Military Financing. In August and September 2008, four major storms directly hit or passed close to Haiti, causing widespread devastation. The hurricanes caused an estimated $1 billion in damage—equivalent to about 15% of Haiti's GDP—and set back much of any progress that had been made in recent years. The U.S. government provided $30 million in humanitarian assistance to affected Haitian populations in response to the hurricanes in Haiti in FY2008, and another $2million in FY2009, for a total of $33 million. Congress provided not less than $100 million for hurricane relief and reconstruction assistance for Haiti and other Caribbean countries in the FY2009 continuing appropriations resolution ( P.L. 110-329 ) signed into law September 30, 2008. $96 million of this is directed to Haiti. Haiti was already experiencing a food crisis; the impact of the storms has greatly exacerbated the problem, mainly due to flooding. The storms destroyed approximately one-third of the country's rice crop. Haiti's rice crop is essentially used for domestic consumption, and reportedly is a lifeline for many Haitians. Livestock, other crops, seeds, and farm equipment were destroyed as well. The storms hit during harvest season, meaning that farmers will not have capital from this crop to reinvest in future crops. Some observers worry that additional food shortages and price increases could again lead to riots, like the ones in April 2008 that killed several people and contributed to the dismissal of the Prime Minister at the time, and to higher incidences of children dying of malnutrition. Haitians have repeatedly sought Temporary Protected Status (TPS), which would allow them to remain in the United States without threat of deportation, after various domestic crises, arguing that the return of deportees would contribute to instability and be a further drain on already inadequate services. After last summer's devastating tropical storms and hurricanes, President Préval publicly requested that illegal Haitian migrants in the United States be granted TPS. Over 30,000 Haitians are currently in detention facing deportation. The former Bush Administration turned down the request at the end of its term. While visiting Haiti on April 16, Secretary of State Hillary Clinton said the Obama Administration was considering granting TPS to Haitians. Proponents argue that Haiti is ill-equipped to absorb thousands of deportees, and depends on the remittances they send back to Haiti. Opponents of TPS have argued that granting it could encourage a wave of new immigrants. Clinton said if granted, the policy would only apply to Haitians already in the U.S. before President Obama's election. She also said the policy of interdicting Haitian migrants on the high seas and returning them to Haiti would continue. There was bipartisan support in the 110 th Congress to assist the Préval government. Responding to the food crisis and Préval's earlier calls for increased U.S. investment in Haiti, Congress passed the second Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act as part of the 2008 farm bill in June 2008 (Title XV, P.L. 110-246 ). The law expands trade preferences for U.S. imports of Haitian apparel first provided in the 2006 version of the HOPE Act ( P.L. 109-432 , Title V). In late June 2008, Congress amended the Merida Initiative, an aid package for Mexico and Central America that was part of the FY2008 Supplemental Appropriations Act, H.R. 2642 ( P.L. 110-252 ), to include counternarcotics funds for Haiti. The 111 th Congress may consider not only the balance of financial support for democracy building, security enhancement, counternarcotics, development assistance, police and judicial reform, and disaster recovery and prevention, but also the scope of the assistance. Several Members have already requested that the Obama Administration grant Temporary Protected Status (TPS) to Haitians living in the United States because of the disastrous conditions in Haiti. The Bush Administration decided that Haiti did not currently warrant a TPS designation, and was criticized by some Members and human rights advocates for renewing deportations of Haitians after a three-month reprieve in the aftermath of the hurricanes. Deportations have continued under the Obama Administration. The Haitian Protection Act of 2009 ( H.R. 144 ), a bill that would require the Secretary of Homeland Security to designate Haiti as a country whose qualifying nationals may be eligible for temporary protected status was introduced January 6, 2009. Another issue of immediate concern to Congress is likely to involve an effort to ensure that free fair, and safe elections are held for the Haitian Senate runoff races on June 21, 2009. As discussed in the "Political Background" section above, tensions remains over the exclusion of former President Jean-Bertrand Aristide's Fanmi Lavalas party from the elections on technical grounds. Congress may once again take up debt relief for Haiti. In the 110 th Congress the House passed an amendment to the Jubilee Act [ H.Amdt. 993 to H.R. 2634 ] in April 2008 recommending immediate cancellation of Haiti's outstanding debts to multilateral institutions). Much of Haiti's $1.7 billion foreign debt is owed to multilateral institutions. P.L. 111-8 . In the Omnibus Appropriations Act, 2009, sec. 7045(b) deals expressly with Haiti, stating that (1) the Government of Haiti shall be eligible to purchase defense articles and services under the Arms Export Control for the Coast Guard; (2) of the funds appropriated by this Act under Title III, Bilateral Economic Assistance, and Title IV, International Security Assistance, not less than $251.126 million shall be made available for assistance for Haiti; and (3) none of the funds made available by this Act under the heading 'International Narcotics Control and Law Enforcement' may be used to transfer excess weapons, ammunition or other lethal property of an agency of the U .S. Government to the Government of Haiti for use by the Haitian National Police until the Secretary of State reports to the Committees on Appropriations that any members of the Haitian National Police who have been credibly alleged to have committed serious crimes, including drug trafficking and violations of internationally recognized human rights, have been suspended. The omnibus act contains several other provisions related to Haiti as well. For the federal prison system. up to $20 million shall remain available until expended for expenses authorized by section 501(c) of the Refugee Education Assistance Act of 1980 (8 U.S.C. 1522 note), for the care and security in the United States of Haitian [and Cuban] entrants. International Military Education and Training funds for Haiti may only be provided through the regular notification procedures of the Committees on Appropriations and any such notification must include a detailed description of the proposed activities. No Foreign Military Financing Program funds may be made available for Haiti, except pursuant to the regular notification procedures of the Committees on Appropriations. None of the funds appropriated under Title 1II—Bilateral Economic Assistance; Title IV—International Security Assistance; Title V—Multilateral Assistance; or Title VI—Export and Investment Assistance—may be obligated or expended for assistance for Haiti, except through the regular notification procedures of the Committees on Appropriations. Signed into law March 11, 2009. H.Con.Res. 17 . Expressing the sense of Congress with regard to providing humanitarian assistance to countries of the Caribbean devastated by Hurricanes Gustav and Ike and Tropical Storms Fay and Hanna.. Introduced and referred to the House Committee on Foreign Affairs January 9, 2009. H.R. 144 . The Haitian Protection Act of 2009 would require the Secretary of Homeland Security to designate Haiti as a country whose qualifying nationals may be eligible for temporary protected status. Introduced January 6, 2009; referred to the House Judiciary Committee's Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law February 9, 2009. H.R. 264 . The Save America Comprehensive Immigration Act of 2009 would amend the Immigration and Nationality Act (INA) to provide increased protections and eligibility for family- sponsored immigrants, including to authorize adjustment of status for certain nationals or citizens of Haiti. Introduced January 7, 2009, referred to House Judiciary; House Homeland Security; House Oversight and Government Reform Committees; referred to the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law February 9, 2009. H.R. 331 . Would establish a Congressional Independent Commission to examine the U.S. government's role in the February 2004 coup d'etat in the Republic of Haiti. Would terminate the Commission 60 days after submission of its final report to Congress and the President. Introduced and referred to the House Committee on Foreign Affairs January 8, 2009. H.R. 416 . Would authorize the Secretary of State to establish the Shirley Chisholm United States-Caribbean Educational Exchange Program under which scholars and secondary, undergraduate, graduate, and post-graduate students from communities demonstrating the greatest need within certain Caribbean countries, including Haiti, would attend U.S. schools and participate in activities designed to promote a greater understanding of U .S. values and culture. Students would be expected to invest the knowledge and experiences they gain in the United States back into CARICOM (Caribbean Community and Common Market) countries. Would also authorize the Secretary, through the United States Agency for International Development (USAm), to establish a program to improve primary and secondary education in such countries by enhancing teacher training, strengthening curriculum and instructional materials, and assisting improvements in school management and public administration of education. Introduced and referred to the House Committee on Foreign Affairs January 9, 2009. H.R. 417 . The Next Steps for Haiti Act of 2009 would authorize the Director of Foreign Assistance, in consultation with the government of Haiti and Haitian civil society organizations, to establish the Haiti Professional Exchange Program to assign qualified Haitian Americans and others to provide technical assistance to help Haiti improve in areas vital to its growth and development, including education, energy, environment, health care, infrastructure, security, transportation, and disaster preparedness. Directs the Secretary of State to implement a student loan forgiveness program for program participants. Introduced and referred to the House Committee on Foreign Affairs January 9, 2009. H.R. 1567 . The Haitian Refugee Immigration Fairness Act (HRIFA) Improvement Act of 2009 would amend the 1998 HRIFA to (1) require determinations with respect to children to be made using the age and status of an individual on October 21, 1998 (enactment date of the HRIFA of 1998); (2) permit an application based upon child status to be filed by a parent or guardian if the child is present in the United States on such filing date; and (3) include document fraud among the grounds of inadmissibility which shall not preclude an otherwise qualifying Haitian alien from permanent resident status adjustment. It would also permit new status adjustment applications to be filed for a limited time period. Introduced March 17, 2009, referred to the House Judiciary Committee's Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law on April 27, 2009. S. 730 . The Affordable Footwear Act of 2009 would amend the Caribbean Basic Economic Recovery Act to provide footwear imported directly from Haiti into the United States with the same preferential treatment that is provided to certain imported footwear under the Dominican Republic-Central America-United States Free Trade Agreement. Introduced and referred to the Senate Committee on Finance on March 26, 2009. S. 1183 . The Haiti Reforestation Act of 2009 would authorize the Secretary of Agriculture to provide assistance to the Government of Haiti to end within 5 years the deforestation in Haiti and restore within 30 years the extent of tropical forest cover in existence in Haiti in 1990. Introduced and referred to the Senate Committee on Foreign Relations June 4, 2009. P.L. 110-161 . FY2008 Consolidated Appropriations Act. Division J includes the provision of not less than $201.5 million in total economic and military assistance to Haiti. The act provides that the Government of Haiti is eligible to purchase defense articles for the Coast Guard; states that IMP funds and FMF may only be provided to Haiti through the regular notification procedures; and includes a restriction on certain INCLE funding to Haiti. The joint explanatory statement to the act recommends providing $5 million to support USAID's watershed reforestation program in Haiti. Introduced on June 18, 2007 as the State Department, Foreign Operations, and Related Agencies Appropriations Act, H.R. 2764 . The House Appropriations Committee issued its report on the bill, H.Rept. 110-197 , on June 18, and the House passed the bill on June 22. The Senate Appropriations Committee approved its version of the bill, S.Rept. 110-128 , on June 28, and the Senate passed it on September 6, approving the same level of total funding as the House bill. On December 17, 2007, H.R. 2764 became the vehicle for the FY2008 Consolidated Appropriations Act, with Division J providing for foreign aid appropriations. The bill was signed into law on December 26, 2007. P.L. 110-181 . Section 1023 of the National Defense Authorization Act for Fiscal Year 2008 requires the President to submit a report on counternarcotics assistance for the government of Haiti within 120 days of the enactment of this law. The report is to provide a description and assessment of the counternarcotics assistance provided to the Government of Haiti by the Departments of Defense, State, Homeland Security, and Justice; (2) A description and assessment of any impediments to increasing counternarcotics assistance to the Government of Haiti; (3) An assessment of the potential for the provision of counternarcotics assistance for the Government of Haiti through the United Nations Stabilization Mission in Haiti. Signed into law January 28, 2008. P.L. 110-329 . The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 was a FY2009 continuing resolution that continued funding at FY2008 levels through March 6, 2009. Introduced on June 8, 2007, it was signed into law on September 30, 2008. P.L. 110-252 . In the Supplemental Appropriations Act, 2008, Sec. 1407 states that $65 million in International Narcotics Control and Law Enforcement (INCLE), Foreign Military Financing Program (FMF), Nonproliferation, Anti-Terrorism, Demining and Related Programs, and Economic Support Funds, may be made available for assistance to Central America, Haiti, and the Dominican Republic only to combat drug trafficking and related violence and organized crime, and for judicial reform, institution building, anti-corruption, rule of law activities, and maritime security, providing that $2.5 million in INCLE funds shall be made available for assistance for Haiti, and that none of the funds shall be made available for budget support or as cash payments. Requires the Secretary of State to submit a detailed spending plan of those funds within 45 days of the bill's enactment. Fifteen percent of the INCLE and FMF funds for Haiti may not be obligated until the Secretary of State reports in writing to the Committees on Appropriations that the government is 1 ) establishing police complaints commissions with authority and independence to receive complaints and carry out effective investigations; (2) implementing reforms to improve the capacity and ensure the independence of the judiciary; and (3) investigating and prosecuting members of the federal police and military forces who have been credibly alleged to have committed violations of human rights. Signed into law June 30, 2008. P.L. 110-246 . The HOPE II Act , or the second Haitian Hemispheric Opportunity through Partnership Encouragement Act, is Title XV of the Food, Conservation, and Energy Act of 2008, or farm bill. The law expands trade preferences for U.S. imports of Haitian apparel first provided in the 2006 version of the HOPE Act ( P.L. 109-432 , Title V). It was enacted over veto into law on June 18, 2008. P.L. 109-13 . Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, for the fiscal year ending September 30, 2005. Makes $20 million in Economic Support Funds available for Haiti, of which $2.5 million should be made available for criminal case management, case tracking, and the reduction of pre-trial detention in Haiti, notwithstanding any other provision of law. Introduced March 11, 2005 ( H.Rept. 109-72 ), signed into law May 11, 2005. P.L. 109-53 . Dominican Republic-Central America-United States Free Trade Agreement Implementation Act. Contains a side letter indicating the Administration's intent to work with Congress to allow benefits available under the Caribbean Basin Trade Partnership Act for articles co-produced by Haiti and the Dominican Republic to continue once CAFTA is implemented. Introduced June 23, 2005 ( H.Rept. 109-182 ); passed Senate 54-45 June 30; signed into law August 2, 2005. P.L. 109-95 . Amends the Foreign Assistance Act of 1961 to provide assistance for basic care for orphans and other vulnerable children in developing countries. Introduced March 17, 2005. Signed into law November 8, 2005. P.L. 109-102 . Department of State, Foreign Operations, and Related Programs Appropriations Act, 2006. International Military Education and Training funds and Foreign Military Financing may only be provided to Haiti through the regular notification procedures. Section 549 makes available for Haiti (1) $20 million from Child Survival and Health Programs Fund; (2) $30 million from Development Assistance; (3) $50 million from Economic Support Fund; (4) $15 million from International Narcotics Control and Law Enforcement; (5) $1 million from Foreign Military Financing Program; and (6) $215,000 from International Military Education and Training. It also continues to allow the government of Haiti to purchase defense articles and services under the Arms Export Control Act for the Coast Guard. Section 549 (c) prohibits any 'International Narcotics Control and Law Enforcement' funds from being used to transfer excess weapons, ammunition, or other lethal property of an agency of the United States government to the government of Haiti for use by the Haitian National Police until the Secretary of State certifies to the Committees on Appropriations that (1) the United Nations Mission in Haiti (MINUSTAH) has carried out the vetting of the senior levels of the Haitian National Police and has ensured that those credibly alleged to have committed serious crimes, including drug trafficking and human rights violations, have been suspended; and (2) the Transitional Haitian National Government is cooperating in a reform and restructuring plan for the Haitian National Police and the reform of the judicial system as called for in United Nations Security Council Resolution 1608 adopted on June 22, 2005. Introduced June 24, 2005, referred to House and Senate Committees on Appropriations ( H.Rept. 109-152 ; S.Rept. 109-96 ). Signed into law November 14, 2005. The conference report expresses concern about members of the Haitian National Police or other individuals unlawfully using weapons, ammunition, and other lethal materiel that has been provided or sold by the United States Government and therefore requires the certification included in Section 549(c). The conferees understand that investigations into extrajudicial killings and other alleged incidents of human rights abuses by the police were currently underway but were severely limited by the lack of investigative capacity within the HNP. The conferees request that not later than 60 days after the date of enactment of this act, the State Department report to the appropriate congressional committees the findings of these investigations, including information on whether any United States-supplied or provided weapon or ammunition was used during those incidents. Directs the Secretary of State to submit a report to the Committees on Appropriations within 30 days of enactment of the act which (1) describes in detail the steps taken by the Haitian Transitional Government and the United Nations Stabilization Mission to provide adequate security to permit free and fair elections with broad based participation by all political parties, and to demobilize, disarm and reintegrate armed groups, and (2) provides an assessment of the effectiveness of such steps. Conference report ( H.Rept. 109-265 ) agreed to in House 358-39, November 4, 2005. P.L. 109-108 . Departments of Commerce and Justice, Science, and Related Agencies Appropriations Act, 2006. Provides that an amount not to exceed $20 million shall remain available until expended to make payments in advance for grants, contracts and reimbursable agreements, and other expenses authorized by Section 501(c) of the Refugee Education Assistance Act of 1980, for the care and security in the United States of Haitian (and Cuban) entrants. Introduced June 10, 2005. H.Rept. 109-118 ; S.Rept. 109-88 ; conference report ( H.Rept. 109-272 ). Signed into law November 22, 2005. P.L. 109-162 . Violence Against Women and Department of Justice Reauthorization Act of 2005. Amends Violence Against Women Act of 2002, provides for aliens or children of aliens who qualify for relief under the Haitian Refugee Immigration Fairness Act of 1998 to petition for certain protections of battered and trafficked immigrants. Introduced July 22, 2005. H.Rept. 109-233 . Signed into law January 5, 2006. P.L. 109-234 . Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006. Provides an additional $22.5 million for Haiti. Includes $5 million in Child Survival and Health funds and $17.5 million in Economic Support Funds for police and judicial reform programs and job creation programs. Introduced March 13, 2006. Signed into law June 15, 2006. P.L. 109-432 . The HOPE Act , or the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 ( H.R. 6142 ), was incorporated into the Tax Relief and Health Care Act of 2006 as Title V. Allows duty-free entry to specified apparel articles 50% of which were made and/or assembled in Haiti, the United States, or a country that is either a beneficiary of a U.S. trade preference program, or party to a U.S. free trade agreement (for the first three years; the percentage would be higher after that). Requires ongoing Haitian compliance with certain conditions, including making progress toward establishing a market-based economy, the rule of law, elimination of trade barriers, economic policies to reduce poverty, a system to combat corruption, and protection of internationally recognized worker rights. It also stipulates that Haiti not engage in activities that undermine U.S. national security or foreign policy interests, or in gross violations of human rights. Introduced, referred to House Committee on Ways and Means September 21, 2006. Signed into law December 20, 2006.
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Haiti shares the island of Hispaniola with the Dominican Republic. Since the fall of the Duvalier dictatorship in 1986, Haiti has struggled to overcome its centuries-long legacy of authoritarianism, extreme poverty, and underdevelopment. While some progress has been made in developing democratic institutions, they remain weak. Economic and social stability have improved considerably. But poverty remains massive and deep, and economic disparity is wide. In May 2006, René Préval began his second five-year term as President of Haiti. During his first two years in office, Préval began to establish internal political stability by attempting to strengthen democratic institutions and creating an environment that would attract private investment and spur job creation. Haiti's fragile stability has been repeatedly shaken, however, if not by political problems, then by climatic ones. In 2008, a worsening food crisis led to violent protests and the removal of Haiti' s Prime Minister. Parliament rejected Préval' s first two choices for a new prime minister, but finally confirmed Michele Pierre-Louis, a highly-regarded educator and economist, as Prime Minister in September 2008. In the summer of 2008, four major storms caused widespread devastation in Haiti. Haiti remains the poorest country in the western hemisphere. Over half the population of 8.2 million people live in extreme poverty. Since Haiti's developmental needs and priorities are many, and deeply intertwined, the Haitian government and the international donor community are implementing an assistance strategy to address these many needs simultaneously. The Préval administration presented a revised strategy at a donors' conference on April 14. Haiti received aid commitments of $353 million. The United States pledged $68 million in new FY2009 assistance, including $20 million in targeted budget support. The United Nations Stabilization Mission in Haiti (MINUSTAH) has been in Haiti to help restore order since the collapse of former President Jean-Bertrand Aristide's government in 2004. MINUSTAH's current strength is 9,089 troops. The main priorities for U.S. policy regarding Haiti are to strengthen fragile democratic processes, continue to improve security, and promote economic development. Other concerns include the cost and effectiveness of U.S. aid; protecting human rights; combating narcotics, arms, and human trafficking; addressing Haitian migration; and alleviating poverty. The FY2009 aid request for Haiti was $246 million. The Omnibus Appropriations Act of 2009 (P.L. 111-8) provided for an additional $41 million in bilateral economic and international security assistance for Haiti. The FY2010 aid request for Haiti is $293 million. The 111th Congress may consider the balance and scope of assistance to Haiti. Members have already requested that the Obama Administration grant Temporary Protected Status (TPS) to Haitians living in the United States. Of immediate concern to Congress may be ensuring that second round elections scheduled for June 21 for 11 Haitian Senate seats are free, fair, and—in light of recent violent protests—peaceful. Prohibited from running on technicalities, former President Aristide's Lavalas party boycotted the first round vote; turnout nationwide averaged 11%. Congress may take up debt relief for Haiti again. Current law related to Haiti includes P.L. 111-8, P.L. 110-161, P.L. 110-246, and P.L. 109-432. Pending legislation related to Haiti includes H.Con.Res. 17, H.R. 144, H.R. 264, H.R. 331, H.R. 416, H.R. 417, H.R. 1567, S. 730, and S. 1183; for details see sections on Legislation. This report on conditions in Haiti will be updated as necessary. For additional information see CRS Report RL34687, The Haitian Economy and the HOPE Act, by [author name scrubbed].
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Juvenile offenders of federal criminal law are primarily the responsibility of state juvenile court authorities. The Federal Juvenile Delinquency Act permits federal delinquency proceedings when state courts cannot or will not accept jurisdiction or in the case of a limited number of crimes when there is a substantial federal interest. In the more serious of these cases, the juvenile offender may be transferred for trial as an adult. The rise in serious juvenile crime, the contraction of state juvenile court jurisdiction, and the expansion of federal criminal law have all contributed to the increased prevalence of the federal delinquency proceedings described here. In early America, the law held that a child, until the age of 7, lacked the maturity necessary to be held criminally responsible. Thereafter, the law rebuttably presumed incapacity until the child reached the age of 14, by which time acquisition of the intellectual capability to entertain criminal intent was assumed. As an early nineteenth century commentator explained, Under the age of seven years, indeed, it seems that no circumstances of mischievous discretion can be admitted to overthrow the strong presumption of innocence which is raised by an age so tender. During the interval between seven and fourteen, the infant is prima facie supposed to be destitute of criminal design; but this presumption diminishes as the age increases, and even during this interval of youth, may be repelled by positive evidence of vicious intention. For a tenderness of years will not excuse a maturity in crime; . . . since the power of contracting guilt is measured rather by the strength of the delinquent's understanding, than by days and years. Thus, children of thirteen, eight, and ten years of age, have been executed for capital offenses, because they respectively manifested a consciousness of guilt, and a mischievous discretion or cunning. After the age of fourteen, an infant is on the same footing with those of the mature years. A child found capable of the requisite intent was subject to trial and punishment as an adult; other children were set free. In the early twentieth century, the states established juvenile court systems so that children accused of conduct that would be criminal in an adult might be processed apart from the criminal justice system in an environment more closely attuned to their rehabilitative needs. By 1930, the Wickersham Commission reported that only the federal government continued to uniformly treat children, charged with a crime, as adults. The states had instead adopted various juvenile court systems in which the "child offender [was] generally dealt with on a noncriminal basis and . . . protected from prosecution and conviction for crime . . . [They undertook] to safeguard, train, and educate rather than to punish him. [They] substituted social for penal methods; the concept of juvenile delinquency for that of crime." Attorney General Wickersham also pointed out that (1) most of the cases involved interstate joyriding, an offense for which juvenile court treatment was thought particularly appropriate; (2) "[t]here [were] not enough juveniles brought into the Federal courts to justify the establishment of juvenile courts by act of Congress;" and (3) "federal penal institutions are not adequately equipped to deal with this class of juvenile delinquency." He recommended, and Congress agreed, that the disparity should be adjusted by authorizing the Department of Justice to return juveniles charged with violating federal law to the juvenile authorities of their home state. This solution suffered two unfortunate limitations. It did not account for juveniles charged with capital crimes. State law ordinarily excluded capital offenses from the jurisdiction of its juvenile courts. Second, state juvenile courts had no jurisdiction over juveniles who lived, and whose misconduct occurred upon, Indian reservations or military installations over which the state had no legislative jurisdiction. Congress addressed these shortcomings with the Federal Juvenile Delinquency Act of 1938. State juvenile proceedings remained the preferred alternative, but the Attorney General might instead elect to proceed against a juvenile as an adult, and federal juvenile proceedings became possible should both parties agree. Although supplemented in 1950 by the Federal Youth Corrections Act which afforded federal juvenile offenders tried as adults the prospect of special rehabilitative opportunities, the Act remained essentially unchanged for over thirty-five years. In 1974, Congress substantially revised the Act in order "to provide basic procedural rights to juveniles who come under federal jurisdiction and to bring federal procedures up to the standards set by various model acts, many state codes and court decisions." Crimes punishable by death or life imprisonment (primarily murder, kidnapping, and rape) were made subject to the federal juvenile treatment for the first time. At the time, the Supreme Court decision in Furman v. Georgia had recently declared unconstitutional the procedure under which the vast majority of state and federal capital punishment statutes operated. It was not until two years thereafter that Woodson v. North Carolina and Gregg v. Georgia gave some clue as to what procedures would pass constitutional muster. When Congress established the requisite procedures to restore capital punishment as a federal sentencing option, it exempted juveniles. In the 1974 revision of federal juvenile law, the Attorney General lost the unbridled discretion to determine whether children, accused of federal crimes, should be tried as adults in federal criminal proceedings. The Attorney General was authorized, however, to petition the federal juvenile court to transfer, for trial as an adult, any 16-or 17-year old accused of a crime which carried a maximum penalty of death, life imprisonment, or imprisonment for ten years or more. Congress made the final major adjustments ten years later with changes that emphasized that at least some of the juveniles who commit serious crimes merited punishment as adults. The Sentencing Reform Act of 1984 repealed the Federal Youth Corrections Act and eliminated juvenile parole provisions. The Sentencing Reform Act also lowered the age at which a juvenile may be transferred for trial as an adult and expanded the list of crimes that justify such a transfer. Thus far at least, the courts have declined to read into this history a congressional intent to repudiate rehabilitation as a sentencing consideration in federal juvenile proceedings. The continuing basic premise of federal juvenile law is that juvenile matters, even those arising under federal law, should be handled by state authorities whenever possible. The remote second preference of federal law is treatment of the juvenile under the federal delinquency provisions. Because a majority of the federal cases have historically arisen in areas beyond state jurisdiction, i.e. , primarily Indian country, the majority of federal delinquency proceedings have historically involved Native Americans. In a limited, but growing, number of instances involving drugs or violence, federal law permits the trial of juveniles as adults in federal court. For purposes of the Federal Juvenile Delinquency Act in its present form, a juvenile is an individual, under 21 years of age when the information is filed, alleged to have violated federal criminal law before reaching the age of 18. The Act reaches neither individuals after they turn 21 nor conduct committed after they turn 18. Federal authorities, however, may prosecute as an adult any individual whose active participation in a conspiracy or racketeering enterprise bridges his or her eighteenth birthday. Once the federal courts have found a juvenile delinquent, however, a court that revokes a juvenile's delinquent supervised release may order the juvenile held until age 26. Criminal investigation and prosecution is first and foremost the domain of state and local officials, and conduct which violates federal criminal law is usually contrary to state law as well. For example, the federal Controlled Substances Act has a state equivalent in every jurisdiction, and robbery of a federal insured bank, or murder of a federal employee or law enforcement officer will almost always be contrary to the state robbery and murder statutes in the state in which the offenses occur. Moreover, while state crimes are the most common basis for state juvenile court jurisdiction, many state juvenile courts enjoy delinquency jurisdiction based upon a violation of federal law. Thus, an individual under 18 who violates federal criminal law can move through the state juvenile delinquency system without ever coming into contact with federal authorities. Contractions in state juvenile court jurisdiction, however, make this less likely than was once the case. Many states now define juvenile court jurisdiction more narrowly than federal law either in terms of age or crime or both. Some also permit the adult criminal trial of a juvenile either through the exercise of concurrent jurisdiction or a waiver or transfer of jurisdiction under circumstances the federal courts could not. A juvenile taken into federal custody for violation of federal law must be advised of his or her legal rights immediately and the juvenile's parents or guardian must be notified immediately. The courts have held that since federal custody activates the statute's requirements, the obligations only begin after a juvenile, initially detained by state, local or tribal officials, is turned over to federal authorities, and may be excused when the juvenile frustrates reasonable but unsuccessful notification efforts. Much of the case law relating to the federal advice and notification provisions comes from the U.S. Court of Appeals for the Ninth Circuit which has held that: (1) the word "immediate" means the same for both advice and notifications purposes; (2) advice given 4 hours after arrest and notification given 3½ hours after arrest has not been given "immediately"; (3) notice given within close to an hour after arrests had been given immediately; (4) parental notification must include advice as to the juvenile's rights; (5) parental notification may be accomplished through the good offices of the surrogate or appropriate foreign consulate when the juvenile's parents reside outside of the United States; (6) convictions or delinquency determinations must be overturned if they are tainted by violations of section 5033 so egregious as to violate due process; and (7)less egregious but prejudicial violations of section 5033 may require that any resulting incriminating statements be suppressed. The juvenile must also be brought before a magistrate for arraignment "forthwith." At night, on weekends, or at other times when a magistrate is not immediately available, arraignment may be within a time reasonable under the circumstances. On the other hand when a magistrate is available, arraignment may not be delayed simply because the government is proceeding with an abundance of caution or because the associated paperwork is tedious. Once before the magistrate, the juvenile is entitled to the assistance of counsel and to have counsel appointed in the case of indigence. The magistrate may also appoint a guardian ad litem, and, after a hearing before counsel, order the juvenile detained to guarantee subsequent court appearances or for the safety of the juvenile or anyone else. A juvenile under federal detention is entitled to a delinquency hearing within 30 days or to have the information charging his or her delinquency dismissed with prejudice unless he or she has contributed or consented to the delay or unless dismissal with prejudice would be contrary to the interests of justice. This speedy trial requirement runs from the time the juvenile was taken into federal custody pending judicial proceedings, but does not attach to any period of state detention; to any period during which the juvenile was being held for purposes other than the pendency of delinquency proceedings; to any time when the juvenile is not being detained; to delays attributable to the juvenile's deception; to the period between admission or guilty plea and sentencing; or to the period for which a continuance has been granted at the juvenile's behest. Time spent on the government's appeal is excludable in the interest of justice, as is time spent litigating the government's transfer motions, but not when the juvenile was being unlawfully detained at the time of government's motion. Federal law permits federal proceedings against a federal juvenile offender when there is no realistic state alternative or when the juvenile is accused of a serious federal crime. The government must certify that it has elected a federal forum. The certificate must assert that either: (1) the state courts are unwilling or unable to proceed against the juvenile for the misconduct in question; or (2) the juvenile programs of the state are unavailable or inadequate; or (3) the offense is a drug dealing or drug smuggling violation, possession of an undetectable firearm, or felony and crime of violence and that a substantial federal interest exists warranting the exercise of federal jurisdiction. "Because certification requirements are disjunctive, a single basis for certification establishes jurisdiction." Although the statute calls for certification by the Attorney General, the authority has been redelegated to the various United States Attorneys. A facially adequate certification is generally thought to be beyond judicial review in the absence of evidence of bad faith. Certification is jurisdictional, however, so that certification by an Assistant United States Attorney without evidence of the United States Attorney's approval is insufficient. The government need not certify the want of, or unwillingness to exercise, tribal as well as state jurisdiction. "The Attorney General's certification of a 'substantial federal interest' is an act of prosecutorial discretion that is shielded from judicial review." Because there is no statutory definition of the term "crime of violence" for certification purposes, courts in the past have relied on the definitions in 18 U.S.C. § 16 ("The term 'crime of violence' means – (a) an offense that has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or (b) any other offense that is a felony and that, by its nature, involves substantial risk that physical force against the person or property of another may be used in the course of committing the offense "); or 18 U.S.C. § 924(c)(3) ("the term 'crime of violence' means an offense that is a felony and – (A) has as an element the use, attempted use, or threatened use of physical force against the person or property of another, or (B) that by its nature, involves a substantial risk that physical force against the person or property of another may be used in the course of committing the offense"); or simply "an offense that 'by its very nature involves a substantial risk' that physical force against another may be used in committing the offense." On April 17, 2018, however, the Supreme Court in Sessions v. Dimaya declared unconstitutionally vague the language of 18 U.S.C. § 16(b) (in italics above), incorporated by cross-reference into the Immigration and Nationality Act. The Court's decision may require future lower federal courts, tasked to discern the meaning of the term "crime of violence" for certification purposes, to apply 18 U.S.C. §§ 16(a) or 924(c)(3)(A) or to formulate a new definition. If the government decides against federal proceedings, the juvenile must either be released or, under the appropriate conditions, turned over to state authorities. Otherwise, the government begins the proceedings by filing an information and a statement of the juvenile's past record with the district court. Most courts appear to believe that they have no jurisdiction to proceed against a juvenile until they receive evidence of the juvenile's prior record. The government may proceed against a juvenile as an adult only if the child insists, or pursuant to a juvenile court transfer. There are two types of transfers, mandatory and discretionary. A transfer is mandatory in the case of a violent felony, drug trafficking, drug smuggling, or arson, allegedly committed by a juvenile 16 years of age or older who has previously been found to have committed comparable misconduct. As the language suggests, the prior felony "conviction" may be either a conviction as an adult or a finding of delinquency based on conduct that would be felonious if committed by an adult. Charges that would support a mandatory transfer if brought against a 16 year old recidivist, may be used to trigger a discretionary transfer if the juvenile is 15 or older regardless of his or her prior record; discretionary transfers are also possible for juveniles 13 or older in some cases of assault, homicide or robbery. As in the case of certification, the vagaries associated with the term "crime of violence" impact transfers involving in two of the three classes. The predicate offense list found in section 5032 for the mandatory transfer of recidivists aged 16 or older uses language virtually identical to the language of 18 U.S.C. §§ 16(a) and 16 (b): "[a]a felony offense that has as an element thereof the use, attempted use, or threatened use of physical force against the person of another, or [b] that, by its very nature, involves a substantial risk that physical force against the person of another may be used in committing the offense ." The Supreme Court's determination in Dimaya , that the language of section 16(b) is unconstitutionally vague, presumably applies with equal force to the comparable mandatory transfer language (italicized above). The discretionary transfer provision for juveniles 15 years of age or older has a similar problem. It lists "crimes of violence" as predicates. Here by operation of the Dimaya decision, the lower courts are left with the task of applying section 16(a) or some other definition that avoids the uncertainty of section 16(b). The discretionary transfer provision for juveniles 13 and older presents no such challenge, because section 5032 enumerates specific predicate offenses there. At least one federal appellate court has rejected contentions that mandatory transfers constitute an unconstitutional denial of either due process or equal protection and aside from a denial of the ineffective assistance of counsel, questions of the constitutionality of the underlying prior conviction or determination may not be raised at the transfer hearing. When the transfer is discretionary, juvenile adjudication is presumed appropriate, unless the government can establish its case for a transfer by a preponderance of the evidence. Section 5032 lays out the factors for the court's consideration when it is asked to exercise its discretion to transfer a juvenile in the interest of justice for trial as an adult. "In making its determination, the court must consider six factors: (1) the age and social background of the juvenile; (2) the nature of the alleged offense; (3) the extent and nature of the juvenile's prior delinquency record; (4) the juvenile's present intellectual development and psychological maturity; (5) the nature of past treatment efforts and the juvenile's response to them; and (6) the availability of programs designed to treat the juvenile's behavioral problems." The purpose of the exercise is to determine whether the prospects for the juvenile's rehabilitation are outweighed by the risk of harm that he poses if not tried as an adult. A court need not give the factors equal weight as long as the court documents its consideration of each. The age factor compels the court to consider a juvenile's age both at the time of the misconduct and at the time of the transfer hearing. "The older a juvenile delinquent is both at the time of the alleged offense and at the time of transfer hearing, the more the juvenile defendant's age weighs in favor of transfer." In considering the child's social background, the courts cite the child's family life, both positive and negative, and other social interactions. The second factor calls for an assessment of both the seriousness of the misconduct alleged and the juvenile's role in the transgression. The allegations are taken as true for purposes of the assessment, and allegations of serious offenses argue strongly for transfer. The third factor requires the court to take into account "the extent and nature of the juvenile's prior delinquency record." This may include the juvenile's arrest record in some instances. A clean record, however, is no bar to a transfer. The fourth factor, the juvenile's "intellectual development and psychological maturity," is essentially a matter of whether the juvenile has the mind of a child at the time of the transfer petition, indicating a receptivity to rehabilitation. The factor may argue strongly for the transfer of a juvenile wise beyond his years. Moreover, with age, the weight the courts give to average intellectual development and maturity begins to slip away. In the case of older juveniles, the courts may find evidence of reduced, or even greatly reduced, development and maturity insufficient to overcome the counter weight of a serious offense. The fourth factor attempts to predict whether the juvenile will be receptive to rehabilitative efforts. The fifth factor evaluates whether the juvenile has been receptive to past rehabilitative efforts. Obviously, the factor carries no weight if there have been no past efforts. The final factor is the availability of treatment programs for the individual either as a juvenile or an adult. The juvenile's age or offense may make him ineligible for state programs in some instances. Transfer hearings are considered akin to preliminary hearings and consequently other than the rules of privilege, the Federal Rules of Evidence include those governing hearsay do not apply. A juvenile's statements "prior to or during a transfer hearing" may not be admitted in subsequent criminal proceedings. Consequently, a juvenile may be required to submit to a psychiatric examination in connection with the hearing, and the court may base its transfer determinations on the results without intruding upon the juvenile's Fifth Amendment privilege against self-incrimination. The court's determination of whether transfer is appropriate is immediately appealable under an abuse of discretion standard. The Supreme Court's decision in Miller v. Alabama , barring imposition of a sentence of life imprisonment without parole for an offense committed while a juvenile, precludes a transfer relating to an offense punishable only by death or life imprisonment. It does not preclude a transfer with respect to an offense punishable alternatively by imprisonment for a term of years. In the absence or failure of a government transfer motion and unless the juvenile insists on an adult trial, the district court, at its discretion, conducts a delinquency hearing "at any time and place within the district, in chambers or otherwise." Neither the right to grand jury indictment or to a jury trial are constitutionally required. However, the Constitution demands many of the other features of an adult criminal trial including: notice of charges, right to counsel, privilege against self-incrimination, right to confrontation and cross examination, proof beyond a reasonable doubt, protection against double jeopardy, and application of the Fourth Amendment exclusionary rule. Upon a finding of delinquency, the court schedules either a sentencing hearing or a hearing in anticipation of a commitment for examination prior to sentencing. At sentencing, the court may dispose of a juvenile delinquency case by suspending sentence, by ordering restitution or probation, or by committing the juvenile to the custody of the Attorney General for detention. Unless the court suspends sentence, section 5037 establishes a series of time limits that restrict the court's authority when it orders detention, when it imposes or revokes probation, and when it imposes or revokes a period of juvenile delinquent supervision. Section 5037(c) provides different detention limitations depending upon whether the dispositional hearing occurs when the individual is under 18 years of age or is between 18 and 21 years of age. In the case of a juvenile under 18, the court may order a term of detention no longer than the shorter of (A) the date the juvenile will turn 21; (B) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult; or (C) the maximum term of imprisonment that would apply had the juvenile been an adult. The detention limits for juveniles between the ages of 18 and 21 depend on the seriousness of the misconduct that led to the delinquency determination. If the misconduct would have been punishable by imprisonment for a maximum of 12 years or more, the term of detention may be no longer than the sooner of: (i) five years, or (ii) the top of the sentencing guideline range applicable to adults under comparable circumstances. If less serious misconduct led to the delinquency determination, the court may order detention for no longer than the sooner of: (i) three years; (ii) the top of the sentencing guideline range; or (iii) the maximum term of imprisonment that an adult would have faced under the circumstances. The time limits for probation are comparable. The court may set the term of probation for a juvenile under 18 years of age at no longer than the sooner of (A) the date on which the juvenile will turn 21 years of age; or (B) five years (or one year if the misconduct in an adult would be punishable by imprisonment for not more than five days). For juveniles between the ages of 18 and 21, the limit is the shorter of (A) three years; or (B) one year (if the misconduct in an adult would be punishable by imprisonment for not more than five days). The adult mandatory and discretion condition statutes apply including the requirement that any discretion conditions involve only such deprivations of liberty or property as are reasonably necessary to comply with statutory sentencing principles. The court may later revise or revoke a juvenile's probation and order the juvenile's detention for violation of his probation conditions. Detention authority following revocation mirrors the court's initial detention authority with two exceptions. First, regardless of the juvenile's age at the time of revocation, the court is initially governed by the time limits that apply to the detention of juveniles between the ages of 18 and 21. Second, an individual who is 21 years of age or older may not be detained beyond the age of 23, or beyond the age of 25 if the misconduct is punishable by imprisonment for 12 years or more. Subject to those restrictions, when the misconduct that resulted in the delinquency determination would be punishable by a maximum term of imprisonment of 12 years or more, the court may order a term of detention no longer than the shorter of (i) five years; or (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult. For less serious forms of misconduct, the limit is the shorter of (i) three years; (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult; or (iii) the maximum term of imprisonment that would apply had the juvenile been an adult. When a court orders juvenile detention, it may also impose a term of juvenile delinquent supervision to be served after the individual's release from detention. Juvenile delinquent supervision has its own time limits and its own set of conditions. The conditions are the same as those available when the court sentences a juvenile to probation. The initial term of juvenile delinquent supervision may not exceed the juvenile's 21st birthday if the individual is under the age of 18 when the detention order is issued. If the individual is between 18 and 21, the initial time limits are those that apply to detention, less the time served in detention. Thus, when the misconduct that resulted in the delinquency determination would be punishable by a maximum term of imprisonment of 12 years or more, the court may order a term of supervision no longer than the shorter of (i) five years; or (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult. For less serious forms of misconduct, the limit is the shorter of (i) three years; (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult; or (iii) the maximum term of imprisonment that would apply had the juvenile been an adult. Violation of the conditions of supervision may lead to further terms of detention and juvenile delinquent supervision. The maximum term of detention following revocation of a term of supervision is the same as the maximum term of detention following revocation of probation, less time served in detention. That is, when the misconduct that resulted in the delinquency determination would be punishable by a maximum term of imprisonment of 12 years or more, the court may order a term of supervision no longer than the shorter of (i) five years; (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult; or (iii) the time before which the individual turns 26 years of age. For less serious forms of misconduct, the limit is the shorter of (i) three years; (ii) the term at the top of the sentencing range under the sentencing guidelines that would apply had the juvenile been an adult; (iii) the maximum term of imprisonment that would apply had the juvenile been an adult; or (iv) the time before which the individual turns 24. Section 5037(d)(6) is somewhat cryptic about the term limits on the juvenile delinquent supervision imposed after revocation. It makes no mention of the limits in place when the individual is less than 18 years of age or between 18 and 21 years of age. As for individuals over 21 years of age, it declares that the term of juvenile delinquent supervision "shall be in accordance with the provisions of section 5037(d)(1)" with the exception of the usual bars on supervision over individuals once they reach either 24 or 26 years of age depending on the seriousness of their original misconduct. The difficulty stems in part from the fact that section 5037(d)(1) says nothing about time limits. It merely states that "[t]he court, in ordering a term of official detention, may include the requirement that the juvenile be placed on a term of juvenile delinquent supervision after official detention." One appellate court has held that "the maximum term of supervision that a court may impose under § 5037(d)(6) is determined by the requirements of in § 5037(d)(2), using the juvenile's age at the time of the revocation hearing." One of the hallmarks of the Federal Juvenile Delinquency Act is its effort to shield juveniles from some of the harsh consequences of exposure to the criminal justice system. Before and after being taken into custody, and before and after being found delinquent, it refuses to allow juveniles to be interspersed with adults who are awaiting trial for, or have been convicted of, criminal offenses. In the same spirit, ordinarily federal juvenile records are sealed for all purposes other than judicial inquiries, law enforcement needs, juvenile treatment requirements, employment in a position raising national security concerns, or disposition questions from victims. This does not render otherwise admissible evidence of juvenile proceedings inadmissible in criminal proceedings. Moreover, in response to media requests the court will balance the competing interests which weigh heavily in favor of confidentiality. Juveniles transferred for trial as adults in federal court are essentially treated as adults, with few distinctions afforded or required because of their age. At one time, even the Sentencing Guidelines instructed sentencing judges that an offender's youth was not ordinarily a permissible ground for reduction of the otherwise applicable Sentencing Guideline range. The Sentencing Commission has since amended the guideline to permit consideration of the defendant's age in atypical cases. In addition, the death penalty may not be imposed as punishment for a crime committed by a juvenile. Nor may an individual be sentenced to life imprisonment without the possibility of parole for a crime committed as a juvenile.
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Federal authorities have three options when a juvenile violates federal criminal law. First, they can refer the juvenile to state authorities. Second, they can initiate federal delinquency proceedings. Third, they can petition the federal court to transfer the juvenile for trial as an adult. The Federal Juvenile Delinquency Act general favors referring juveniles to state authorities, but it permits federal delinquency proceedings where state courts cannot or will not accept jurisdiction. Because a majority of the federal juvenile delinquency cases have historically arisen in areas beyond state jurisdiction, i.e., primarily Indian country, the majority of federal delinquency proceedings involve Native Americans. In the more serious of these cases, the juvenile offender may be transferred for trial as an adult in federal court. The Act applies to those charged before the age of 21 with a breach of federal criminal law occurring before they reached the age of 18. Given the preference for state juvenile proceedings and the fact that a violation of federal law will ordinarily support the assertion of state juvenile court jurisdiction, most such offenders never come in contact with federal authorities. Many of those who do are returned to state officials to be processed through the state court system. The United States Attorney, however, may elect to initiate federal proceedings if the state courts are unwilling or unable to assume jurisdiction, or the state has no adequate treatment plans, or the juvenile is charged with a crime of violence or with drug trafficking. Federal juvenile delinquency proceedings require neither grand jury indictment, public trial, nor trial by jury. The constitutional rights available to juveniles at delinquency proceedings are otherwise much like those found in adult criminal trials. Juveniles found delinquent may be released under suspended sentence, placed on probation, ordered to pay restitution and/or sentenced to the custody of the U.S. Attorney General for detention. The period of detention, if any, may not exceed the term which might be imposed upon an adult offender for the same misconduct. The period of detention may be followed by a period of juvenile delinquent supervision, revocation of which in serious cases may result in detention until the individual is 26 years of age. The U.S. district court may, and in some cases must, transfer a juvenile for criminal trial as an adult. A juvenile may request a transfer to trial as an adult. Otherwise, a court must order a transfer when a juvenile, with a prior comparable conviction or juvenile adjudication, is charged with committing a violent offense or a drug trafficking offense at the age of 16 or older. Discretionary transfers come in two varieties. A court may transfer a juvenile, who when 13 years of age or older is alleged to have committed aggravated assault, murder, attempted murder, armed robbery, or armed rape. A court may also transfer a juvenile who when 15 years of age or older is alleged to have committed drug trafficking or a violent felony. The court orders or denies the transfer petition after considering the seriousness of the offense, the age and maturity of the juvenile, the juvenile's prior delinquency record, the results of past rehabilitative efforts, and the availability of existing rehabilitative programs.
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By some estimates there are approximately 1.2 billion Muslims in the world, of which 60% live in Asia. Only 15% of Muslims are Arab, while almost one third live in South Asia. The four nations with the largest Muslim populations, Indonesia (194 million), India (150 million), Pakistan (145 million), and Bangladesh (130 million), are in Asia. China also has a population of 39 million Muslims. Despite this, the Muslims of Asia are perceived to be on the periphery of the Islamic core based in the Arab Middle East. Muslims are a majority in Kirgizstan, Uzbekistan, Tadjikistan and Turkmenistan in Central Asia, Afghanistan, Pakistan, and Bangladesh in South Asia and Malaysia, Brunei, and Indonesia in Southeast Asia. (See map below) There are also significant minority populations in Khazakstan, India, Thailand, and the Philippines. Sizable Muslim communities are also found in Sri Lanka, China, Burma, and Singapore. Islam is by some estimates the world's fastest growing religion. Mecca, in Saudi Arabia, is the spiritual center of Islam because Mohammad founded the religion there in 610. In 2002, Muslims constituted approximately 19% of the world's population as compared to 30% that were Christian. These percentages are projected by some to shift to 25% Christian and 30% Muslim by the year 2025. Islam in Southeast Asia is relatively more moderate in character than in much of the Middle East. This moderation stems in part from the way Islam evolved in Southeast Asia. Islam came to Southeast Asia with traders rather than through military conquest as it did in much of South Asia and the Arab Middle East. Islam also was overlaid on animist, Hindu, and Buddhist traditions in Indonesia, which are said to give it a more syncretic aspect. Islam spread throughout much of Southeast Asia by the end of the seventeenth century. Islam in Asia is more politically diverse than in the Middle East. Islam has been undergoing a revival in Asia. RAND analyst Angel Rabasa points to several factors that contribute to this Islamic resurgence in Asia. These include both domestic and external factors. Internally, the forces of globalization and the impact of Western culture have played a role, especially the effect of rapid industrialization and resulting urbanization. The Asian financial crisis of 1997 resulted in the overthrow of the authoritarian Suharto regime and created political space for Islamists in Indonesia. Muslim separatist insurgents have continued their struggle in the Philippines and Thailand while the Parti Islam se Malaysia has worked through the political system to promote an Islamist agenda while in opposition in Malaysia. External factors include the current situation in Iraq and Afghanistan, the Arab-Israeli conflict, the 1979 Islamic revolution in Iran, the export of Saudi-backed Wahhabi Islamic fundamentalism, the conflict between India and Pakistan over Kashmir, and the Afghan war against the Soviets. The majority of Muslims are of the Sunni tradition, while 10-15% are Shiite. This difference stems from disagreement over the succession to the prophet Mohammad. In South and Southeast Asia, Shiites are a significant portion of the population in only Afghanistan and Pakistan. The puritanical Sunni sect of Wahhabism has played an important role in the resurgence of Islam in Asia. It stems from a 18 th Century movement founded by Muhammad ibn Abd al-Wahhab that preached a literal interpretation of the Quran and an orthodox practice of Islam. Historically there has been a close relationship between Wahhabism and the Saudi dynasty. Sufism is another more "mystical" variant of Islam, though its presence in Asia is small except for parts of South Asia. The decline of Islamic power in the wake of European colonial expansion provoked two key schools of thought within Islam that continue to have relevance today. The traditionalist school believed that the cause for the decline of Islam could be traced to "moral laxity and departure from the true path of Islam." As a result, their response was to call for an Islamic revival. Others, known as reformers, felt that the decline was due to "a chronic failure to modernize their societies and institutions." The path of the reformers presents the question of whether it is possible to modernize without Westernizing. At its core this is a struggle over values: "... how to protect a society's cultural heritage and traditional practices in an age of globalization and how to develop a creative coexistence between modernization and traditionalism without Westernization." It is thought by some analysts that if the United States and the West seek to make common cause with moderate elements within the Islamic world against violent extremists they would be well advised to do so in a way that is not perceived to be a threat to the Islamic world. The United States, through its association with globalization and a globalizing culture, is perceived as a threat by many leaders of the Islamic world who are seeking to preserve, or restore, traditional culture even as segments of the populations they lead are drawn to American culture. The disconnect between Muslim elites and their people in Asia can also be seen in the decreasing popularity of United States's foreign policy even as regional leaders seek to maintain close ties. Some analysts believe that as long as the Muslim world views the U.S.-led war against terror as a war against Islam there will be significant limits on the extent to which Muslim states will be able to cooperate with the United States in the war against terror. The problem is exacerbated by widespread Muslim opposition to United States policy on the Arab-Israeli conflict. The Islamic revival is changing the face of political Islam in Asia. The distinction to be drawn is between revivalists, who see religious change as an end in itself, and political Islam, or Islamists, who seek the Islamic revival as a means to the end of transforming the state. A further distinction is to be drawn between those who would work through the political process and those who would use violence to achieve their ends. The Islamic revival has a complex relationship to the level of extremism in Asia. While Islam in Southeast Asia has been moderate in character, it is undergoing a process of revivalist change in some segments of society. The resurgence is in part inspired by links to the Middle East, Afghanistan, and Pakistan. Some Southeast Asians returning from Islamic religious schools in the Middle East and Pakistan have returned with a new, radical, militant, Islamist, and extremist form of Islam that is more likely to be anti-American or anti-Western in character. There is also a significant number of violent extremists of returned Southeast Asians, and a larger number of South Asians, who had participated in the war against the Soviet Union in Afghanistan. Some of the South and Southeast Asians who have been radicalized through these experiences have gone on to spread extremist ideology, particularly by linking with local Muslim extremist groups who tend to have more nationally or regionally defined goals and who are largely opposed to local moderate Muslims. From one perspective "the most effective policies towards Muslim Asia will be those that contain extremism while working with, rather than against, the Muslim majority's aspirations for social and economic improvement." Connections between Islamic extremism and terrorist organizations in South Asia appear to be more extensive than they are in Southeast Asia. This stems in large part from closer interaction with the Middle East, strengthened recently by the presence of Al Qaeda in Afghanistan and Pakistan. It is also a function of long term conflict in Afghanistan and in Kashmir. The extremist Taliban regime gave sanctuary to Al Qaeda until it was crushed. Since that time remnant Al Qaeda forces have linked up with other Sunni extremist groups in South Asia including Lashkar-e-Taiba, Jaish-e-Mohammad, Sipah-e-Sahaba Pakistan and Lashkar-i-Jhangvi. Pakistan has also experienced Sunni-Shiite conflict. An extensive array of Islamic schools known as madrassas , including some that teach a militant anti-Western and anti-Hindu perspective, operate in Pakistan. A coalition of Islamist political parties controls approximately 20% of the seats in Pakistan's legislature, as well as the Northwest Frontier Province. They also lead a coalition in Baluchistan. It has been reported that Al Qaeda fighters escaped to Bangladesh after the fall of Afghanistan to American and Afghan Northern Alliance forces and that Bangladesh veterans of the conflict in Afghanistan have played a role in establishing radical madrassas in Bangladesh. In India, while there exists significant inter-communal strife between Hindus and Muslims it is largely domestically focused with the exception of Pakistani based groups operating in Kashmir. There are a number of Islamist groups in Southeast Asia that have linkages, either direct or indirect, to terrorist organizations. The Moro Islamic Liberation Front (MILF), and Abu Sayyaf are examples of groups in the Philippines where Islamist ideology, secessionism, criminality, and linkages to international terrorist networks are evident. The terrorist Jemaah Islamiya (JI) organization, which seeks to establish an Islamic Khalifate across much of Southeast Asia and establish Islamic law, has ties to Al Qaeda. In Indonesia, the now reportedly disbanded Lashkar Jihad incited inter-communal strife between Muslims and Christians in Sulawezi and the Moluccas that created a struggle that can be exploited by terrorist groups such as JI. Lashkar Jundullah is another group that has been involved in inter-communal violence in the Moluccas and Sulawezi. The extremist Kampulan Mujahidin Malaysia (KMM) is an example of an organization in Southeast Asia established by veterans of the fight against the Soviets in Afghanistan. In Thailand, separatists have mounted an insurrection in the Muslim southern provinces. The relatively few Muslims of Northeast Asia are found in China for the most part. China is home to an estimated 17.5 to 36 million Muslims. The largest, most concentrated group is the Uighurs of Xinjiang Province in western China. The Uighur minority has experienced unrest of an Islamic character in recent years. Many Uighurs seek autonomy within China. Demographic trends arising from Han-Chinese in-migration are projected to make the Uighurs a minority in their home province. The scope of the Islamic revival in Asia, and the extent to which increased religious fervor will translate into extremist positions or political power that will express itself in violent ways towards the West, is debated. Some see this phenomenon manifesting itself more in terms of increased piety among individuals within society without necessarily expressing itself politically. Karen Armstrong, author of Islam: A Short History , believes that because fear feeds extremism the war against terror should include a better appreciation of Islam in the West. It has been observed that U.S. counter-terrorism policy "tends to conflate political Islam and terrorism worldwide." A key distinction for some in this debate is the distinction between cultural or religious identity and political identity. An Islamic revival that finds its expression through cultural or religious means is not necessarily a threat, even as some in the Islamic world would manipulate it to their anti-American or anti-Western ends. An examination of recent developments with political Islam in Malaysia and Indonesia illustrate this point. Radical Islamist or extremist parties have not demonstrated broad appeal among Indonesian or Malaysian voters in recent elections even as some segments of these societies have experienced a resurgence of Islamic belief. The Islamist Parti Islam se Malaysia experienced significant electoral setbacks in the 2004 elections to the relatively more secular Barisan National Coalition of Prime Minister Badawi, who is himself regarded as a respected Islamic scholar. In Indonesia, Islamist parties, such as the Prosperous Justice Party (PKS), made small gains based not on their Islamist agenda but on their anti-corruption and good governance policies. Secular and nationalist parties clearly are preferred by voters in Indonesia and Malaysia even as Islam remains a core value of the people. There are also fundamentalists in Southeast Asia that would introduce strict Islamic law but would not advocate the use of violence to do so. There is also a distinction to be made between those who would focus primarily on sub-national, national and regional objectives, such as secession for a Muslim province, rather than focus on the international agenda advocated by Al Qaeda. Alienation and humiliation appear to be key concepts for understanding the Islamic resurgence in Asia and for understanding why individuals are drawn to terrorist groups. In discussing madrassas and pesantren in Indonesia, from which extremists have been recruited, Zachary Abuza has taken the position that the "radical fringe (of Islam) will continue to grow, as modernization leaves people more isolated and the political process leaves people more disenfranchised. The Islamists and their supporters will continue to gain in power unless the more secular Muslim community again provides a successful model of tolerant and modernist Islam that it has done fairly successfully for forty years." In this way, some analysts believe frustration from diminished expectations driven by economic malaise, the lack of effective political participation, and a sense of humiliation are at the core of why many Asian Muslims have become radicalized. It is thought by some that U.S. policies can help best by assisting moderate elements in Asia to "respond to mainstream Muslims' hopes for economic improvement and political participation ... education, balanced development, participatory governance, and civil peace" that will give hope to alienated individuals who might otherwise drift towards radicalism. Some observers feel that diminishing the ranks of alienated Asian Muslims will in turn restrict room for maneuver by extremists and terrorists by limiting active or passive support from the societies within which they operate.
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There exists much diversity within the Islamic world. This is particularly evident in Asia. This diversity is to be found in the different ethnic backgrounds and in the different practices of Islam. The Muslim world of Asia has been experiencing an Islamic revival. This has had an effect on moderate as well as radical Muslims. An understanding of the dynamics of Islam in Asia should help inform United States' policy to develop respect between America and Muslim peoples, to foster economic policies to encourage development of open societies, to support education in Muslim states, and to identify and prioritize terrorist sanctuaries in order to pursue more effectively the war against terror. This report will be updated.
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The new Medicare legislation, the Medicare Prescription Drug, Improvement, andModernization Act ( P.L. 108-173 ), addresses the importation of prescription drugs for all U.S.consumers, not just for Medicare-eligible individuals. (1) These provisions are rooted in consumer and congressional concernwith the high cost of prescription drugs in the United States. International comparisons of drugprices have confirmed that American consumers, particularly the elderly and uninsured, often paymore for prescription drugs than do citizens in other countries. (2) The importation oflower-priced prescription drugs is one strategy to reduce U.S. consumer spending. The new Act, despite being structured as a replacement to the importation provisions in theMedicine Equity and Drug Safety (MEDS) Act of 2000, does not effectively change U.S.prescription drug importation policy. The details it adds will not be implemented unless theSecretary of Health and Human Services (hereafter referred to as the Secretary) certifies to Congressthat such imports would not threaten the health and safety of the American public and would providecost savings. That certification requirement, continued from prior law, has effectively haltedimplementation of import provisions because no Secretary has been willing to provide the requiredcertification, a stance outlined in testimony from the Food and Drug Administration (FDA). (3) Although earlier laws restricted the importation of a prescription drug to its manufacturer,the FDA has maintained a lenient enforcement policy that lets individuals bring a small amount ofnon-FDA approved drugs into this country for their own use. (4) Called a "personal-use" or"compassionate-use" policy, this FDA discretion has made it easier for patients with life-threateningdiseases (such as cancer and AIDS) to bring medicines into the country and be treated by their owndoctors. The policy, as described on the FDA website, does not cover commercial imports, nor doesit cover individual imports of FDA-approved drugs available in the United States. (5) The new Medicare legislation (6) entirely replaces the language in Section 804 of the Federal Food,Drug, and Cosmetic Act (FFDCA) that had been inserted by the MEDS Act of 2000. The followingsummarizes the prescription drug import provisions in the new Act. Provisions Definitions. [Section 804(a)] "Importer" isdefined to mean a pharmacist or a wholesaler; "pharmacist" to mean a person licensed by a state topractice pharmacy, including the dispensing and selling of prescription drugs; and "wholesaler" tomean a person licensed as a wholesaler or distributor of prescription drugs in the United States, notincluding the manufacturer of the drug being imported. A "prescription drug" is defined as a drugsubject to Section 503(b) (7) excluding, however, a controlled substance, a biological product, an infused drug, an intravenouslyinjected drug, a drug that is inhaled during surgery, or a parenteral drug whose importation theSecretary determines poses a threat to the public health. "Qualifying laboratory" is defined as a U.S.laboratory that has been approved by the Secretary for the purposes of this section. Regulations. [Section 804(b)] The Secretary,after consultation with the United States Trade Representative and the Commissioner of Customs,must promulgate regulations permitting pharmacists and wholesalers to import prescription drugsfrom Canada into the United States. Limitation. [Section 804(c)] The regulationsmust ensure that all imported prescription drugs meet the same safety and efficacy standards as drugsapproved in the United States and that the importer comply with all information and reportingrequirements. The Secretary is permitted to adopt such rules as necessary to safeguard public healthor as a means to facilitate the importation of prescription drugs. Information and Records. [Section 804(d)] Drugimporters must provide information that includes the name and amount of the active ingredient ofthe drug, the dosage form of the drug, the date the drug is shipped, the quantity shipped, andinformation about its origin and destination. The importer must also supply the price paid by theimporter; the importer's name, address, and license number; the original source of the drug and theamount of each lot received from that source; and the manufacturer's lot or control number. Also,the importer or manufacturer must certify that the drug is FDA-approved, properly labeled, notadulterated, and not misbranded; and provide laboratory records of authenticity testing, includingdata, and evidence that testing was conducted in an approved U.S. laboratory. The importer isrequired to provide any other information that the Secretary determines is necessary to ensure thepublic health. Records regarding imported prescription drugs must be provided to the Secretary, andthen kept for such time as the Secretary determines to be appropriate. For a prescription drug imported directly from the first foreign recipient from themanufacturer, there must be documentation indicating that the drug came directly from themanufacturer, that the amount being imported is not greater than the quantity that was originallyreceived, that the drug was subsequently shipped by that recipient to the U.S. importer, andverification that each batch of the drug has been statistically sampled and tested for authenticity anddegradation prior to importation. Samples of subsequent shipments of these drugs must also betested for authenticity and degradation. For a prescription drug not imported directly from the firstrecipient in the foreign country, there must be documentation demonstrating that each batch of thedrug has been statistically sampled and tested for authenticity and degradation prior to importation. Testing. [Section 804(e)] The importer or themanufacturer must conduct the required authenticity testing at a qualified U.S. laboratory. If theimporter conducts these tests, the manufacturer must give the importing pharmacist or wholesalerthe information needed to authenticate the product and confirm its labeling. Also, testinginformation must be kept in confidence and used only for this required import testing or to otherwisecomply with this Act. The Secretary may adopt rules to protect trade secrets and commercial orfinancial information that is privileged or confidential. Registration of Foreign Sellers. [Section 804(f)] Any Canadian establishment engaged in the distribution of a prescription drug imported or offeredfor importation into the United States must register its name and place of business with the Secretary. The Canadian establishment also must register the name of its U.S. agent. Suspension of Importation. [Section 804(g)] Ifthe Secretary discovers a pattern of counterfeit or violative products, the agency must suspendimportation of that specific prescription drug or that specific importer. The suspension must stayin effect until the FDA investigates and determines whether the public is being adequately protectedfrom counterfeit and violative drug products under existing regulations. Approved Labeling. [Section 804(h)] A drugmanufacturer must give the importer written authorization to use, at no cost, the approved labelingfor the prescription drug. Charitable Contributions. [Section 804(i)] Section 801(d)(1) of the FFDCA, which allows only the U.S. manufacturer of a drug to import it intothe United States, will continue to apply to a product donated by a manufacturer of a drug to acharitable organization or foreign government. (8) Waiver Authority for Importation by Individuals. [Section 804(j)] Congress declares that the Secretary should use discretion when enforcing thecurrent legal prohibition against persons importing drugs or devices. The Secretary should focusenforcement on cases where the importing may pose a significant threat to public health. When theimportation is clearly for personal use and the prescription drug or device does not appear to presentan unreasonable risk to the individual, the Secretary should exercise discretion to permit theimportation by the individual. The new law specifies two waiver procedures to allow individuals-- other than pharmacists and wholesalers -- to bring prescription drugs into the United States fortheir personal use. The first deals with drugs from Canada. The Secretary is required to publish regulations thatgrant waivers for an individual to import for personal up to a 90-day supply of a drug from a licensedCanadian pharmacy. The drug must also be in final dosage form, be made in an FDA-registeredfacility, come from a registered Canadian seller, be accompanied by a valid prescription, and beimported under conditions the Secretary determines are necessary to ensure public safety. The second addresses drug imports from any other country. Here, the law gives the Secretarythe option, rather than a requirement, to issue regulations allowing imports from countries other thanCanada. If the Secretary were to publish such regulations, the law requires the Secretary to alsopublish guidance specifying the conditions under which individuals would be able to import drugsfor personal use. Construction. [Section 804(k)] Nothing in thissection shall be construed to limit the Secretary's authority relating to the importation of prescriptiondrugs, other than with respect to Section 801(d)(1), which allows only the manufacturer to importa prescription drug. Commencement of Program. [Section 804(l)] The drug import program described above can begin only if the Secretary first certifies to Congressthat its implementation would pose no additional risk to public health and safety, and would resultin a significant reduction in the cost of covered products (prescription drugs) to Americanconsumers. Termination of Program. [Section 804(l)] Oncean importation program is implemented, the Secretary can move to terminate it under specifiedconditions. If the Secretary certifies to Congress, between 12 and 18 months after the regulationsare implemented, that, based on substantial evidence, in the opinion of the Secretary, the benefits ofthe implementation of the import program do not outweigh any detriment, drug imports under thesection would cease 30 days after the certification is submitted. (9) However, the Secretary'scertification may not be submitted unless, after a public hearing, the Secretary finds it is more likelythan not that implementation will result in an increased risk to the public health; identifies, inqualitative and quantitative terms, the nature and causes of the increased risk; considers whethermeasures can be taken to avoid, reduce, or mitigate the increased risk and, if those measures wouldrequire additional statutory authority, to report to Congress describing needed legislation; identifies,in qualitative and quantitative terms, the benefits that would result from the program, includingreductions in the cost of drugs to U.S. consumers, which would allow them to obtain neededmedications without foregoing other necessities of life; and, in specific terms, compares thedetriment with those benefits and determines that the benefits do not outweigh the detriment. Authorization of Appropriations. [Section804(m)] The new law authorizes to be appropriated such sums as are necessary to carry out thissection. Conforming Amendments. Section 1121(b) ofthe Medicare Prescription Drug bill replaces references to "covered product" in Sections 301(aa) and303(a)(6) in the Federal Food, Drug, and Cosmetic Act with "prescription drug." Study and Report on Importation of Drugs. Section 1122 requires the Secretary, in consultation with appropriate government agencies, toconduct a study on the importation of drugs to the United States pursuant to Section 804 of theFederal Food, Drug, and Cosmetic Act (as added by Section 1121 of the conference agreement). TheSecretary shall submit the report to Congress not later than 12 months after the enactment of this Act. Study and Report on Trade in Pharmaceuticals. Section 1123 requires the President's designees to conduct a study and report on issues related totrade and pharmaceuticals. Discussion of Enacted Legislation Import Provisions. It is doubtful whether theSecretary will implement these import provisions given the Act contains the provision that led bothSecretaries Shalala and Thompson to decline. That provision requires that the Secretary certify thatimported drugs would be safe and at reduced cost before implementing import regulations. Althoughsignificant changes were considered, the new law changes very few elements of the MEDS Act of2000. Effectively, until the Secretary makes a certification regarding safety and cost, the law allowsno one (other than the U.S. manufacturer of the drug) to legally import a prescription drug. (10) Therefore: Until an HHS Secretary certifies to Congress that "the implementation of this section will (A) poseno additional risk to the public's health and safety; and (B) [will] result in a significant reduction inthe cost of covered products to the American consumer, (11) " drug imports are illegal unless imported by the manufacturerof the drug. Neither a pharmacist nor a wholesaler may import prescription drugs. The law does notallow an individual to import a drug for personal use. (12) If the HHS Secretary were to certify to Congress the required safety and cost savings certification,then all the mechanisms of Section 804 would go into effect. In that case, pursuant to regulationsthat the Secretary must promulgate: By law and according to regulations, a pharmacist or a wholesaler could importprescription drugs from Canada; Personal-use imports by an individual from any other country would remainillegal unless the Secretary chose to issue regulations allowing them; and The law's restrictions on personal-use imports would be waived so anindividual could import a 90-day supply of a prescription drug from Canada. Studies and Reports. Unrelated to whether theSecretary certifies safety and cost savings, the Medicare Act mandates two studies with reports toCongress. Study and Report on Importation of Drugs. The lawdirects the HHS Secretary, within 12 months of enactment, to study and report on "the importationof prescription drugs into the United States pursuant to Section 804 of the FFDCA (as added bySection 1121 of this Act)." The conference report provides the detailed instructions for that study. These include consideration of the pharmaceutical distribution chain; anti-counterfeitingtechnologies and their costs; the scope, volume, and safety of unapproved drugs; participation offoreign health agencies in ensuring product safety; the impact of importation on the drug prices thatconsumers face; the impact on research and development; agency resources; liability protections; andintellectual property rights. Study and Report on Trade in Pharmaceuticals. Thenew law also directs that "[t]he President's designees shall conduct a study and report on issuesrelated to trade and pharmaceuticals." Here, too, the conference report provides detail not stated inthe bill, including the naming of the Secretary of Commerce, the International Trade Commission,the HHS Secretary, and the United States Trade Representative as responsible for the conduct of thestudy and report. Topics to be covered include how other countries use price controls and what thiscosts U.S. consumers; the impact of price controls and intellectual property laws on price,innovation, generic competition, and research and development; and whether these are appropriatetopics for trade negotiations with other countries. The following table provides a comparison of the drug import provisions of the recentlypassed Medicare legislation and the MEDS Act provisions that it replaced. Comparison of the Importation of Prescription Drug Provisions in the New Law and What TheyReplace In June 2003, the Senate and the House each passed drug importationprovisions as part of their Medicare bills. Both the Senate-passed Prescription Drugand Medicare Improvement Act of 2003 ( S. 1 ) and the House-passedMedicare Modernization and Prescription Drug Act of 2003 ( H.R. 1 )would have required the Secretary of HHS to issue regulations allowing pharmacistsand drug wholesalers to import prescription drugs from Canada into the UnitedStates. These two bills were sent to conference. One month later, the House voted 243 to 186 to adopt the PharmaceuticalMarket Access Act of 2003 ( H.R. 2427 ), which contained broaderprovisions, such as permitting qualifying individuals (i.e., consumers) as well aspharmacists and wholesalers to import prescription drug products from 25industrialized countries, including Canada. This bill, introduced by RepresentativeGutknecht, differed strikingly from the then-current law and the subsequently enactedMedicare legislation in that it would have eliminated the provision that requires theSecretary to first certify that importation would pose no additional risk to publichealth and safety and would lower the cost of prescription drugs for U.S. consumers. H.R. 2427 would also have required drug makers to incorporatevarious counterfeit-resistant technologies in the packaging and shipping containersof all prescription drugs. The bill would have created a new section in the law calledCounterfeit-Resistant Technologies. It would have required that all prescriptiondrugs (not just those being imported) be packaged to incorporate overt opticallyvariable counterfeit-resistant technology or technologies that have an equivalentfunction of security; provide, with those technologies, visible identification of theproduct; be similar to those used by the Bureau of Engraving and Printing to secureU.S. currency; be made and distributed in a secure environment; and integratenon-visible security features with forensic capability. (13) Drug importation is attracting attention in the legislative, executive, andjudicial branches of government. Because expenditures for pharmaceuticals continue to increase and are takinga larger portion than previously of public funds used for health care, some states aretrying various ways to legally import lower cost prescription drugs from Canada inorder to control the rate of growth of this portion of the state budget. Governmentofficials from several states have petitioned HHS Secretary Tommy Thompson togrant waivers from the current law prohibiting imports; allow pilot projects; orpromulgate regulations, as would be allowed under the new Section 804 of theFFDCA, if the Secretary issued the required certification, to authorize programs forthe safe importation of prescription drugs from Canada. They cite potential savings,in one case, of over $90 million a year. (14) Coinciding with the National Governors Association meeting in Washington,D.C., a bipartisan group of Governors, accompanied by a bipartisan group ofMembers of Congress, held a February 24, 2004 hearing preceded by a pressconference in which they spoke of collective action to take advantage of lower pricedpharmaceuticals from Canada. (15) The FDA, which is charged with ensuring the safety and effectiveness ofprescription drugs sold in the United States, has responded swiftly. Rather thansingle out individuals for punishment for breaking the law, the agency has sentwarning letters and has sought to close down the websites and facilities that areillegally supplying prescription drugs. (16) In January 2004, FDA reported on its second"blitz examination" of import courier hubs. It found that 87% of the almost 2,000examined parcels containing prescription drugs, mostly from Canada, containedunapproved drugs. Because, by law, any prescription drug imported by anyone otherthan the drug's manufacturer is illegal, the FDA considers it unapproved. (17) FDAcontinues to object to these websites and states in a letter to Governor Pawlenty ofMinnesota that the states could face tort liability suits and charges of assisting incriminal activity if citizens suffer injury from these drugs. (18) Following passage of the Medicare bill, some Members have introduced billsthat seek to allow the importation of prescription drugs. S. 1974 ,introduced by Senator Daschle on November 25, 2003, includes the importation andanti-counterfeiting provisions that the House had passed in the Gutknecht bill, asdoes S. 2137 , introduced by Senator Dorgan on February 26, 2004. Senator Kennedy introduced S. 1992 on December 9, 2003, one sectionof which would amend the new law's importation provisions to include registration,inspection, and reporting requirements for Canadian wholesalers and pharmacistswho export prescription drugs to the United States; restore the prohibition ofmanufacturer discrimination against importers provisions from the MEDS Act;replace the report requirements now assigned to the Secretaries of HHS andCommerce with reports involving the Institute of Medicine and the GeneralAccounting Office; and remove the requirement that the Secretary certify safety andreduced cost to U.S. consumers before implementing the importation provisions. It remains unclear whether Congress will act in the second session of the 108thCongress to ease the restrictions on prescription drug imports. It confronts adilemma in that several Governors, local officials, and the AARP support theimportation of drugs from Canada and possibly other countries and otherstakeholders, including the FDA, the pharmaceutical manufacturers, and pharmacistsare opposed to such importation.
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The new Medicare legislation, the Medicare Prescription Drug, Improvement, andModernization Act ( P.L. 108-173 ), addresses the importation of prescription drugs for all U.S.consumers, not just for Medicare-eligible individuals. These provisions are rooted in consumer andcongressional concern with the high cost of prescription drugs in the United States. Internationalcomparisons of drug prices have confirmed that American consumers, particularly the elderly anduninsured, often pay more for prescription drugs than do citizens in other countries. The importationof lower-priced prescription drugs is one strategy to reduce U.S. consumer spending. The new Act, despite being structured as a replacement to the importation provisions in theMedicine Equity and Drug Safety (MEDS) Act of 2000, does not effectively change U.S.prescription drug importation policy. The details it adds will not be implemented unless theSecretary of Health and Human Services (hereafter referred to as the Secretary) certifies to Congressthat such imports do not threaten the health and safety of the American public and do provide costsavings. That certification requirement, continued from prior law, has effectively haltedimplementation of existing import provisions because no Secretary has been willing to provide therequired certification. The Act changes the law in four basic ways: it (1) directs the Secretary to allow imports fromCanada only (the MEDS Act had allowed imports from a specific list of industrialized countries,including Canada); (2) includes a shift in approach to the importation of prescription drugs byindividuals, by codifying the discretion in enforcement that the Food and Drug Administration(FDA) has exercised to allow the "personal use" imports of prescription drugs; (3) eliminates theprohibition against a manufacturer's entering into agreements to prevent the sale or distribution ofimported products; and (4) includes a mechanism, based on evidence, by which the Secretary canterminate the import program. Following enactment of the Medicare bill in December 2003, some Members of Congresshave moved to amend the importation of prescription drugs provisions. Some states and localitieshave set up websites to facilitate individuals' purchase of prescription drugs from Canadianpharmacies. FDA has responded. In letters to state officials, FDA has warned that states could facetort liability suits and charges of assisting in criminal activity if citizens suffer injury from thesedrugs. FDA, via the Department of Justice, has gone to the courts to stop the Canadian and U.S.distributors of drugs imported from Canada.
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Social Security is financed by payroll taxes, which are paid by covered workers and their employers. In the absence of a payroll tax reduction, employees and employers would each pay 6.2% of covered earnings, up to an annual limit, whereas self-employed individuals would pay 12.4% of net self-employment income, up to an annual limit. In December 2010, Congress temporarily reduced the employee and self-employed shares by two percentage points (to 4.2% for employees and 10.4% for the self-employed), with the Social Security trust funds "made whole" by a transfer of general revenue. The temporary reduction was scheduled to expire at the end of 2011, but was extended for two months as part of the Temporary Payroll Tax Cut Continuation Act of 2011 ( P.L. 112-78 ). The temporary payroll tax rate reduction was extended through the end of 2012 in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) and subsequently allowed to expire at the end of 2012. As part of the agreement on the Temporary Payroll Tax Cut Continuation Act of 2011, a conference committee was appointed to consider a full-year extension of the payroll tax reduction. In addition to an extension of the payroll tax rate reduction, the conferees also considered a further extension of unemployment benefits and adjusting payments to doctors under Medicare. The conference committee agreed to extend the payroll tax rate reduction, emergency unemployment compensation, and physician payments under Medicare. The final legislation, however, did not fully pay for (or offset) these extensions. Whether to provide a full-year extension was then debated among policymakers. Concerns included those related to the potential of the temporary reduction to endanger the Social Security trust funds, signaling a departure from the self-finance structure of Social Security, while increasing the federal deficit. Supporters of an extension emphasized the potential of an extension to stimulate the economy and the general revenue "repay" as a way to counter concerns about endangering the Social Security trust funds. However, the use of offsets to reduce the budgetary cost of repaying the Social Security trust funds would reduce the stimulative effect, though the choice of offsets can influence the magnitude of the reduction. This report briefly discusses economic stimulus considerations related to temporary payroll tax reductions and efforts to offset the budgetary cost of an extension. For a discussion of Social Security policy considerations concerning a temporary payroll tax reduction, see CRS Report R41648, Social Security: Temporary Payroll Tax Reduction , by [author name scrubbed]. Short-term fiscal stimulus measures aim to boost economic activity primarily through increases in the demand for goods and services. The goal of these measures is to break a cycle of decreasing output leading to decreasing employment, resulting in lower consumption and leading to further decreases in output. Without stimulative policies the economy would eventually stabilize and recover, but recovery would take longer and the overall disruption to the economy would be greater. The Congressional Budget Office (CBO), in testimony before Congress, has identified three key criteria for assessing proposals to stimulate the economy. The criteria are timing, cost-effectiveness, and consistency with long-term fiscal objectives. The following sections evaluate the payroll tax rate reduction using these criteria. Effective short-term stimulus should happen during the period of economic weakness. In addition, since recessions are historically short lived, effective stimulus should normally also be short lived. An extension of the reduction in payroll taxes could be implemented quickly and be designed to expire as the economy strengthens. The resulting increase in household income would be experienced quickly, as well. A modification of the reduction in payroll taxes, through either a greater reduction or an expansion to employer contributions, could be similarly designed. Effective short-term stimulus maximizes the increase in output and employment per dollar of budgetary cost. The effectiveness of a policy aimed at households would then depend upon the fraction of additional income spent (as opposed to saved) on goods and services relative to the lost federal revenue. Provisions targeted at low-income individuals or the unemployed should be more cost-effective than broad tax rate reductions, as those facing financial constraints are more likely to fully spend any additional disposable income. In addition, theory suggests small recurring increases in income may be more likely to be spent than a similarly sized (in total) lump sum payment, but the empirical evidence to support this is weak. An extension of the reduction in payroll taxes would not be targeted to those facing the greatest financial constraints, but the increase in disposable income would take the form of a small recurring increase. CBO estimated that a temporary reduction of payroll taxes would raise output cumulatively in the next two years by $0.10 to $0.90 per dollar of total budgetary cost and would increase employment by between one and nine jobs per million dollars of budgetary cost. These estimates assume that the majority of the increase in disposable income would be saved or used to pay down debt rather than spent on goods and services. Compared with other household tax reductions, an extension of the reduction in payroll taxes may be a cost-effective stimulus—though well-targeted direct spending may be still more cost-effective. According to CBO estimates, the short-term stimulative effect of an extension of the reduction in payroll taxes would be greater than the stimulative effects from extending the Bush Tax Cuts, on par with a one-year AMT patch, and less than an increase in refundable tax credits. Expanding the reduction in payroll taxes to include employer contributions—as proposed in S. 1660 and S. 1917 —would be expected to provide a slightly greater degree of stimulus per unit of budgetary cost than an employee-side reduction, according to CBO. The policy could encourage hiring by temporarily reducing the cost of labor. However, other evidence suggests that subsidies provided on the employer side, whether to subsidize hiring or investment, may be relatively ineffective, because employers are unlikely to hire in the absence of increased demand. The cost-effectiveness of this policy would ultimately depend on firms' responses to the incentive. Effective short-term stimulus should not hinder long-term fiscal sustainability. An extension of the reduction in payroll taxes, by itself, adds to short-term budget deficits. The two-month reduction was estimated to increase the deficit by $20.8 billion. , Extending the two percentage point payroll tax reduction through the end of 2012 is estimated to cost $93.2 billion. By themselves, these proposals would be at odds with the long-term goal of deficit reduction and may signal to some a lack of resolve to reduce deficits to investors. To address long-term fiscal objectives, some proposals to extend or expand the temporary reduction in payroll taxes include one or more offsets to reduce or eliminate the net budgetary cost of the proposals. These offsets are, by definition, contractionary as they either cut spending or raise taxes. As enacted, the extension of the payroll tax rate reduction was not offset. Dozens of other temporary tax provisions expired at the end of 2011. Whether further extension of other expiring tax provisions should be included in a payroll tax rate was an issue of debate. Ultimately, no other expiring or expired tax provisions were extended as part of the legislation extending the payroll tax rate reduction through the end of 2012. Many of these provisions were extended through the end of 2013 by the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ). Expired tax provisions lead to uncertainty for businesses and individual taxpayers. Furthermore, the potential for tax incentives to influence behavior, often the goal of tax policy, is diminished when expired tax incentives are reinstated retroactively. One challenge posed by the potential inclusion of tax extenders in a payroll tax rate reduction extension is the cost of extending these expired provisions. The Joint Committee on Taxation has estimated that extending these other expiring provisions for one year, through December 31, 2012, would cost $36.9 billion over the 2012 through 2021 budget window. This figure does not include the cost of extending the payroll tax rate cut. This figure also does not include the cost of extending first-year bonus depreciation, which would cost an estimated $21.1 billion over the 2012 through 2021 budget window, or the cost of adjusting the Alternative Minimum Tax (AMT) exemption amount for inflation, which is estimated to cost $119.6 billion over the 10-year budget window. Extending the two percentage point payroll tax reduction through the end of 2012 cost an estimated $93.2 billion. In considering a further extension of the payroll tax reduction, many proposals include some form of budgetary offset. The use of offsets is not, however, universal, as the Temporary Payroll Tax Cut Continuation Act of 2012 ( H.R. 4013 ), introduced on February 13, 2012, did not contain any offsets. Ultimately, costs associated with the extension of the payroll tax rate reduction as enacted in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) were not offset. Offsets that reduce spending, or increase revenues, are contractionary. While offsets address the issue of long-term fiscal sustainability, depending on design, they can diminish the short-term stimulative effects of the tax cut. Having offsets occur after the period of economic weakness has passed could limit short-term contractionary effects while simultaneously promoting long-term fiscal sustainability. In addition to the aggregate economic impacts of the offset, there are distributional effects. The percentage increase in after-tax income and the percentage decrease in average federal tax liability is greater for low- and middle-income taxpayers, as compared to the highest-income taxpayers (see Table 1 ). Offsets that reduce income or benefits to low- and middle-income earners, or offsets that otherwise increase taxes, could diminish the potential benefit of the payroll tax rate reduction for affected groups. One option for offsetting the cost of extending the reduced payroll tax rate is to raise additional revenues. Some of the options discussed below have been proposed as part of payroll tax rate reduction legislation. Other options have been proposed by the Obama Administration, or have been part of comprehensive deficit reduction plans. These options represent a few of the dozens of policy options for raising additional revenues to finance an extension of reduced payroll tax rates. The revenues that could be generated using the different options discussed below are summarized in Table 2 . Since the revenue options discussed below were not included in either the House-passed or Senate-passed versions of H.R. 3630 , paying for an extension of the payroll tax rate cut extension with additional revenues would have required conferees to consider measures that were not previously included in H.R. 3630 . The final version of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ), as enacted on February 22, 2012, did not include any of the revenue options discussed below. A specific option for raising revenues to pay for an extension of the temporary two percentage point payroll tax reduction is a high-income surtax. There have been several proposals to levy a high-income surtax in the 112 th Congress. The American Jobs Act of 2011 ( S. 1660 ) would levy a 5.6% high-income surtax on those with modified adjusted gross income in excess of $1 million ($500,000 for married individuals filing separate tax returns). This surtax would raise an estimated $452.7 billion over the 2012 through 2021 budget window. A high-income surtax was also proposed in Senate legislation seeking to extend and expand the payroll tax rate reduction. The Middle Class Tax Cut Act of 2011 ( S. 1917 ) proposed a 3.25% surtax on modified adjusted gross income above $1 million ($500,000 for married individuals filing separate tax returns). Imposing a 3.25% surtax on those earning in excess of $1 million would generate an estimated $267.5 million over the 2012 through 2021 budget window. Imposing a surtax on high-income individuals could partially address concerns that some high-income individuals pay lower average tax rates than some middle-income earners. In 2006, 65% of taxpayers with incomes over $1 million paid an average tax rate lower than those with less than $100,000 in taxable income. High-income taxpayer benefits from the payroll tax rate reduction are also limited. The 2012 wage cap is $110,100, meaning that the 12.4% OASDI payroll tax is suspended for earnings above this threshold. High-income taxpayers would receive a maximum benefit of $2,202 under a one-year, two percentage point payroll tax rate reduction. As a larger share of income is earned above the wage cap, benefits from the payroll tax rate reduction would be diminished. If, however, high-income earners were more likely to save payroll tax rate reduction benefits, rather than spend these benefits, recapturing these benefits through a high-income surtax would be less likely to dampen the stimulative impact of the payroll tax rate reduction. One concern that has been raised regarding a high-income surtax is the potential effect on small businesses. However, very few tax returns reporting business income (roughly 1%) report adjusted gross income in excess of $1 million. Offsetting a temporary payroll tax reduction through a high-income surtax would mean that the costs associated with a tax benefit received by many would be paid for by a limited group. Nearly 76% of taxpayers benefitted from the two-month extension of the temporary payroll tax rate reduction (see Table 1 ). In 2009, 0.22% of tax returns filed had an adjusted gross income of at least $1 million. Individual income tax expenditures reduce income tax revenues by roughly $1 trillion annually. Thus, scaling back or eliminating certain tax expenditures could result in additional revenues. As examples, the Congressional Budget Office has estimated that gradually eliminating the mortgage interest deduction would result in an estimated $214.6 billion over the 2012 through 2021 budget window. Limiting the deduction for state and local income taxes to 2% of adjusted gross income (AGI) would raise an estimated $629.3 billion over the 2012 through 2021 budget window. Limiting charitable contributions such that only contributions in excess of 2% of AGI would be deductible would raise $219 billion over the 2012 through 2021 budget window. Another option for limiting tax expenditures would be to limit the value of tax expenditures for higher-income taxpayers. The Obama Administration has proposed limiting the value of itemized deductions to 28%. This proposal would reduce the value of itemized deductions for taxpayers in the 33% and 35% bracket in 2012. Limiting the value of itemized deductions to 28% would raise an estimated $293.3 billion over the 2012 through 2021 budget window. Limiting the value of itemized deductions to 28% would increase the progressivity of the income tax system by increasing taxes paid by those at the upper end of the income distribution. For 2011, the 33% income tax rate applies to taxable income above $212,300 for married filers ($174,400 for single filers). In 2009, the top 2% of returns filed were in the 33% or 35% tax brackets. Estimates suggest that limiting the value of itemized deductions to 28% would leave tax liability unchanged for those with less than $200,000 in income. Taxpayers with cash incomes between $200,000 and $500,000 would see income taxes increase by 0.1%, on average. For taxpayers with cash incomes between $500,000 and $1 million, average federal tax rates would increase by an estimated 0.4%, while average federal tax rates would increase by an estimated 0.6% for those with cash incomes in excess of $1 million. Similar to a high-income surtax, limiting itemized deductions to offset an extension of the payroll tax rate reduction would lead to an increased tax burden on the highest incomes. The higher tax burden, however, would result from scaling back the value of certain tax subsidies, which currently provide a greater benefit to higher-income taxpayers. Another option for raising additional revenues is to modify how tax code parameters are adjusted for inflation. Current price level measures may overstate actual levels of inflation. A modified measure of inflation that more accurately reflects changes in the price level would change how provisions in the tax code, such as the standard deduction, personal exemptions, earned income and child tax credits, and IRA contribution limits, as well as tax brackets, are indexed for inflation. A re-indexing of the tax code was included in the deficit reduction packages presented by the President's Fiscal Commission and the Debt Reduction Task Force. The Joint Committee on Taxation (JCT) has estimated that indexing the tax code for inflation using a chained consumer price index (CPI) would generate $59.6 billion in additional revenues over the 2012 through 2021 budget window. Applying a chained CPI to the tax code would result in increased tax liability for taxpayers at all income levels. Moderate income taxpayers (those with cash incomes between $30,000 and $40,000) would see average tax rates increase 0.3%. Higher-income taxpayers (those with cash incomes between $100,000 and $200,000) would see average tax rates increase 0.2%. For taxpayers with incomes in excess of $1 million, tax rates would not increase, on average. Like the benefits of the reduced payroll tax rate, the additional tax burden imposed by re-indexing the tax code using a chained CPI is spread across the income distribution. Enacting a re-indexing of the tax code immediately could offset some of the stimulus provided by the payroll tax rate reduction. Much of the additional revenues, however, will be generated over time. Allowing the re-indexing to go into effect later in the budget window would postpone this contractionary effect, and would also reduce the revenues generated from the policy as measured within the 10-year budget window. Another option for raising additional revenues is to increase the social security payroll tax base. For 2012, Social Security payroll taxes apply to the first $110,100 in wage income. In recent years, roughly 83% of employment earnings fell below the Social Security wage cap. When payroll taxes were first collected in 1937, 92% of earnings were covered. Over time, the share of covered earnings has fluctuated, falling below 80% in the 1960s. Legislation enacted in the late 1970s increased the tax base such that 91% of earnings were covered in 1983. Since the share of covered earnings has been allowed to decline since the 1980s, one option for raising additional revenues is to increase the share of total earnings subject to the Social Security payroll tax to 90%. Like re-indexing the tax code, increasing the Social Security wage base was included in the deficit reduction plans presented by the President's Fiscal Commission and the Debt Reduction Task Force. CBO estimates suggest that increasing the Social Security payroll tax base to cover 90% of earnings would have a net revenue impact of $456.7 billion over the 2012 through 2021 budget window. Increasing the Social Security payroll tax cap would increase the tax burden on upper-middle income taxpayers. For taxpayers with earnings above the current payroll tax cap of $110,100, enacting this option would offset some of the benefits associated with the payroll tax rate reduction. This measure would make the payroll tax less regressive, and over the longer term, improve the fiscal outlook of the Social Security trust fund. The revenue cost associated with extending the payroll tax rate reduction could also be offset with spending reductions. Two specific options that have been discussed as possible offsets for a payroll tax rate reduction extension are reductions in federal worker compensation and war contingency funds. The options of reducing spending are also discussed in the context of discretionary and mandatory spending. The specifics of potential spending reductions are beyond the scope of this report. The revenue impacts of some of the specific proposals discussed below are summarized in Table 2 . The House-passed version of H.R. 3630 would extend the current freeze on statutory pay adjustments for federal employees for one year, through December 31, 2013. The House-passed version of H.R. 3630 would reduce the discretionary spending limits enacted under the BCA to achieve these savings. The CBO estimated that the provisions related to discretionary spending in the House-passed versions of H.R. 3630 would reduce spending by $26.2 billion over 2011 through 2021 budget window. Legislation introduced in the Senate, the Temporary Tax Holiday and Government Reduction Act ( S. 1931 ), also proposed extending the current federal employee pay freeze, through 2015. The Congressional Budget Office estimated that under S. 1931 , discretionary spending would be reduced by $221.8 billion over the 2012 through 2021 budget window. This savings comes from provisions that would freeze federal workers' salaries, reduce the size of the federal workforce, and reduce the discretionary spending caps as enacted under the Budget Control Act of 2011 (BCA; P.L. 112-25 ). Another option for raising revenue by reducing federal civilian employee pay would be to reduce the amount of the annual pay adjustment as established under the Federal Employees Pay Comparability Act of 1990 (FEPCA; P.L. 101-509 ). Reducing the annual across-the-board adjustment expected to occur under FEPCA by 0.5 percentage points would reduce outlays by $50.3 billion over the 2012-2016 budget window. The conference committee agreement on H.R. 3630 , enacted as the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ), included provisions to increase pension contributions of newly hired federal employees. Provisions agreed to in the conference agreement do not affect current federal workers' pension contributions, benefits, or compensation. The federal employee pension provisions enacted in P.L. 112-96 are expected to generate $15.5 billion in additional revenues over the 2012 through 2022 budget window. Freezing federal worker pay or reducing annual pay adjustments for federal workers would offset the benefits of the payroll tax rate reduction for a targeted group of wage earners. Regions with high concentrations of federal employees may receive less stimulative benefit from the payroll tax if a large proportion of employees have the payroll tax rate reduction offset through reduced wages. Trading future reductions in federal worker salaries for current revenue losses from a payroll tax rate reduction could make it more difficult for the federal government to recruit and retain highly qualified employees with technical and professional skills over the longer term. Another option for offsetting the revenue cost associated with the payroll tax rate reduction extension is to use savings from overseas contingency funds. In developing the budget baseline, the CBO assumes that discretionary spending grows with inflation. Thus, spending on Overseas Contingency Operations (OCO) is projected to grow over time. For FY2012, an adjustment of $126.5 billion was made to the discretionary spending cap set under the BCA for OCO. Testimony presented by the CBO before the Joint Select Committee in October 2011, based on budget figures from the continuing resolution, projected the cost of overseas contingency operations over the 2012 through 2021 budget window at $1.3 trillion. If the drawdown in overseas military operations continues as expected, fewer funds will be needed for overseas contingency operations, resulting in budgetary savings relative to the CBO baseline. This option was not used to offset the payroll tax rate reduction extension as enacted in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). Legislation in the 112 th Congress has constrained anticipated growth in discretionary spending. The BCA included statutory caps on discretionary spending that resulted in $917 billion in savings over the 2012 through 2021 budget window. The BCA also established the Joint Select Committee on Deficit Reduction, tasked with finding an additional $1.5 trillion in deficit reduction over the 10-year budget window. Failure of the Joint Select Committee to propose deficit reduction legislation has led to an automatic spending reduction process. Under this process, an additional $1.1 trillion will be cut from the deficit over the 2013 through 2021 budget window. Of this $1.1 trillion, $813 billion is from reduced discretionary spending ($492 billion for defense, $322 billion nondefense). CBO's adjusted March 2011 baseline projected discretionary spending of $11.0 trillion over the 2013 through 2021 budget window. Projected discretionary spending under the BCA caps and automatic spending reductions is $9.4 trillion over the same time period. Thus, discretionary spending projections have been reduced by nearly 15% through BCA provisions. Offsetting the payroll tax rate reduction extension using discretionary spending cuts would require further reductions. Spending reductions are typically contractionary, implying that spending cuts enacted while the economy is still weak could offset the stimulative effect of the payroll tax rate reduction. Several payroll tax rate reduction extension bills proposed limiting certain federal benefits, including unemployment compensation, benefits under the Supplemental Nutrition Assistance Program (SNAP), and Medicare, based on income. Measures to eliminate unemployment compensation for certain individuals based on income were included in the Temporary Tax Holiday and Government Reduction Act ( S. 1931 ), the Middle Class Tax Cut Act of 2011 ( S. 1944 ), and the Middle Class Tax Relief and Job Creation Act of 2011 ( H.R. 3630 ), as introduced on December 9, 2011. In all cases, the legislation sought to limit or eliminate unemployment compensation for very high-income individuals. These three bills also sought to limit SNAP (formerly known as food stamps) for very high-income individuals. CBO estimates that the unemployment compensation and SNAP provisions contained in H.R. 3630 would generate $0.1 billion over the 2012 through 2021 budget window. Two of the three aforementioned pieces of legislation contained provisions that would require high-income individuals to pay higher Medicare premiums ( S. 1931 and H.R. 3630 ). CBO has estimated that provisions in H.R. 3630 to adjust the calculation of Medicare premiums and increase premiums for high-income beneficiaries would raise $31.0 billion over the 2012 through 2021 budget window. The conference committee agreement on H.R. 3630 , and the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) as enacted on February 22, 2012, did include several health offsets. In total, the health care offsets that change direct spending as enacted in P.L. 112-96 are estimated to raise $18.2 billion over the 2012 through 2022 budget window. The offsets as enacted do not increase Medicare premiums for higher-income individuals. Generally, reducing spending (mandatory or discretionary) will tend to have a contractionary impact. Reducing mandatory spending through reductions in benefits for high-income individuals could have a contractionary impact if individuals reduce consumption to purchase services that were previously provided through the government. Alternatively, if high-income individuals instead purchase services out of savings, maintaining current consumption levels, the short-term contractionary impacts will be reduced. A number of other issues were considered alongside an extension of the payroll tax rate reduction. The Temporary Payroll Tax Cut Continuation Act of 2011 ( P.L. 112-78 ) also provided a temporary extension of emergency unemployment compensation and a temporary readjustment of physicians' Medicare reimbursements. These provisions were extended in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). Lawmakers also considered including provisions that would extend the 100% bonus depreciation allowance to promote investment. Extending the 100% bonus depreciation allowance would generate revenue losses. To avoid increasing the deficit, the cost of extending policies such as an extension of the 100% bonus depreciation allowance would require a budgetary offset. Ultimately, an extension of the 100% bonus depreciation allowance was not enacted as part of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ). In addition to the issues mentioned in this report, legislation to extend the temporary payroll tax rate reduction has included provisions related to a number of other policy issues. Several of these issues are noted below (links to relevant CRS reports provided as footnotes): Environmental Protection Agency (EPA) regulations related to the Maximum Achievable Control Technology (MACT) standards for boiler and solid waste combustion units; flood insurance reform; spectrum reallocation and assignment and emergency communications; and Keystone XL pipeline project.
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Social Security is financed by payroll taxes, which are paid by covered workers and their employers. In the absence of a payroll tax reduction, employees and employers would each pay 6.2% of covered earnings, up to an annual limit, whereas self-employed individuals would pay 12.4% of net self-employment income, up to an annual limit. In an effort to stimulate the economy, Congress, in December 2010, temporarily reduced the employee and self-employed shares by two points (to 4.2% for employees and 10.4% for the self-employed), with the Social Security trust funds "made whole" by a transfer of general revenue. The temporary reduction was scheduled to expire at the end of 2011, but the reduction was extended for two months as part of the Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78). The payroll tax rate reduction was extended through the end of 2012 in the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96). Extending the reduction through the end of 2012 would, by itself, increase the deficit by an estimated $93.2 billion—raising concerns about the apparent incompatibility of an extension with long-term goals of fiscal sustainability. Earlier proposals to extend the payroll tax reduction included some form of budgetary offset to reduce or eliminate the effect on the deficit and address concerns about long-term fiscal sustainability. Among the budgetary offsets mentioned in extension proposals were a surtax on high-income individuals, freezing federal employee pay, and limiting certain federal benefits to high-income individuals. Ultimately, both the Temporary Payroll Tax Cut Continuation Act of 2012 (P.L. 112-78) and the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) extended the payroll tax rate reduction for the remainder of 2012 without offset. The payroll tax rate reduction expired at the end of 2012. Budgetary offsets are contractionary—as they either reduce spending or increase revenues. The degree to which they are contractionary in the short term, however, depends on design and the populations affected. For example, having offsets occur after the period of economic weakness has passed could limit short-term contractionary effects while simultaneously promoting long-term fiscal sustainability. In contrast, offsets that fall on individuals facing financial constraints would be expected to have larger contractionary effects. This report briefly discusses economic stimulus considerations related to temporary payroll tax reductions. In addition, as the Social Security trust fund is made whole through a transfer from the general fund, select options to offset this increase in the deficit will be examined to illustrate how the choice of offsets can affect the net amount of economic stimulus provided. For a discussion of Social Security policy considerations concerning a temporary payroll tax reduction, see CRS Report R41648, Social Security: Temporary Payroll Tax Reduction, by [author name scrubbed].
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Parking privileges for individuals with disabilities is distinct from the subject of physical accessibility of parking spaces or structures. The federal role in ensuring physical parking space accessibility is significant: under the Americans with Disabilities Act (ADA), a broad nondiscrimination statute, government entities, private businesses, and others must adhere to the ADA Standards for Accessible Design when re-striping existing or building new parking lots. The ADA standards mandate specific percentages of van-accessible parking spaces per parking facility and require accessible aisles between certain spaces. However, the ADA Standards for Accessible Design do not require governments or other entities to reserve accessible parking spaces or issue special license plates or placards for individuals with disabilities; nor does any other ADA regulation mandate the provision of such parking privileges. Therefore, any federal action on parking privileges occurs separately from federal rules on physical parking space accessibility. Congress first considered federal action on parking privileges for individuals with disabilities in the mid-1980s in response to complaints that some states did not honor parking placards for individuals with disabilities from other states. The first bills introduced during that period would have created federal guidelines and authorized penalties for states that failed to comply with those guidelines. Specifically, the initial bills proposed federal sanctions in the form of reduced highway apportionments for states that failed to recognize parking placards issued by other states or failed to implement federal rules. However, those early proposals were not reported out of their respective committees. Since that time, the federal government has created guidelines for parking privileges. In 1988, Congress enacted legislation requiring the Department of Transportation to create a "uniform system" of parking privileges for people with disabilities. Accordingly, the Department of Transportation promulgated the "Uniform System for Parking for Persons with Disabilities." However, Congress has never required states to comply with the Uniform System, nor has it authorized penalties for non-complying states. Rather, the enacted law and resulting federal guidelines are merely hortatory. The legislation required the department to "encourage adoption of such system by all the states," but it did not require states to adopt the federal guidelines. Thus, although the federal government has a strong advisory role, states have the ultimate responsibility for the development of parking privileges. The stated purpose of the Department of Transportation's Uniform System for Parking for Persons with Disabilities is to provide "guidelines to States for the establishment of a uniform system." Thus, the Uniform System provides model definitions and rules regarding eligibility, application procedures, and issuance of special license plates and placards. It also contains information to aid states in developing reciprocal systems of parking privileges, including sample placards and a model rule regarding reciprocity. The Uniform System is brief. It does not contain model rules regarding enforcement, nor does it provide model rules specifying lengths of time after which special plates or placards must be renewed or addressing whether eligible individuals must be primary users of vehicles with special license plates. Instead, it contains basic definitions and samples that the department encourages states to utilize as part of their own, more detailed, parking privilege systems. One key provision in the Uniform System is the model definition of eligible individuals. Unlike the ADA, which protects every individual with a "disability," the Uniform System extends parking privileges only to "persons with disabilities which impair or limit the ability to walk." This definition includes people who (1) "[c]annot walk 200 feet without stopping to rest"; (2) cannot walk without the aid of another person or certain assistive devices; (3) have respiratory volumes of less than a certain amount due to lung disease; (4) "[u]se portable oxygen"; (5) have cardiac conditions of a specified severity; or (6) "[a]re severely limited in their ability to walk due to an arthritic, neurological, or orthopedic condition." Under the Uniform System, individuals' fit within any of these categories must be "determined by a licensed physician." If an individual qualifies as a person with a disability which impairs or limits his or her ability to walk, then under the Uniform System's model rules, he or she may submit an application for special license plates or a windshield placard, which entitle the individual to park in specially reserved parking spaces. A certification from a licensed physician must accompany an initial application for such plates and placards. Under the Uniform System guidelines, states may not charge a higher fee for special license plates than they charge for regular license plates. Together with special license plates, placards "shall be the only recognized means of identifying vehicles permitted to utilize parking spaces reserved for persons with disabilities which limit or impair the ability to walk" under the Uniform System. The system delineates two types of windshield placards: removable windshield placards and temporary removable windshield placards. Removable windshield placards are appropriate for individuals who will qualify as persons with disabilities which impair or limit the ability to walk permanently or for at least six months. Temporary removable windshield placards are most appropriate for individuals who will have such an impairment or limitation for less than six months. The Uniform System provides samples of each type of windshield placard. The sample placards display the "International Symbol of Access," which was adopted by the disability rights organization Rehabilitation International in 1969. The symbol is a commonly recognized image of a wheelchair and is best known as a white chair on a blue background. The samples also include spaces in which to display names of issuing authorities and expiration dates for the placards. In addition to sample placards, which aid efforts for reciprocity among states indirectly by providing a commonly recognized symbol, the Uniform System includes a model rule that directly addresses reciprocity. It provides that states "shall recognize removable windshield placards, temporary removable windshield placards and special license plates which have been issued by issuing authorities of other States and countries." All states have laws governing parking privileges for individuals with disabilities, and nearly all states have adopted at least some portion of the Department of Transportation's Uniform System. Most states extend privileges to visitors with placards issued by other states. Also, most states issue placards closely resembling the Uniform System's sample placard. However, other aspects of the state systems vary greatly. Regarding eligibility, some states have incorporated the Uniform System's definition of an individual with a disability which limits or impairs the ability to walk word-for-word into their eligibility criteria. Other states' eligibility criteria are entirely distinct from the Uniform System definition. Between these two options, most states have incorporated the Uniform System's definition in their statutes but have modified or expanded it. For example, some states have added a category for blindness to the Uniform System definition. Most states extend parking privileges to individuals with special license plates or placards issued by other states. Many states even extend privileges to people with placards issued by other countries. The language in these reciprocity provisions differs from state to state. Some states codified most or all of the Uniform System's reciprocity provision. Other states adopted little or no language from the Uniform System but recognize out-of-state placards nonetheless. A few states extend conditional privileges to out-of-state visitors; for example, North Dakota extends privileges only to people from states that also extend privileges to traveling North Dakotans. However, even states that extend parking privileges to out-of-state visitors have rules that out-of-state visitors might not know to follow. For example, Iowa requires that placards be displayed only when individuals with disabilities are actually utilizing reserved parking spaces. The state laws are fairly similar regarding some application procedures and criteria for which the Uniform System provides model rules. For example, most states require eligible individuals to apply for both special license plates and either temporary or more permanent windshield placards. Likewise, most states issue special license plates or placards after receipt of an application containing certification by a physician, as the Uniform System suggests. In contrast, states' laws are relatively different regarding administrative aspects of parking privileges that the Uniform System does not address. For example, state rules regarding the duration for which removable windshield placards will be valid—an aspect the Uniform System does not address—vary from just two years to indefinitely. In sum, the Department of Transportation's Uniform System has increased uniformity in the state laws. Many states utilize uniform sample placards and have enacted statutes requiring reciprocal privileges for individuals bearing placards issued by other states. Nonetheless, the state systems differ in many aspects of parking privilege administration.
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State law generally governs parking privileges for people with disabilities. However, federal regulations offer a uniform system of parking privileges, which includes model definitions and rules regarding license plates and placards, parking and parking space design, and interstate reciprocity. The federal government encourages states to adopt this uniform system. As a result, most states have incorporated at least some aspects of the uniform regulations into their handicapped parking laws. This report describes the federal role in parking privileges law, outlines the uniform system's model rules, and briefly discusses state responses to the model federal rules.
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T he Constitution neither establishes administrative agencies nor explicitly prescribes the manner by which they may be created. Even so, the Supreme Court has generally recognized that Congress has broad constitutional authority over the establishment and shape of the federal bureaucracy. This power stems principally from the combination of Congress's enumerated powers under Article I of the Constitution to legislate on various matters; language in Article II, Section 2, which authorizes the appointment of "officers" to positions "which shall be established by law"; and Article I, Section 8, which authorizes Congress to "make all laws which shall be necessary and proper for carrying into execution" not only Congress's own enumerated powers, but "all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." Acting pursuant to its broad constitutional authority, Congress may create federal agencies and individual offices within those agencies, design agencies' basic structures and operations, and prescribe, subject to certain constitutional limitations, how those holding such offices are appointed and removed. Congress also may enumerate the powers, duties, and functions to be exercised by agencies, as well as directly counteract, through later legislation, certain agency actions implementing delegated authority. The most potent tools of congressional control over executive branch agencies, including structuring, empowering, regulating, and funding agencies, typically require enactment of legislation. Such legislation must comport with the constitutional requirements of bicameralism (i.e., it must be approved by both houses of Congress) and presentment (i.e., it must be presented to the President for signature). For legislation to take effect, that constitutional process requires the support of the House, Senate, and the President, unless the support in both houses is sufficient to override the President's veto. But Congress does not always need to act through legislation to impact agency decisionmaking. Several tools available to the House, Senate, congressional committees, and even individual Members of Congress may be employed to influence agency action. Some tools are explicitly enumerated in the Constitution, such as impeachment and subsequent removal from office, and Senate advice and consent to the ratification of treaties and the appointment of certain executive officers, ambassadors, and judges. Under these provisions, the Constitution has explicitly authorized an individual house of Congress to act unilaterally with binding legal effect. Other tools, however, are both non-constitutional (i.e., they are not explicitly established in the Constitution) and non-statutory (i.e., they do not require enactment of legislation). Most of these non-constitutional, non-statutory tools, while capable of influencing agency decisionmaking, cannot themselves legally compel agency action. This distinction between the compulsory nature of statutory enactments and the non-binding nature of most (though not all) non-statutory legislative actions is essential to understanding the scope of congressional authority over federal agencies. Congress's power to create agencies is well established. Members of the First Congress viewed the Constitution as contemplating the creation of "departments of an executive nature" to "aid" the President in the execution of law. Toward this end, the First Congress enacted measures creating the Departments of Foreign Affairs, Treasury, and War. At this early stage, Congress sought to ensure it retained some degree of influence and control over the new departments. The Secretary of the Treasury, for example, had to report directly to Congress, either "in person or in writing," on "all matters referred to him by the Senate or the House." Yet the debates of the First Congress also provide evidence of Congress's acknowledgment of what would become the delicate, and at times uneasy, balance between congressional creation and control of agencies and the President's authority to supervise executive officials pursuant to his constitutional obligation to "Take Care that the laws be faithfully executed." From the very outset, Congress wrestled with defining the scope of both presidential and congressional control of executive agencies. For example, in 1789 Congress engaged in a historically significant debate on the President's authority to remove the Secretary of Foreign Affairs. Although Members' views differed, ultimately the prevailing position was "in favor of declaring the power of removal to be in the President," rather than in the Congress. Similarly, a proposal to structure the Department of the Treasury as a multi-member commission, partly to insulate the agency from presidential control, was debated and eventually rejected out of concern that such a body would not be able to administer effectively the finances of the new government. As reflected in the debates of the First Congress and confirmed by later Supreme Court decisions, Congress's power over the administrative state, though broad, is not unlimited. In particular, constraints on congressional power over executive agencies flow from the foundational constitutional doctrine of the separation of powers. Although the text of the Constitution distributes the legislative, executive, and judicial powers among the three branches of government, the Supreme Court has not endorsed any absolute separation. The allocation of powers was never intended, in the words of Justice Oliver Wendell Holmes, to cause the branches to be "hermetically sealed," or divided into "fields of black and white." Instead, observed Justice Robert Jackson, the separation of powers "enjoins upon [the] branches separateness but interdependence, autonomy but reciprocity." It is a doctrine generally characterized by ambiguity and overlap rather than bright-line rules. Yet some well-established principles govern the relationship between Congress and the administrative state. For example, Congress may neither displace executive authority by directly implementing the law itself, nor appoint or reserve for itself the power to remove (except through impeachment) executive officers engaged in the execution of law. On the other end of the spectrum, the separation of powers is not violated merely by Congress directing, prohibiting, or otherwise legislating on most forms of agency action. It would appear that the chief substantive limitations on Congress's ability to control the executive branch arise from specific constitutional provisions and implied principles—intimately connected to the separation of powers—that buttress the general division of power among the branches. These provisions and principles, which include the Appointments Clause, the Take Care Clause, and the President's authority to supervise the executive branch, are addressed below in conjunction with Congress's statutory powers. Congress's ability to control administrative agencies through the exercise of legislative power is a holistic endeavor perhaps best understood as built upon four basic pillars: structural design, delegation of authority, procedural controls on agency decisionmaking, and agency funding. Reliance on each pillar, however, is informed by separation-of-powers principles. How an agency is structured invariably affects how it operates, and what sort of relationship it has with the Congress and the President. In creating a federal agency, Congress may structure or design the agency in several ways. Many of Congress's structural choices affect the independence of agencies by shaping the degree to which the President can assert control over them. These structural choices are wide-ranging, but generally relate to agency leadership, appointment and removal of officers, and presidential supervision. For example, subject to constitutional considerations explained below, Congress may structure agency leadership in the form of a multi-member commission or a single director; create agency offices, which may be filled by persons appointed by the President with the advice and consent of the Senate, or in the case of "inferior" offices, vest the power of appointment in the President, the head of a department, or the "Courts of Law"; establish certain statutory qualifications for appointees, often based on political affiliation or substantive experience, or dictate the length of an official's term of office; choose to make an agency freestanding, or place it within an existing department or agency; provide that an agency official serve at the pleasure of the President, or, in certain situations, be protected from removal except in cases of "inefficiency, neglect of duty, or malfeasance in office"; or choose to exempt an agency from certain aspects of presidential supervision—for example by excusing the agency from complying with generally applicable executive branch requirements that agency rules, legislative submissions, and budget requests be reviewed and cleared by the White House. Although Congress may wish to insulate an agency from presidential control through these structural choices, fundamental constitutional requirements must be complied with in designing federal agencies. These limits, two of which are discussed below, generally exist to ensure that executive branch officials remain accountable to the President, and ultimately the public, for their actions. The Appointments Clause imposes significant limitations on the structural choices that Congress may make in determining how executive agency officials are appointed. Under the Clause, principal officers must be appointed by the President, "with the Advice and Consent of the Senate," while Congress may vest the appointment of "inferior Officers" "in the President alone, in the Courts of Law, or in the Heads of Departments." Non-officers—that is, "mere employees"—are not subject to any constitutionally required method of appointment. The breadth of authority that an executive branch official exercises typically determines the official's classification as either an officer or non-officer for Appointments Clause purposes. Generally, if an executive official holds a "continuing position established by law" and "exercis[es] significant authority pursuant to the laws of the United States," he is an "Officer of the United States." The applicable standard for distinguishing between principal officers—who must be appointed with the advice and consent of the Senate—and inferior officers—whose appointment Congress may vest elsewhere—is arguably less clear. At times, the Supreme Court has adopted an approach that suggests the distinction between a principal and inferior officer hinges mainly on whether the officer is subject to supervision by some higher official, and not on the amount of overall authority exercised. Under this approach, principal officers are generally subject only to supervision by the President, while inferior officers are generally subject to supervision by a higher-ranking, Senate-confirmed official. Thus, in designing agencies, Congress generally has little discretion in directing the method of appointment for most agency heads. If an agency head exercises significant authority on a continuing basis and is supervised only by the President, she qualifies as a principal officer and must be appointed by the President with the advice and consent of the Senate. However, Congress has some discretion in choosing the appointing official for inferior officers. For example, Congress can vest the appointment of an "inferior" agency official in the head of a department or in the "Courts of Law" to either provide an official with some independence from the President or to prevent the President from nominating an official of his own choosing. That said, Congress may not reserve for itself the authority to appoint any officer, whether principal or inferior. The President's general authority to supervise and oversee the executive branch also limits the structural choices Congress may make in designing agencies. These limits are often implicated by statutory provisions that seek to insulate an agency from presidential control by providing agency leaders with removal protections. For example, "for cause" removal protections generally prevent the President from removing an identified official except in cases of "inefficiency, neglect of duty, or malfeasance in office." Generally, these and other removal provisions cannot be used to deprive the President of his constitutional duty to "oversee the faithfulness of the officers who execute" the law. The Supreme Court has established that by vesting the President with both "the executive Power" and the personal responsibility to ensure the faithful execution of the laws, Article II confers upon the presidency the "administrative control" of the executive branch. The President's ability to ensure accountability through removal of executive branch officials has long been viewed as an essential aspect of this ability to oversee the enforcement and execution of the law, as "the power to remove is the power to control." The Supreme Court has outlined the extent of the President's authority to oversee the executive branch through removal in a series of seminal cases. The 1926 decision of Myers v. United States invalidated a statutory provision that prohibited the President from removing an executive official without first obtaining the advice and consent of the Senate and established the general proposition that Article II grants the President "the general administrative control of those executing the laws, including the power of appointment and removal of executive officers." Myers was curtailed shortly thereafter in Humphrey's Executor v. United States , when the Court held that Congress could limit the President's ability to remove members of a multi-member commission by providing commissioners with "for cause" removal protections. The Court again approved of statutorily imposed for cause removal protections in Morrison v. Olson , this time as applied to the independent counsel, an officer who was authorized to conduct independent investigations and prosecutions of high-level executive officials. Focusing on whether "the removal restrictions are of such a nature that they impede the President's ability to perform his constitutional duty," the Court held that Congress had afforded the President adequate authority to oversee the independent counsel and ensure that the official faithfully executed and enforced the law. The Court most recently assessed the constitutional dimensions of presidential control in Free Enterprise Fund v. Public Company Accounting Oversight Board (PCAOB) . There, the Court invalidated statutory provisions providing that members of the PCAOB could be removed only for cause by the Securities and Exchange Commission, whose members were, in turn, also protected from removal by for cause removal protections. By insulating PCAOB members from presidential control with dual layers of for cause removal protections, the law had "impaired" the President's necessary authority to "hold[] his subordinates accountable for their conduct" and "subvert[ed] the President's ability to ensure that the laws are faithfully executed." These removal cases impose significant, if somewhat undefined, limitations on Congress's authority to structure an agency to insulate certain officials from presidential control. For example, the Court has suggested that there are certain "purely executive" officials, and these persons "must be removable by the President at will if he is to be able to accomplish his constitutional role." For this reason it is likely that congressional attempts to provide a traditional Cabinet official with "for cause" removal protections would be viewed as placing an impermissible obstruction on the President's ability to carry out his executive functions. In addition, some recent federal court decisions have drawn into question whether Congress may provide a single director of an agency, rather than a member of a multi-member commission, with for cause removal protections. In any event, providing officials with removal protections remains a useful tool for encouraging independence from the President and, possibly, greater responsiveness to Congress. In general, an agency has only that authority which has been delegated to it by Congress. Thus, Congress can control a federal agency by detailing its jurisdiction and authority, setting policy goals for the agency to accomplish in the exercise of that authority, and choosing whether it may regulate the public. Similarly, Congress may choose to grant an agency the authority to issue legislative rules, enforce violations of law, or to adjudicate claims made to the agency. The more precise a delegation, the less discretion is afforded to the agency in its execution of its delegated authority. Congress's control over agency authority is not limited to initial decisions made when the agency was established. Instead, the authority delegated to an agency can generally be enlarged, narrowed, or altered at any time by Congress. Nor does delegated authority need to be permanent. Congress often uses sunset provisions to terminate a delegation on a specified date. Congress may also reject an agency's specific exercise of delegated power through legislation. Congress is not, however, unconstrained in its ability to empower agencies. One limitation on Congress's ability to delegate authority to a federal agency is the non-delegation doctrine. As opposed to the appointment and removal doctrines, which limit Congress's ability to encroach upon or restrict executive authority, the non-delegation doctrine limits the extent to which Congress may bestow legislative authority on other entities, including the executive branch. This doctrine is based in the separation of powers and works to prevent Congress from abdicating the core legislative function assigned to it by Article I of the Constitution. In practice, the non-delegation doctrine does not, by itself, generally function as a substantial limitation on the powers that Congress may provide to a federal agency. Although the Supreme Court has declared categorically that "the legislative power of Congress cannot be delegated," the standard for determining whether Congress has in fact delegated "legislative authority" is more lenient than this statement might suggest. For a delegation to survive scrutiny, Congress need only establish an "intelligible principle" to govern the exercise of the delegated power. The "intelligible principle" test requires that Congress delineate reasonable legal standards for when that power may be exercised. According to the Court's doctrine, when a delegation is accompanied by an "intelligible principle," Congress confines the degree of discretion that an agency possesses in the exercise of that delegation, such that the delegation does not offend the separation of powers. Congress may also condition an agency's exercise of its delegated authority in various ways. For example, Congress can craft legislation establishing that delegated agency authority is triggered only after a specific event occurs, or after a factual determination made by an executive branch official. Congress sometimes enacts "report and wait" provisions that require an agency to report to Congress on a proposed use of delegated authority, and then wait a specific time period before implementing or finalizing that action. The report and wait framework is designed to give Congress the opportunity to enact legislation rejecting the agency's proposed action if desired. Congress has also repeatedly established internal expedited procedures for the rejection of specific agency actions. This approach typically establishes special procedures in each house of Congress for consideration of a joint resolution of disapproval that would overturn agency actions. Under such a review mechanism, the agency has authority to act unless Congress affirmatively rejects or blocks the action through legislative enactment. Congress can also authorize an agency to make proposals to Congress that only become effective when approved through legislation. Under this framework, the agency has no authority to act until a proposal is given legal effect through the enactment of implementing legislation. Congress can also exert substantial control over administrative agencies by prescribing the procedures agencies must employ when exercising delegated powers. The Administrative Procedure Act (APA), enacted in 1946, is perhaps the most prominent federal administrative procedure statute. The APA sets forth the default procedural rules with which federal agencies must comply when crafting and issuing regulations (termed "rules" by the APA) and conducting adjudicatory proceedings. Other statutes may supplement or even supersede the APA's procedural requirements. The power to issue binding law through notice-and-comment rulemaking or administrative adjudication (or both) is one of the most consequential powers with which many agencies are imbued. The APA prescribes default procedural requirements with which agencies must comply when conducting rulemaking and adjudication proceedings. These rules are intended to safeguard the rights of the public and entities affected by agency decisions, while also ensuring that agencies retain that degree of flexibility necessary to achieve their delegated responsibilities. For example, before an agency may issue a binding regulation, the APA generally requires that it first publish a notice of proposed rulemaking in the Federal Register and afford members of the public an opportunity to submit comments on the proposal. An agency's final rule must contain "a concise general statement of [its] basis and purpose" and may generally take effect no earlier than thirty days after issuance. In the case of agency adjudications that are required (by another statute) to "be determined on the record after opportunity for an agency hearing" —often referred to as "formal" adjudications—the APA prescribes formalized, trial-like procedures and provides that impartial adjudicators shall preside over such proceedings. The APA is not the only statute that governs administrative procedure. Many other statutes impose requirements on the procedural governance of large swaths of the executive branch, including the Congressional Review Act, Regulatory Flexibility Act, Freedom of Information Act (FOIA), Federal Records Act, and Paperwork Reduction Act. Through these and similar statutes, Congress can impact agency action by, among other things, requiring or authorizing the use of alternative or substitute procedural mechanisms to subject agencies' actions to increased transparency and public accountability, and ensuring that agencies engage in certain substantive considerations during the decisionmaking process. In addition, some statutes may impose procedural requirements on specific agencies on top of or instead of those required by the APA. Finally, and perhaps most significantly, Congress exercises virtually plenary control over agency funding. This power to determine agency appropriations can be used to control agency priorities, prohibit agency action by denying funds for a specific action, or force agency action by either explicitly appropriating funds for a program or activity or withholding agency funding until Congress's wishes are complied with. Article I of the Constitution gives Congress the power to tax and spend in order to provide for the "Common Defence and general Welfare of the United States," and provides explicitly that "[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Thus, Congress controls the funding levels for agency operations and programs through enactment of appropriations. A typical appropriation measure contains limits on the amount of funding available to an entity and specifies the purposes and duration for which the funding can be used. Agencies may neither spend appropriated funds in excess of an amount authorized, nor withhold appropriated funds from expenditure in a manner that violates the intent of the appropriation. Moreover, several federal statutes, such as the Antideficiency Act, reinforce Congress's power of the purse by making it unlawful to spend in excess of appropriations. Along with the power to determine general funding levels for agencies and programs, Congress may also prohibit or condition the use of funds to control agency activity or achieve certain policy goals. Given the legislative branch's clear constitutional power over the purse, the Supreme Court has recognized that "Congress may always circumscribe agency discretion to allocate resources by putting restrictions in the operative statutes." These so-called "appropriations riders" are a common tool for guiding an agency, especially when Congress seeks to prevent an agency from acting. A typical rider prohibits an agency from using funds to implement a certain action and potentially can transform how a federal agency implements the law. For example, Congress has used appropriations riders to limit agency action on issues ranging from the enforcement of federal marijuana laws to the transfer of detainees from the U.S. Naval Station at Guantanamo Bay. But while Congress's power of the purse is almost plenary, it cannot be used to achieve unconstitutional purposes. For example, in Lovett v. United States , the Supreme Court held that Congress cannot wield its appropriations power to punish specific government officials in violation of the Bill of Attainder Clause. The executive branch has consistently contended that Congress may not use its appropriations power to infringe upon the President's constitutional authority. The above discussion establishes Congress's broad authority to control federal agencies by enacting legislation. These statutory tools, however, may be exercised only under Congress's lawmaking power, which requires the participation and agreement of the House, Senate, and, absent a veto override, the President. But there are also many non-statutory tools (i.e., tools not requiring legislative enactment to exercise) that may be used unilaterally and independently by the House, Senate, congressional committees, or individual Members of Congress to influence and control agency action. The Constitution's required lawmaking procedures impose significant limitations on how Congress and its component parts (i.e., the House, Senate, committees, and individual Members) may wield power over agencies. The Supreme Court has made clear that Congress must exercise its legislative power in compliance with the "finely wrought and exhaustively considered[] procedure" set forth in Article I, Section 7, which provides that "every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States." This provision establishes the bedrock constitutional principle that before legislation is given the force and effect of statutory law, it must first satisfy the requirements of bicameralism (approval by both houses of Congress) and presentment (submission to the President for his signature or veto). Immigration & Naturalization Service v. Chadha is the seminal case on the limits bicameralism and presentment place on the ability of Congress's component parts to act alone. In Chadha , the Court struck down a provision of the Immigration and Nationality Act that had authorized either house of Congress, by simple resolution, to "veto" an exercise of statutory deportation authority that had been delegated to the Attorney General. In invalidating this "legislative veto," the Court determined that "legislative acts" having the force of law are subject to the requirements of bicameralism and presentment, and held that the statutory procedure did not comply with these constitutional requirements. The Court defined a legislative act as any action "properly . . . regarded as legislative in its character and effect" or taken with "the purpose and effect of altering the legal rights, duties and relations of persons . . . outside the legislative branch." The Chadha opinion identified specific exceptions to the bicameralism and presentment requirement, noting that "[c]learly, when the [Constitution's] Draftsmen sought to confer special powers on one House, independent of the other House, or of the President, they did so in explicit, unambiguous terms." The Constitution's impeachment provisions and those relating to Senate advice and consent to treaty ratification and the appointment of judges, ambassadors, and public officials are examples of such provisions. The Court also noted that "[e]ach House has the power to act alone in determining specified internal matters." These express exceptions to the bicameralism and presentment requirements in the Constitution, the Court noted, "further indicate[] the Framers' intent that Congress not act in any legally binding manner outside a closely circumscribed legislative arena, except in specific and enumerated instances." As a result of the Chadha decision, if Congress seeks to legally compel or prohibit agency action, or otherwise alter an agency's underlying authority, the House and Senate generally must act in concert with each other, and absent a veto override, in concert with the President. Chadha , therefore, represents a key limitation on the ability of an individual house, committee, or Member to directly and unilaterally control federal agencies. The Supreme Court has consistently interpreted Chadha as limiting the legal impact of non-statutory legislative actions. For example, in Bowsher v. Synar , the Court reaffirmed that "once Congress makes its choice in enacting legislation, its participation ends. Congress can thereafter control the execution of its enactment only indirectly—by passing new legislation." Yet a distinction must be made between the Court's legal interpretation of Article I's bicameralism and presentment requirements, and the practical realities of ongoing congressional involvement in administrative decisionmaking. As discussed in the remainder of the report, there are many non-statutory tools that congressional actors may use to influence agencies without compliance with bicameralism and presentment. These tools may inhere to the House, Senate, congressional committees, or individual Members. Some of the most significant non-statutory tools are available to both houses of Congress. Three tools have particular practical or legal significance to Congress: expressions of disapproval, including censure; criminal contempt of Congress; and each house's inherent power to arrest and jail individuals for obstructive conduct. Either house of Congress may seek to influence agency action through formal disapproval of executive branch officials. Formal declarations of disapproval take different forms. They can be expressions of censure or condemnation, declarations of a loss of or no confidence in an official, or expressions of the belief that an official should resign or be removed from office. These expressions are generally contained in simple resolutions if issued by one house or concurrent resolutions if issued by Congress as a whole. Although censure resolutions and other expressions of disapproval generally have no legal effect, they might still influence the actions of agency officials who wish to avoid the political consequences of such measures. Congress has proposed resolutions condemning or censuring executive branch officials since as early as 1793, when Congress considered resolutions censuring Secretary of the Treasury Alexander Hamilton. As a matter of historical practice, censure and similar resolutions have been adopted against various executive officials. Still, some have argued that congressional censure of executive officials is unconstitutional. For example, it has been argued that the impeachment provisions of the Constitution provide the exclusive means by which Congress may punish executive branch officials, and that censure is an unconstitutional bill of attainder by imposing legislative punishment on a named official. These arguments appear to be grounded in an understanding of the relationship between censure, impeachment, and bills of attainder that is not widely shared. Impeachment is exclusive only in that it is the sole tool available to Congress to remove an official from office and that Congress is constitutionally prohibited from imposing any additional punishment following impeachment and conviction beyond removal and disqualification from holding future federal office. Censure and other expressions of disapprobation in simple or concurrent resolutions, however, do not seek to legally compel removal from office, nor are they punishments following impeachment and conviction. As for the Constitution's prohibition on bills of attainder, a censure resolution would violate that constitutional prohibition only if it imposed a "punishment" as envisioned by the Bill of Attainder Clause. The Supreme Court has identified a bill of attainder as "a law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial." The Court has explained that "the historical meaning of legislative punishment" includes "imprisonment, banishment, . . . the punitive confiscation of property[,] . . . . [and] legislative bars to participation by individuals or groups in specific employments or professions." A non-tangible injury—such as the reputational harm that might result from a censure resolution—is not the category of injury generally viewed as implicated by the Bill of Attainder Clause. Given that censure resolutions do not carry a direct legal consequence, it would appear difficult to argue that such measures impose the type of punishment prohibited by the Clause. While expressions of disapproval through censure or similar mechanisms do not carry direct legal consequences, legal penalties potentially attach to an individual's refusal to comply with a valid congressional subpoena. If an agency official (or any other individual) refuses to appear before a committee to provide testimony or produce documents in response to a congressional subpoena, the relevant house of Congress may seek to punish the witness for failure to comply with the subpoena by certifying the case to the relevant United States Attorney for criminal prosecution in federal court. Generally speaking, the threat of such a referral can encourage agency compliance with congressional oversight requests. Under federal statute, a person "summoned as a witness" to provide testimony or produce documents upon the request of either house of Congress and who is found to have "willfully" refused to provide "pertinent" documents or testimony is guilty of a misdemeanor and may be subject to a fine and imprisonment. Under both federal law and House and Senate practice, if the House or Senate approves a criminal contempt citation, a report shall be certified "to the appropriate United States attorney, whose duty it shall be to bring the matter before the grand jury for its action." There are several legal limitations on Congress's use of the criminal contempt statute. Like other criminal provisions, the criminal contempt of Congress statute cannot be used to prosecute constitutionally protected conduct. In addition, the subpoena that forms the basis for the criminal contempt statute must be valid. In general, this means the subpoena must seek information relevant to an investigation that is both within the issuing committee's jurisdiction and for which the committee can articulate a legislative purpose. These subpoena-related limitations are detailed later in this report in reference to the use of subpoenas by congressional committees. There are additional limits on the use of the criminal contempt statute that arise from the manner in which the criminal contempt of Congress provision is enforced. The executive branch has taken the position—based on both statutory interpretation and the constitutional separation of powers—that federal prosecutors retain discretion in deciding whether to begin a criminal contempt of Congress prosecution. That discretion, it has been asserted, extends to the decision to present the matter to a grand jury. The executive branch has also asserted that "the contempt of Congress statute was not intended to apply and could not constitutionally be applied to an Executive Branch official who asserts the President's claim of executive privilege." As a result, there have been recent instances in which use of the criminal contempt of Congress provision against an agency official has proven unavailing. For example, when the President directs or endorses non-compliance with a subpoena, such as where the official refuses to disclose information pursuant to the President's decision that the information is protected by executive privilege, past practice suggests that the Department of Justice (DOJ) is unlikely to pursue a prosecution for criminal contempt. Even when the official is not acting at the direction of the President, the executive branch has argued that in deciding whether to pursue the case it retains authority to make an independent assessment of whether the official has violated the criminal contempt statute. The inherent contempt power is a constitutionally based power given to each house to arrest and detain an individual found to be "obstruct[ing] the performance of the duties of the legislature." Because the power extends to conduct that generally obstructs the exercise of legislative powers by either the House or the Senate, the inherent contempt power can be more broadly applied than the criminal contempt statute. Despite its title, "inherent" contempt should perhaps more accurately be characterized as an implied constitutional power. The Supreme Court has repeatedly held that although the contempt power is not specifically granted by the Constitution, it is nonetheless "incidental" to the legislative function and therefore implied from the general vesting of legislative powers in Congress. In an inherent contempt proceeding, the House or Senate can authorize the arrest of a suspected contemnor by the body's Sergeant at Arms. If the individual is found in contempt, the body (either the House or the Senate) is empowered to imprison or otherwise detain the individual until he or she complies with the congressional request or until the end of the legislative session. Despite its potential reach, the inherent contempt power has been described by some observers as cumbersome, inefficient, and "unseemly." Presumably for these reasons, neither house of Congress has initiated an inherent contempt proceeding since 1935. Several non-statutory tools inhere exclusively to the House of Representatives. Some of these tools have limited legal effect. For example, through resolutions of inquiry, the House may make non-binding requests for information from certain executive branch officials. Other non-statutory tools have weighty and, potentially, legally consequential effects. The House may impeach federal government officials for "high Crimes and Misdemeanors." Moreover, it may initiate civil actions in federal court to enforce compliance with congressional subpoenas. (The Senate's role in the impeachment process and its ability to enforce congressional subpoenas through civil litigation is covered separately in this report. ) Under House Rule XIII, the House may request certain information from executive branch officials through resolutions of inquiry. Resolutions of inquiry are simple resolutions that seek factual information in the possession of the executive branch. They are limited in their effect, however, given that they are neither legally binding on the agency nor judicially enforceable; instead, "[t]he effectiveness of such a resolution derives from comity between the branches of government rather than from any elements of compulsion." Resolutions of inquiry are given privileged status on the House floor if they are directed toward the head of a department and seek available facts, rather than opinions. Resolutions of inquiry are most typically used to request documents or information that pertains to foreign affairs, defense, or intelligence matters. They traditionally "request" information from the President, while other officials are usually "directed" to provide the sought-after information. Although resolutions of inquiry are not legally enforceable, they are often phrased in mandatory terms when directed to persons other than the President. The Constitution establishes a bifurcated process for impeachment and removal, with the House of Representatives accorded the "sole Power" to impeach federal government officials, and the Senate given "the sole Power to try all Impeachments," with the immediate consequence of Senate conviction being an official's removal from office. (The Senate's power to try impeachments is discussed below. ) The purpose underlying the impeachment process "is not punishment; rather, its function is primarily to maintain constitutional government." Decisions by the House to impeach executive officials have been rare—in total, two Presidents and one member of the Cabinet have been impeached by the House. To initiate impeachment proceedings formally, the House must first draw up articles of impeachment that formally approve allegations that an official committed one or more impeachable offenses. If a simple majority in the House votes to impeach, the proceedings then transfer to the Senate. The Constitution defines who may be impeached and stipulates the types of misconduct that rise to the level of impeachable offenses. First, Article II, Section 4 permits only the impeachment of "[t]he President, Vice President and all civil Officers of the United States." While the Constitution does not define the term "civil Officers," past practice signifies that Congress understands the term to embrace federal judges and Cabinet-level executive branch officials. Congress has never impeached a non-Cabinet level official in the executive branch, so there is some question whether such officials are "civil Officers." While untested, non-officer employees of the federal government (i.e., most individuals employed in the federal bureaucracy who are not subject to appointment by the President or departmental heads) probably are not subject to impeachment. Nor have Members of Congress or military officers been considered "civil Officers of the United States" under Article II, Section 4. Second, the Constitution specifies the types of behavior that justify impeachment. A "civil Officer" is not subject to impeachment (and removal) unless the officer has committed "Treason, Bribery, or other high Crimes and Misdemeanors." Treason and bribery are well-defined actions, but there is no definition of "high Crimes and Misdemeanors" in the Constitution or statute. Congress has afforded the term a broad reading. For example, in impeachment proceedings against Judge Alcee L. Hastings, the accompanying House report described "high Crimes and Misdemeanors" as embracing "misconduct that damages the state and the operations of government institutions." While grounds for impeachment "do not all fit neatly and logically into categories," there are at least three general categories of conduct that, based on past congressional practice, are thought to constitute grounds for impeachment: (1) exceeding or abusing the powers of office; (2) behavior incompatible with the functions and purpose of office; and (3) misuse of office for improper purpose or for personal gain. The House may use the federal courts as a way to influence agency action. That said, because of standing and other justiciability issues, the House's authority to use the courts as a conduit for controlling agencies appears to relate principally to subpoena enforcement. Recent practice, approved by the U.S. District Court for the District of Columbia, indicates that the House may authorize a civil claim in federal court to enforce a subpoena. Under the existing process, the authorization is provided through a simple House resolution that generally grants the committee that issued the subpoena the authority to seek a court order declaring that the subpoena recipient is legally required to comply with the demand for information. Civil enforcement cases brought by an authorized committee, especially if triggered by an agency official's refusal to produce documents or testimony, generally require a court to evaluate both Congress's oversight powers and the official's articulated justification for non-compliance with the subpoena. This typically will include an evaluation of whether the subpoena was validly issued and whether the witness has asserted a defense—such as a constitutionally based right or privilege—that would excuse compliance with the subpoena. If the lawsuit succeeds, the court will generally order compliance with the subpoena and disclosure of the information. For example, in 2016, the D.C. federal district court issued an opinion in Committee on Oversight and Government Reform v. Lynch instructing DOJ to comply with a House committee subpoena. In addition to subpoena enforcement lawsuits, a federal district court has held that the House has standing to challenge expenditures of funds made without an appropriation from Congress. In United States House of Representatives v. Burwell , the court held that if an agency's expenditure of funds is taken in violation of the "specific proscription" in Article I that "[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law," then the House has standing to remedy that constitutional violation. However, that same opinion also held that the House does not suffer an injury adequate to obtain standing when it challenges an agency's "implementation, interpretation, or execution" of the law. Some oversight tools are available exclusively to the Senate. Through its "advice and consent" responsibility, the Senate plays an integral role in the performance of two constitutionally prescribed executive functions—the appointment of important government officials and completion of treaties between the United States and foreign nations or international bodies. In addition, if an official is impeached by the House, the Senate has the exclusive power to try and, upon conviction, remove the official from office. And like the House, the Senate may seek to enforce congressional subpoenas through civil actions in federal court, but unlike in the case of the House, the Senate practice is authorized and shaped by federal statute. Like the House, the Senate may seek to enforce a subpoena by instituting civil proceedings in federal court. While the House's civil enforcement of subpoenas may occur on an ad hoc basis, a federal statute provides procedures for subpoena enforcement by the Senate. That statute is severely limited with regard to its application against an agency official. By statute, the U.S. District Court for the District of Columbia is granted jurisdiction to hear claims "to secure a declaratory judgment concerning the validity of, or to prevent a threatened refusal or failure to comply with, any subp[o]ena or order issued by the Senate or committee or subcommittee" thereof. As in the House, filing such a lawsuit requires authorization from the Senate as a whole. The Senate provision, however, does not apply to federal officials or employees who refuse to comply with a subpoena based on an assertion of a properly authorized governmental privilege. Despite the terms of the statute, it would appear arguable that like the House, the Senate may retain the authority to seek enforcement of a subpoena on an ad hoc basis through approval of a Senate resolution authorizing such a lawsuit. The Constitution conditions the full performance of two essential executive branch functions on the assent of the Senate. The Appointments Clause and the Treaty Clause respectively authorize the President to make certain appointments to important governmental positions and to finalize treaties with foreign nations or international bodies on behalf of the United States only after receiving the "advice and consent" of the Senate. "Advice and consent" in both contexts has been understood in practice to require senatorial approval, but not necessarily consultation. Both Clauses, therefore, afford the Senate unique opportunities to influence and exert control over the execution of important executive branch powers, especially by conditioning or withholding consent in order to obtain executive branch compliance with congressional desires. As noted, the Appointments Clause establishes that principal "Officers of the United States," and those "inferior Officers" whose appointments have not been vested in the President alone, department heads, or "the Courts of Law," must be appointed by the President with the advice and consent of the Senate. Because of recent changes in Senate rules, presidential nominations are not subject to filibuster, and so as a practical matter, the support of a simple majority of Senators is enough to confirm a presidential nomination. There are more than 1,200 executive branch positions that, by law, require Senate approval. When an officer holding an advice-and-consent position leaves office before his or her successor is chosen, an acting official may temporarily perform the duties of the vacant office without receiving senatorial approval. The ability of government officials to perform the duties of a vacant office is generally governed by the Federal Vacancies Reform Act of 1998 (Vacancies Act), although other statutes may supplement or supersede that statute. The Senate's advice-and-consent function under the Appointments Clause serves as a significant check on the executive branch, one which the Senate may use not only to approve or reject presidential nominees, but also to influence who is nominated for certain important offices and what a nominee will do in office if confirmed. For example, the threat that a simple majority of Senators will block a presidential nominee can be used by the Senate to persuade the President to nominate an individual agreeable to most Senators. In addition, during the confirmation process, the Senate can seek to elicit commitments from a nominee that he or she will seek to achieve certain policies or abide by certain principles if confirmed. The power of this latter tool was perhaps most dramatically exemplified in connection with the so-called "Saturday Night Massacre" of 1973, in which the Attorney General and Deputy Attorney General under President Richard Nixon resigned, successively, after being directed by the President to fire the Watergate special prosecutor, Archibald Cox. In his resignation letter, Attorney General Elliot Richardson asserted that his decision to resign was based not only on the fact that he had empowered the special prosecutor with a large measure of independence and imposed limitations on his removal, but also because, "[a]t many points throughout the confirmation hearings [for Attorney General], [he had] reaffirmed [his] intentions to assure the independence of the special prosecutor." Similarly, the Treaty Clause of the Constitution stipulates that the President may not ratify a treaty between the United States and a foreign nation or international body without senatorial consent. The Clause states that the President "shall have the Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur." In requiring that the President secure the consent of two-thirds of available Senators, the Clause may pose a steeper obstacle to the effectuation of executive branch responsibilities than does the Appointments Clause, which requires only the approval of a majority of Senators to a presidential nomination. The advice-and-consent function in connection with the President's treaty-making power enables the Senate to serve as a substantial check on the execution of the President's foreign relations power. The Senate, for example, may withhold its consent and therefore prevent the President from ratifying a treaty. It may also supply its consent subject to certain conditions (e.g., specifying that implementing legislation is needed to give domestic legal effect to the treaty's provisions, or making Senate approval conditional upon the reservation that the United States does not agree to be legally bound by a particular treaty provision). As stated above, the impeachment and removal process involves distinct roles for both houses of Congress. If the House votes to impeach an official, it will then forward articles of impeachment to the Senate, which has "the sole Power to try all Impeachments." The Vice President, as President of the Senate, generally presides over impeachment trials, although the Chief Justice of the United States presides when the President has been impeached. If, after the trial, two-thirds of the Senate votes to convict the official based on any of the articles of impeachment, the official will be removed from office. After the vote to convict and remove, the Senate may, in its discretion, hold another vote to disqualify the official from "hold[ing] and enjoy[ing] any Office of honor, Trust or Profit under the United States." Unlike conviction and removal, however, which requires the approval of two-thirds of the Senators present, a later vote to disqualify an official from holding future federal office requires only a majority in favor. The Senate may not impose any punishment other than removal and disqualification from holding future federal office. While the full Senate votes on whether to convict an impeached official, under Impeachment Rule XI, the Senate may order the Presiding Officer of the Senate to establish a committee of Senators to receive evidence and take testimony prior to the vote. This procedure was challenged in Nixon v. United States , which concerned the impeachment and conviction in the Senate of Walter L. Nixon, Jr., former Chief Judge of the U.S. District Court for the Southern District of Mississippi. After a criminal trial, Nixon was found guilty of making false statements to a grand jury and was sentenced to prison. He was then impeached by the House and tried and convicted by the Senate. During the proceedings in the Senate, the Senate established a committee under Impeachment Rule XI to receive evidence. Following his senatorial conviction, Nixon brought suit in federal court, arguing that Rule XI violated the constitutional prescription that the Senate "try" impeachments because, when it is invoked, the full Senate does not take part in evidentiary hearings. The Supreme Court held that the former judge's claim posed a nonjusticiable political question and was therefore not subject to judicial review. The Court decided that "the sole Power" to try impeachments "is reposed in the Senate and nowhere else" and concluded that the word "try" "lacks sufficient precision to afford any judicially manageable standard of review of the Senate's action." Instead, the responsibility and authority for interpreting "try" lay with the Senate. The Supreme Court expressed concern with the uncertainty "and the difficulty of fashioning relief" posed by allowing judicial challenges to the Senate's impeachment procedures. In holding that such challenges could not be entertained on judicial review, Nixon stands for the practical proposition that the Senate has significant discretion over the procedures it employs during impeachment trials. Among the tools to influence agency action available to congressional committees of both houses are the power of investigative oversight and the use of committee report language. The efficacy of these tools, which provide committees with "enormous influence over executive branch doings," reflects both committees' substantial role in the legislative system and their unique relationship with the agencies they oversee. As one court has aptly described, "[o]fficials in the executive branch have to take . . . committees into account and keep them informed, respond to their inquiries, and it may be, flatter and please them when necessary." Congressional committees can significantly influence agency action through investigative oversight. These investigations may uncover and publicize agency abuse of authority or maladministration, prompting a legislative response or immediate change in policies by the investigated agency itself. Hearings may also provide a committee the opportunity to give an agency guidance on how the committee believes an agency should carry out its functions. Congress's power to conduct investigations complements its more prominent power to legislate and appropriate funds. Although the "power of inquiry" was not expressly provided for in the Constitution, it has been acknowledged as "an essential and appropriate auxiliary to the legislative function" derived implicitly from Article I's vesting of "legislative Powers" in the Congress. The prerogative to gather information related to legislative activity is critical in purpose, as Congress "cannot legislate wisely or effectively in the absence of information," and extensive in scope, as Congress is empowered to obtain pertinent testimony and documents through investigations into a wide array of matters that relate to the legislative function. Specifically, acting within relevant constitutional and jurisdictional constraints, a committee may initiate investigations, hold hearings, request testimony or documents from witnesses, and, when either a government or private party is not forthcoming, compel compliance with the committee's requests through the issuance and enforcement of subpoenas. Because each house of Congress has largely delegated its constitutional oversight powers to its standing committees, congressional oversight investigations typically are carried out by congressional committees and subcommittees. House and Senate rules provide each committee with a specific jurisdiction, the authority to hold hearings, and the power to require compliance with requests for information through subpoena. In the House, most standing committees have also been vested with the authority to take sworn testimony through staff depositions. Although hearings, subpoenas, and depositions are available tools, most investigative oversight into executive agencies is conducted through informal staff-to-staff contacts between committees and agencies. Congress has also enacted a series of laws that buttress committee investigative powers. Along with the criminal contempt statute already discussed, the federal perjury, false statements, and obstruction of congressional proceeding statutes also criminalize conduct that may inhibit a congressional committee's ability to exercise its oversight power. That said, congressional committees are not empowered to enforce, or even trigger enforcement of these provisions. Instead, enforcement—as with all criminal provisions—is carried out by the executive branch. With regard to perjury, false statements, and obstruction, a committee may refer a possible offense to DOJ with a recommendation that an investigation be initiated, but the ultimate decision on prosecution is retained by the executive branch. Federal law does, however, directly empower committees to obtain an immunity order from a federal court to compel a witness who has asserted the Fifth Amendment privilege against self-incrimination to testify. Under federal law, a court order can be obtained from a United States district court following a two-thirds affirmative vote in the committee conducting the investigation. So long as the committee complies with certain procedural requirements, the district court "shall grant" the immunity order when petitioned, although the Attorney General can request to delay the order. While an order requires a witness to testify, the Fifth Amendment's protections prohibit the compelled testimony and any evidence derived from that testimony from being used against the witness "in any respect" in a later criminal prosecution, except one for perjury, false statement, or contempt relating to the testimony. While Congress's oversight and investigatory powers are broad, they are not unlimited. Besides jurisdictional limitations and other procedural requirements imposed by each house or a particular committee's rules, other constitutional principles restrict committee investigations. Because the authority to conduct oversight and investigations is implicit in the Constitution's vesting of legislative power in Congress, any inquiry must be undertaken "in aid of the legislative function." This "legislative purpose" requirement is relatively generous, and generally authorizes an investigation into any topic on which legislation could be had, including investigations undertaken to inform Congress or its committees for purposes of determining how laws function, whether new laws are necessary, whether old laws should be repealed or altered, or to conduct oversight to ensure compliance with existing law. No committee, however, "possesses the general power of making inquiry into the private affairs of the citizen." In addition, because a congressional inquiry is part of "lawmaking," a congressional committee engaged in an investigation generally must observe applicable constitutional restrictions and respect validly asserted constitutionally based privileges. Most, though not all, provisions of the Bill of Rights addressing the rights of individuals apply to a congressional investigation. For example, the First Amendment prevents a committee from interfering with a witness's free speech or associational rights without an adequate legislative interest; the Fourth Amendment prevents the enforcement of an unreasonably broad subpoena; and the Fifth Amendment may be asserted in response to a congressional subpoena when compliance would tend to incriminate the witness. Assertions of executive privilege may be invoked to limit a committee's authority to obtain information from executive branch agencies. Executive privilege is generally viewed as having two components: the deliberative process privilege, which protects the decisionmaking process of the entire executive branch; and the presidential communications privilege, which preserves the confidentiality of direct decision making of the President. Both privileges are grounded in the notion that the executive branch must be able to discuss different options and approaches candidly without fear that its communications will become public. The deliberative process privilege is often implicated during committee investigations into agency decisionmaking, and as a result, may prompt conflict between committees and agencies. While the Supreme Court has found the presidential communications privilege to be implied in the Constitution, the legal source from which the deliberative process privilege stems is less clear. Whereas one court has suggested that the privilege "is primarily a common law privilege," another has held that it has "constitutional dimension[s]." Yet because congressional committees have generally claimed discretion in whether to recognize common law privileges asserted by a witness, the legal source of the deliberative process privilege may affect the degree to which the privilege limits congressional investigations. While legislative enactments have the force and effect of law, committees may also use non-binding report language associated with passed legislation to influence agency action. Report language draws its ability to influence not from the law, but from the committee's relationship with the agencies it oversees. This tool may be used to direct the use of appropriated funds, as well as to guide an agency in implementing delegated authority. In general, committee report language refers to any information provided in a report that accompanies legislation approved by the committee. When directed toward agencies, committee report language generally is used to communicate committee preferences to the agency tasked with carrying out the measure once it becomes law. The purpose of committee report language can range from explaining the committee's interpretation of certain provisions of the bill to directly articulating a requirement or prohibition on the agency which may not be directly referenced in the bill's text. Although report language itself is not legally binding in the same manner as statutory text, agencies usually seek to comply with any directives contained within a committee report. If an agency ignores report language, it runs the risk of offending its appropriating committee or another committee with jurisdiction over it, increasing the likelihood of future informal committee-imposed consequences or more formal legislative consequences imposed by Congress at the behest of the committee. In the appropriations context, report language has been used as a non-binding alternative to the types of committee controls held unconstitutional in Chadha . For example, committees have inserted language into committee reports that purport to require an agency to obtain the committee's approval before reprogramming funds. In other instances, agencies have reached informal agreements in which the agency accedes to some form of limited committee control over agency decisionmaking. Because report language and other informal arrangements between an agency and a committee do not, as a legal matter, have the force and effect of law, these tools do not violate constitutional principles of presentment and bicameralism laid out by the Supreme Court in Chadha . If agencies comply with committee report language, they do so voluntarily. As one appellate court has noted, "there is nothing unconstitutional about . . . such informal cooperation." Individual Members also have several tools at their disposal to influence agency action. Members may seek the disclosure of information from agency officials through voluntary cooperation. And procedural rules and customary practices of the House, Senate, or committees may accord specific powers to individual Members that enable them to exert some level of influence over matters affecting administrative agencies. For example, committee rules typically provide committee chairs significant authority to compel disclosure of information from administrative agencies or engage in other oversight activities on behalf of their committees on matters within those committees' jurisdiction. And if an individual Member is authorized by a committee, house, or Congress as a whole, the Member may be "endowed with the full power of the Congress to compel testimony," for, as the Supreme Court has recognized, "each Member of Congress is 'an officer of the union, deriving his powers and qualifications from the [C]onstitution.'" Individual Members may also avail themselves of certain statutes to obtain information from administrative agencies. For instance, 5 U.S.C. § 2954 (also known as the "Seven Member Rule" "Rule of Seven" statute) provides that, upon receipt of a request for information from any seven Members of the House Oversight and Government Reform Committee or five Members of the Senate Committee on Homeland Security and Governmental Affairs, an executive agency "shall submit any information requested of it relating to any matter within the jurisdiction of the committee." Other statutes authorize agencies to disclose records that are otherwise exempt from disclosure specifically to an individual Member of Congress. Individual Members may also secure information through reliance on the statutory authority granted certain investigative agencies—such as the Government Accountability Office—to investigate and oversee administrative agencies. In addition, individual Members may submit requests for agency records under FOIA. Individual Members may also seek to influence or control the executive branch through the initiation of lawsuits challenging executive branch action. However, an individual Member who wishes to institute such a lawsuit faces a significant obstacle unrelated to the merits of his or her case. After the Supreme Court's 1997 decision in Raines v. Byrd , an individual Member will have standing to sue an executive branch agency or official in federal court only if his or her complaint alleges a personal injury (e.g., the loss of a congressional seat) or an "institutional injury" not "abstract and widely dispersed." The only institutional injury the Supreme Court has recognized as sufficient to confer standing upon individual legislators occurs when legislators' votes have been nullified by executive action, a narrow category of injury that individual Members have struggled to allege successfully. After Raines , few legislators who lack authorization from their relevant house of Congress have been granted standing to pursue a civil action against the executive branch. Individual Members may also participate in litigation against the executive branch—albeit not as parties—by appearing as amici curiae ("friends of the court") in pending proceedings. An amicus curiae is "[a] person who is not a party to a lawsuit but who petitions the court or is requested by the court to file a brief in the action because that person has a strong interest in the subject matter." Members of Congress may file amicus briefs in judicial proceedings for a variety of reasons, including to articulate specific policy views, assert the purported meaning of statutory provisions at issue in the litigation in question, or defend the prerogatives or interests of the legislative branch. While they certainly cannot be used to control agency action, amicus briefs filed by Members of Congress in proceedings involving the executive branch may be useful in alerting executive branch components or officials to the views of certain Members on matters central to executive branch programs and powers. As has been shown, individual Members of Congress may exert some measure of influence over administrative agencies. But courts have imposed important limitations on their ability to do so. Chief among these limits is the prohibition against legislator-interference with the decisionmaking process of agency adjudicators. This prohibition—grounded in procedural due process—extends to any action that would implicate an adjudicator's appearance of impartiality, such as a decision issued shortly after facing congressional questioning that focused "directly" and "substantially" on the official's decisionmaking process. An adjudication subject to such impermissible influence is invalid so long as there can be established a "nexus" between the pressure applied and the agency decisionmaker. The U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) has held that "[t]he [proper] test is whether extraneous factors intruded into the calculus of consideration of the individual decisionmaker." This doctrine, however, does not apply in the context of agency rulemaking proceedings. The D.C. Circuit has held that a rule will be held invalid because of legislator pressure only if (1) "the content of the pressure . . . is designed to force [the decision-maker] to decide upon factors not made relevant by Congress in the applicable statute," and (2) "the . . . determination [is] affected by those extraneous considerations." Congress has an array of tools at its disposal to influence and control executive branch agencies. Through the exercise of its legislative power and subject to certain limitations rooted mainly in the separation of powers, Congress may not only establish federal agencies and individual agency offices, but also shape agencies' basic structures and operations, set the manner in which those holding agency offices are appointed and removed, and delegate lawmaking authority to agencies. In addition, Congress may directly reverse certain agency actions and decisions through later legislation. But Congress need not confine itself to the legislative process to exert control or influence over executive branch agencies or officials. Many non-statutory tools that inhere to Congress as a whole, the House or Senate exclusively, committees, or even individual Members of Congress may be used to influence or, in some cases, control agencies or officials. Some of these non-statutory tools, such as impeachment and removal, are of potentially legally binding effect. Other tools, such as censure or resolutions of inquiry, are not legally compulsory, but are possibly powerful tools of influence.
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The Constitution neither establishes administrative agencies nor explicitly prescribes the manner by which they may be created. Even so, the Supreme Court has generally recognized that Congress has broad constitutional authority to establish and shape the federal bureaucracy. Congress may use its Article I lawmaking powers to create federal agencies and individual offices within those agencies, design agencies' basic structures and operations, and prescribe, subject to certain constitutional limitations, how those holding agency offices are appointed and removed. Congress also may enumerate the powers, duties, and functions to be exercised by agencies, as well as directly counteract, through later legislation, certain agency actions implementing delegated authority. The most potent tools of congressional control over agencies, including those addressing the structuring, empowering, regulating, and funding of agencies, typically require enactment of legislation. Such legislation must comport with constitutional requirements related to bicameralism (i.e., it must be approved by both houses of Congress) and presentment (i.e., it must be presented to the President for signature). The constitutional process to enact effective legislation requires the support of the House, Senate, and the President, unless the support in both houses is sufficient to override the President's veto. There also are many non-statutory tools (i.e., tools not requiring legislative enactment to exercise) that may be used by the House, Senate, congressional committees, or individual Members of Congress to influence and control agency action. In some cases, non-statutory measures, such as impeachment and removal, Senate advice and consent to appointments or the ratification of treaties, and committee issuance of subpoenas, can impose legal consequences. Others, however, such as House resolutions of inquiry, may not be used to bind agencies or agency officials and rely for their effectiveness on their ability to persuade or influence.
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On November 20, 2004, both houses agreed to the conference report on a consolidatedappropriations bill ( H.R. 4818 ), containing the FY2005 legislative branchappropriations bill, along with eight other regular annual appropriations bills on which action hadnot yet been completed. (1) H.R. 4818 was signedby the President on December 8, 2004( P.L. 108-447 , 118 Stat. 2809; 658 pages). The annual legislative branch appropriations bill contains two titles. Appropriations forlegislative branch agencies are contained in Title I. Title II contains general administrativeprovisions, and from time to time, appropriations for legislative branch entities. For example, in theFY2003 Act Title II contained funding for the John C. Stennis Center for Public Service Trainingand Development and the Congressional Award Act. Congress changed the structure of the annual legislative branch appropriations bill effective in FY2003. Prior to enactment of the FY2003 bill, and effective in FY1978, the legislative branchappropriations bill was divided into two titles. Title I, Congressional Operations, contained budgetauthorities for activities directly serving Congress. Included in this title were the budgets of theHouse, the Senate, Joint Items (joint House and Senate activities), the Office of Compliance, theCongressional Budget Office (CBO), the Architect of the Capitol (AOC) (except the Library ofCongress (LOC) buildings and grounds), the Congressional Research Service (CRS) within theLibrary of Congress, and congressional printing and binding activities of the Government PrintingOffice (GPO). Title II, Related Agencies, contained budgets for activities not directly supporting Congress. Included in this title were budgets of the Botanic Garden, the Library of Congress (except theCongressional Research Service), the Library buildings and grounds maintained by the Architect ofthe Capitol, the Government Printing Office (except congressional printing and binding costs), andthe Government Accountability Office (GAO), formerly named the General Accounting Office. Periodically since FY1978, the bill contained additional titles for such purposes as capitalimprovements and special one-time functions. In addition to activities funded in the annual legislative branch appropriations bill, other legislative budget authorities include permanent budget authority for both federal funds and trustfunds, and non-legislative entities. These include the following: Permanent federal funds are available as the result of previously enacted legislation and do not require annual action. (2) Permanent trust funds are monies held in accounts credited with collections from specific sources earmarked by law for a defined purpose. Trust funds do not appear in the annual legislativebill since they are not budget authority. They are included in the U.S. Budget, prepared by the Officeof Management and Budget, either as budget receipts or offsetting collections. (3) The U.S. Budget also contains non-legislative entities within the legislative branch budget. They are funded in other appropriation bills, but are counted as legislative branch funds by the Officeof Management and Budget for bookkeeping purposes. (4) For a more accurate picture of the legislative branch budget, as contained in the annual legislative branch appropriation bill, the total FY2005 legislative branch appropriation figure in theFY2005 U.S. Budget must be adjusted. This is accomplished by subtracting non-legislative fundsand permanent federal and trust funds. The FY2005 U.S. Budget contains a legislative budgetauthority request of $4.4 billion. After subtracting non-legislative entities ($48 million), permanentfederal funds ($358 million), and permanent trust funds ($27 million), the total request for entitiesfunded in the regular annual appropriation bill is $3.97 billion. Table 1. Legislative Branch Appropriations, FY1995 - FY2005 (budget authority in billions of current dollars) a a. These figures represent current dollars, exclude permanent budget authorities, and contain supplementals and rescissions. Permanent budget authorities are not included in theannual legislative branch appropriations bill, but rather, are automatically fundedannually. b. Includes budget authority contained in the FY1999 regular annual Legislative BranchAppropriations Act ( P.L. 105-275 ), the FY1999 emergency supplemental appropriation( P.L. 105-277 ), and the FY1999 supplemental appropriation ( P.L. 106-31 ). c. Includes budget authority contained in the FY2000 regular annual Legislative BranchAppropriations Act ( P.L. 106-57 ); a supplemental and a 0.38% rescission in P.L.106-113 ; and supplementals in P.L. 106-246 and P.L. 106-554 . d. This figure contains: (1) FY2001 regular annual appropriations contained in H.R. 5657 , legislative branch appropriations bill; (2) FY2001 supplementalappropriations of $118 million and a 0.22% across-the-board rescission contained in H.R. 5666 , miscellaneous appropriations bill; and (3) FY2001 supplementalappropriations of $79.5 million contained in H.R. 2216 ( P.L. 107-20 ). H.R. 5657 and H.R. 5666 were incorporated by reference in P.L. 106-554 , FY2001 Consolidated Appropriations Act. The first FY2001legislativebranch appropriations bill, H.R. 4516 , was vetoed Oct. 30, 2000. Thesecond legislative branch appropriations bill, H.R. 5657 , was introducedDec. 14, 2000, and incorporated in P.L. 106-554 . This figure does not reflect anyterrorism supplementals funds released pursuant to P.L. 107-38 . e. This figure contains regular annual appropriations in P.L. 107-68 ; transferred from thelegislative branch emergency response fund pursuant to P.L. 107-117 ; and FY2002supplemental appropriations in P.L. 107-206 . f. This figure contains regular annual appropriations in P.L. 108-7 , FY2003 OmnibusAppropriations Act, and supplemental appropriations in P.L. 108-11 . g. This figure contains regular annual appropriations in P.L. 108-83 , FY2004 LegislativeBranch Appropriations Act. Additional FY2004 provisions which did not containappropriations were contained in P.L. 108-199 , the FY2004 Consolidated AppropriationsAct. h. This figure contains regular annual appropriations in P.L. 108-447 , ConsolidatedAppropriations Act, FY2005. Table 2. Status of Legislative Branch Appropriations,FY2005 ( P.L. 108-447 , Consolidated Appropriations Act, FY2005) a. The bill was marked up by the House Subcommittee on Legislative Branch on June 16, 2004. b. The Senate Subcommittee on Legislative Branch did not hold a formal markup. Submission of FY2005 Budget Request on February 3, 2004. A substantial part of the 12.5% increase requested is to meet (1)mandatory expenses, which includes funding for annual salary adjustments required by lawand related personnel expenses, such as increased government contributions to retirementbased on increased pay, and (2) expenses related to increases in the costs of goods andservices due to inflation. Submission of FY2005 Budget Amendments on May 6, 2004. The President submitted amendments to pending FY2005 legislativebranch budgets. These amendments were based on requests of legislative branch entities, and contain an additional $2.7 million in net discretionary resources. The amendments containfunds for the Senate ($1.7 million), (5) Joint EconomicCommittee ($4,000), Capitol GuideService and Special Services Office ($5,000), Library of Congress Copyright Office($810,000), (6) and Congressional Research Service($200,000). (7) Another amendment eliminated a proviso governing the use of some appropriations requested for the Congressional-Executive Commission on the People's Republic of China. The commission is not funded in the annual legislative appropriation bill, but rather is placedin the legislative branch section of the U.S. Budget by the Office of Management and Budgetfor bookkeeping purposes. House Hearings on FY2005 Budget Request. The first House hearing scheduled for February 25, 2004, wascancelled that morning by Representative Jack Kingston, chairman of the Subcommittee onLegislative Branch. Referring to significant increases in agency requests, RepresentativeKingston stated that With record deficits, a war on terrorism, and troops on the ground in Afghanistan and Iraq, the budget is too tight to waste our timeentertaining requests for a 40-percent spending increase. The President's budget calls for anincrease of less than one-percent in non-defense and non-homeland security discretionaryspending but these 'inside the beltway' bureaucracies want 32- to 45-percent increases. (8) The chairman subsequently requested the heads of legislative entities to resubmit revised, reduced budgets, and to explain the impact on authorized staff levels. Among legislative entities with requests containing increases of 32% or more are the Capitol Police (32.7%) and the Architect of the Capitol (45.2%). The Office of Compliancerequested a 31.6% increase. On April 22, 2004, the House held its first hearing, considering budget requests of the House of Representatives and GAO. Hearings continued April 28 on the budgets of theCapitol Police and GPO, and were followed by May 12 hearings on the budget submissionsof the AOC, LOC, and Capitol Visitors' Center (CVC). Plans are pending for a closedhearing on Capitol Hill security. Senate Hearings on FY2005 Budget Requests. The Senate Subcommittee on Legislative Branch, Committee onAppropriations, held hearings March 4 on budget submissions of the GAO, GPO, and CBO;March 11 on the budget request of the LOC, including the CRS; April 1 on the budgets of theSenate Sergeant at Arms and the Capitol Police; and April 8 on the budgets of the Secretaryof the Senate and AOC. FY2005 302(b) Allocation for the House and Senate Subcommittees on Legislative Branch. Both houses agreed to a FY2005budget authority cap of $3.575 billion for discretionary agencies and programs under thejurisdiction of the Subcommittees on Legislative Branch. The limit allows a 1.3% increaseover FY2004 enacted budget authority. (9) House Subcommittee Markup of FY2005 Bill. As approved by the House Subcommittee on Legislative Branch, theFY2005 bill contains $2.75 billion (excluding Senate funds), the same as FY2004; the amountreflects a 16.4% decrease from the request of $3.2 billion (excluding Senate funds). According to a House Appropriations Committee press release, the frozen FY2005 fundinglevel: maintains the current staff levels in legislative branchagencies; funds completely the annual comparability adjustment forstaff; funds a fitness facility for House staff; and contains no funds for new major construction projects by the AOC,directing that resources of the Architect by used for on ongoing projects, specificallymentioning the CVC. (10) The bill contains the following new budget authority for legislative branch entities: $1.044 billion for the House of Representatives , a 3.6% increase over $1.008 billion; $232 million for the U.S. Capitol Police , a 5.5% increase over $220million; $35 million for the Congressional Budget Office , a 2.9% increase over$34 million; $272 million for the Architect of the Capitol (excluding funds for Senateoffice buildings), a decrease of 20% from $340 million; $543 million for the Library of Congress , a 3.8% increase over $523million; $121 million for the Government Printing Office , a decrease of 10.4%from $135 million; and $474 million for the Government Accountability Office , a 3.5% increaseover $458 million. The subcommittee considered four amendments, adopting one. These included amendments to eliminate the Joint Economic Committee (offered by Chairman Jack Kingston). Amendment was withdrawn pending further consideration before full committeemarkup; remove a provision of law prohibiting the use of funds to establish adental and vision benefits program for House employees (offered by ranking minority memberJames Moran). Amendment was withdrawn subject to further study; prohibit funding for the U.S. Capitol Police mounted horse unit (offeredby Representative Mark Steven Kirk). Amendment was adopted by voice vote;and prohibit lame-duck Members of Congress from filing ethics complaintsagainst other Members (offered by Representative Ray LaHood). Amendment failed 5-5. House Full Committee Markup of the FY2005 Bill. During its June 23 markup, the full committee approved thesubcommittee's recommendations after agreeing to the following six amendments: manager's amendment (offered by Chairman Jack Kingston) containing seven provisions: (1) expressing gratitude to House employees for assistance during thefuneral of President Ronald Reagan; (2) directing changes in the administrative reorganizationof the U.S. Capitol Police force; (3) authorizing a review of the appointment process, salarydetermination, and retirement benefits for top personnel in legislative branch agencies; (4)directing the House Chief Administrative Officer to monitor compliance by vendors withHouse prepayment policies; (5) authorizing GAO to study overlap of research on economicissues by the Joint Economic Committee, CRS, CBO, and the Joint Committee on Taxation; (11) (6) encouraging the GAO to undertake additional technology assessment studies as Congressdirects; and (7) prohibiting use of funds in the bill to pay employees of the legislative branchmore than a Member of Congress. The manager's amendment was agreed to by voicevote; an amendment to strike a prohibition on the use of funds to study a dental and vision care benefits program for employees of the House (offered by rankingminority member James Moran); the amendment did not strike a prohibition on the inclusionof Members in such a study; amendment was agreed to by voice vote; an amendment to strike the prohibition on the use of funds to study dental and vision care benefits for Members (offered by Representative John Doolittle);amendment was agreed to by voice vote; an amendment to encourage Members to use hydro-electric vehicles or alternative fuel vehicles while on official business travel (offered by Representative ZachWamp); amendment, as amended (see below), was agreed to by voicevote; an amendment to the Wamp amendment to include alternative fuel vehicles (offered by Representative Marcy Kaptur); amendment to the amendment was agreedto by voice vote; and an amendment to prohibit the construction of a perimeter fence around the Capitol (offered by Representative Sam Farr); amendment was agreed to by voicevote. The committee did not agree to three amendments that sought to add $2.4 million to the Open World program located in the Library of Congress (12) (offered by Representative DavidPrice); amendment failed by a vote of 25-29; establish the Accountability and Review of Federal Agencies Commission "to study non-defense and non-mandatories for redundancies" (13) (offered byRepresentative Todd Tiahrt); amendment failed by voice vote; and reduce the appropriation for the Joint Economic Committee by 50% (offered by Representative Jack Kingston); amendment failed by voicevote. In its report, the committee addressed its expectations of significant future savings directing legislative agencies (1) to submit "more reasonable" funding requests reflective of budget constraints faced by all federal agencies; (2) to "streamline" their organizations,outsource operations, apply "best practices" management principles, and use existingtechnology to enhance operations; (3) to "examine potential outsourcing opportunities" inalmost all operations; and (4) to cooperate in a study to determine means to centralize thedistribution of printed material in the legislative branch. (14) House Report of FY2005 Bill (H.R. 4755). On July 1, the House Appropriations Committee reported H.R. 4755 , as marked up on June 23 ( H.Rept. 108-577 ). See discussion of theHouse markup in this report. House Passage of FY2005 Bill (H.R. 4755). The House passed H.R. 4755 on July 12 after rejectingthe following two amendments and a motion to recommit: (15) an amendment to add $30 million to the appropriation for the GAO (salaries and expense account) to establish within the agency the Center for Science andTechnology Assessment, and offset the increase by reducing the appropriation for the AOC(general administration account) by $15 million and the appropriation for the GPO(congressional printing and binding account) also by $15 million (offered by RepresentativeRush Holt); amendment was rejected by a vote of 115-252, vote #359; an amendment to provide for a 1% reduction in appropriations or amounts made available in the bill that are not required to be appropriated or made available(offered by Representative Joel Hefley); amendment was rejected by a vote of 87-278, vote#360; and a motion to recommit the bill to committee with an amendment which limited each House committee to a maximum of $25,000 for postage expenses (offered byRepresentative Brad Sherman); motion was rejected 163-205, vote #361. Senate Full Committee Markup and Report of the FY2005Bill (S. 2666). During markup, the Senate Committee on Appropriationsadopted a manager's amendment offered by Senator Ben Nighthorse Campbell, chairman ofthe Subcommittee on Legislative Branch. Among its provisions were those to: express the Committee's support of a John Brademas Center for theStudy of Congress at New York University to enhance understanding of federal policymaking(included in Library of Congress report language) (on behalf of Senator RichardDurbin); express failure of the Committee to support House-passed language directing the GAO to study the statutory responsibilities of the joint economic and taxationcommittees (included in Joint Economic Committee report language) (on behalf of SenatorRobert Bennett); direct the LOC to make $500,000 available (by means of a grant) to the Middle Eastern Text Initiative for translation and publishing activities (on behalf ofBennett); add language on electronic services handled by the Senate Sergeant at Arms (on behalf of Hon. Ted Stevens); provide authority to the U.S. Capitol Police to assist congressional delegations traveling overseas by offering advice on security and assisting in advance securityliaison preparations (on behalf of Campbell); commend the LOC on its Lewis and Clark exhibit and direct the LOC to support the exhibit as it travels in the United States (included in Library of Congress reportlanguage) (on behalf of Honorable Byron Dorgan); extend authorization of the National Film Preservation Program in the Library of Congress through FY2005 (offered since House and Senate authorization bills forthe program are still pending) (on behalf of Campbell); and, direct the Librarian of Congress to provide an update of the Library's efforts to handle security related issues, to identify major security problems andvulnerabilities, and to provide the committee a report on the Library's efforts to enhance thesecurity of its collections (included in LOC report language) (on behalf ofCampbell). No other amendments were considered. Later that day, the committee reported S. 2666 ( S.Rept. 108-307 ). Senate Passage of FY2005 Bill (H.R. 4755, Amended to Contain S. 2666). The Senate agreed to the full Committee's totalappropriation of $2.46 million on September 21, by a vote of 94-2. The Senate passed H.R. 4755 , amended to contain the language of S. 2666 , leavingintact language in H.R. 4755 funding internal activities of the House. Beforeamending and passing H.R. 4755, the Senate agreed by unanimous consent to four managers'amendments to S. 2666 which: revised language in S. 2666 authorizing the chief of the Capitol Police to receive and submit tort claims of Senators and Senate officers and employees against theCapitol Police to the Committee on Rules and Administration. Original language containedthe phrase "With respect to claims within the jurisdiction of theSenate"; revised language in S. 2666 authorizing the Capitol Police Board to make regulations regarding the release of security information subject to approval of theSenate Committee on Rules and Administration and the Committee on House Administration. Original language required approval of the Senate and House Committees on Appropriations; added an administrative provision within the Open World Leadership Center Trust Fund account to expand the program to other countries as designed by theCenter's Board of Trustees; required the Board to notify the Senate and House Committeeson Appropriations of a designation at least 90 days before the designation takes effect;and added a new general provision at the end of the bill appropriating $495,000 for the Commission on the Abraham Lincoln Study Abroad Fellowship Program,extending the program to December 31, 2005, and reducing by $495,000 the generaladministration account of the Architect of the Capitol. Conference Report on FY2005 Bill. The FY2005 legislative branch appropriations bill was contained in the conference report on H.R. 4818 , a consolidated appropriations bill. Eight other unfinishedappropriations bills were also part of H.R. 4818. As agreed to in conference on November19, and subsequently by both houses the following day, legislative branch report languagecontained an overall increase of 1.2%, to $3.571 billion from $3.527 billion, subject to a 0.80% rescission; (16) an increase of 5.7% in budget authority for the Capitol Police, to $232.3 million (from $219.8 million), which enables the force to maintain 1,592 sworn staff;and a decrease of 12.5% ($50.3 million) in budget authority for the Architect of the Capitol, to $352.7 million from $403 million. Funding Issues. Congress approved $232.3 million in FY2005 budget authority for the Capitol Police, an overall increase of $12.5 million(+5.7%), from the previous year's budget authority of $219.8 million. The agency's requestwas a $71.9 million (+32.7) increase to $291.6 million. (17) Appropriations are contained intwo accounts: salaries account containing $203.4 million, a $7.0 million (+3.6%) increase; and general expenses account containing $28.9 million, a $5.5 million(23.7%) increase. A second appropriation relating to the Capitol Police appears within the Architect of the Capitol account for Capitol Police buildings and grounds. That funding level is $5.9 million,a reduction from the request of $40.3 million. Note: Details of conference report language regarding the Capitol Police will be included in the next version of this report. Conferees on the FY2005 bill agreed to authorize the transfer of up to $10.6 million to the Capitol Visitors' Center (CVC) from the Capitol Building account of the Architect of theCapitol. Conferees allotted $6 million for CVC facility maintenance and $3.3 million forCVC start-up operations. Earlier, on July 12, the House passed H.R. 4755 , its version of the FY2005 legislative branch funding bill, without funds for the CVC. On September 21, the Senatepassed H.R. 4755, amended to contain the language of S. 2666 , containing $7.6million for maintenance (including equipment, furniture, materials, and supplies), start-upoperations, and new staff. Although the budget request for the CVC did not provideconstruction money, it contained $14.2 million for start-up operations and maintenance. These funds were to cover an interim period during while a decision was made on whichlegislative office would be responsible for the center's operation and maintenance. Therequested funds supported 35 FTE positions. The CVC request was contained in two appropriations under the Architect of the Capitol. The first provided $6.3 million in the Capitol Building appropriation "to procure equipmentand supplies; to provide training, database management, workflow support services, andinventory systems support; and to support, operate, and maintain the structural, architectural,and utilities infrastructures." The second provided $8.2 million in the CVC appropriation to"cover transitional start-up costs for the operation, administration, and management of guideservices, visitor services, food services, and gift shop services for the CVC." (18) The FY2005 request followed the FY2004 appropriation of $48.6 million, which reflected a new appropriation of $36.62 million and a transfer to the center's account of $12million. The transfer was made from previously appropriated funds available for CapitolPolice buildings and grounds, also funded within the AOC account. Interest in construction of the CVC reflects heightened security concerns by some Members of Congress and the desire to make necessary appropriations available so thatconstruction of the center can be completed by the end of 2005. Upon completion offurnishing the CVC and setting up exhibits, the construction barriers will be removed inspring 2006. (19) Congressional leadership brokeground for the center on June 20, 2000, andconstruction began in early 2002. Funding Issues. FY2005 funding for the Architect of the Capitol is $352.7 million, a decrease of $50.3 million (-12.5%) from theFY2004 level of $403.0 million. The AOC requested a 45.2% increase, to $584.9 million. Neither the FY2004 appropriation or the FY2005 request reflected one-time appropriationsfor the CVC. Operations of the Architect are funded in nine accounts. The FY2005 budget authority for these accounts and the percentage changes from FY2004 are: general administration -- $80.4 million (+4.9% from $76.6 million); request was a 16.5% increase; Capitol building -- $28.9 million (+3.0% from $28.0 million); requestwas a 15.1% increase; Capitol grounds -- $7.0 million (+1.9% from $6.9 million); request was an 18.0% increase; Senate office buildings -- $62.1 million (-1.5% from $63.0 million); request was a 3.6% increase; House office buildings -- $65.4 million (+4.7% from $62.5 million); request was a 69.2% increase; Capitol power plant -- $56.8 million (-29.9% from $81.1 million); request was a 21.8% decrease; Library buildings and grounds -- $40.1 million (+3.0% from $38.9 million); request was a 312.8% increase; Capitol Police buildings and grounds -- $ 5.9 million (+78.0% from $3.3 million; request was a 1,125.1% increase; and Botanic garden -- $6.3 million (+2.8% from $6.2 million); request was an 88.3% increase. Overall Funding. FY2005 budget authority for House internal operations is $1.05 billion, an increase of $40.1 million (+4.0%), less thanthe requested $1.07 billion, which would have provided a 5.7% increase. The approvedincrease primarily funds mandatory expenses. House Committee Funding. Funding for House committees is contained in the appropriation heading "committee employees" thatcomprises two subheadings. The first subheading contains funds for personnel andnonpersonnel expenses of House committees, except the Appropriations Committee, asauthorized by the House in a committee expense resolution. The amount approved forFY2005 is $114.3 million, an increase of 11.8% from $102.2 million in FY2004. The second subheading contains funds for the personnel and nonpersonnel expenses of the Committee on Appropriations, which is $24.9 million, the same level appropriated forFY2004. Overall Funding. Congress agreed to $726.1 million for internal Senate programs and activities, a 1.9% increase over the prioryear's funding level of $712.5 million. The Senate requested $758.0 million, an increase of6.4%. Like the House, a significant factor in the request was funding for mandatory expensesrelated to employee insurance and retirement programs. Among increases are those for official personnel and office expenses of individual Senators, an increase of 5.3% instead of the requested 10.0% increase; and salaries of officers and their employees and mandatory Senatecontributions to insurance and retirement programs for most Senate employees, an increaseof 5.1%, the same as requested. Among decreases in the bill are those for activities of the Senate Sergeant at Arms funded under "contingent expenses of the Senate," a decrease of 6.0%, instead of the requested 0.6% increase;and committee funding, a decrease of 7.1%, instead of the requested 1.7%increase. Senate Committee Funding. Appropriations for Senate committees are contained in two accounts: the inquiries and investigations account , containing funds for all Senate committees except Appropriations, for which $110.0 million was approved, a 7.1% decreasein lieu of a requested 1.7% increase; and the Committee on Appropriations account , for which$13.3 million was approved, an increase of 3.9%, the same as requested. Congressional Budget Office. Conferees agreed to $34.9 million, which is $129,000 more than the $34.8 million passed by both theHouse and Senate. The additional amount funds increased agency costs of the employeeretirement system. The conference amount is an increase of $1.3 million (+3.9%) over theprevious year's budget, with the increase covering mandatory pay adjustments and priceincreases. The agency requested $35.5 million, an increase of $1.8 million (5.5%). (20) Most of therequest ($1.6 million) funded mandatory increases in salaries and related benefits. Thisproposed funding supported 235 FTE positions, the same as for FY2004; a 3.5%across-the-board pay adjustment for staff earning $100,000 or less; and funding forpromotions and merit adjustments for all staff, including those earning more than $100,000;completion of the replacement of CBO's budget analysis data system, "the agency's primarybudget-tracking system, with a lower-cost, more-capable in-house system;" (21) andtelecommunications services related to an alternative computing facility. (22) Government Accountability Office. The agency, formerly named the General Accounting Office (GAO), received $471 million inFY2005 funding, an increase of $13.4 million (+2.9%). Earlier, the House approved $473.5million, and the Senate, $470 million. As with other legislative agencies, the increaseprimarily was to meet increased expenses of mandatory pay and services adjustments. Conferees also withdrew the House provision that the Government Accountability Office report on statutory responsibilities of the Congressional Budget Office, theCongressional Research Service, the Joint Economic Committee, and the Joint Committee onTaxation; supported language in the Senate report directing GAO to secure congressional leadership support before undertaking future technology assessments anddirecting the Comptroller General to consult with the Senate Appropriations Committeeregarding guidelines to be used in technology assessments; and, supported Senate report language directing GAO to obtain the necessary equipment for testing and evaluation of the agency's ability to detect threats of chemical,biological, and explosive agents. The FY2005 request of $486.7 million reflected a direct appropriation of $480.5 millionand authority to use $6.1 million in revenues from "reimbursable audit work and rentalincome." (23) The new budget authority request wasa 5.0% increase over FY2004. Based on a congressional directive to the agency to undertake technology assessments, GAO requested $545,000 for four new FTE positions and contract support to establish "abaseline technology assessment capability," allowing GAO to conduct one assessment peryear. During Senate Appropriations Committee testimony, the comptroller general (GAO head) noted that his FY2005 budget supported an authorized staff level of 3,269 FTEs. Library of Congress. Conferees agreed to $549.8 million for the Library of Congress (LOC), including the Congressional ResearchService, an increase of $26.8 million (+5.1). The House and Senate previously agreed to$543.5 million and $544.1 million, respectively. Conferees also authorized two FTE positionsin the Office of Inspector General to assist in information technology security audits, andreduced the number of FTEs by three. LOC requested an appropriation of $562.6 million, an increase of $39.6 million (7.6%) from the FY2004 appropriation of $523.0 million. (24) In addition, the Librarian of Congressrequested authority to use $39.7 million from receipts. According to the Librarian, the request reflected the Library's priorities to initiate operations of the National Audio Visual Conservation Center; to support the CopyrightOffice's reengineering efforts; to "regain full funding for the Congressional Research Servicestaff capacity at 729 full-time-equivalent (FTE) positions;" to support conversion to digitaltalking book technology for the blind and physically handicapped; to fund a massdeacidification program; to support the Veterans History Program; to insure additionalsystems, staff, buildings, and collections security; and to provide infrastructure support. (25) LOC's request supported 4,363 FTE positions (including CRS), an increase of 80 from FY2004, primarily to meet collections, security, and management needs. Congressional Research Service. Both houses agreed to $96.9 million for the Congressional Research Service, an increase of $5.7million (+6.3%), covering mandatory pay and retirement costs and increased expenses of goods and services. Earlier, the House approved $96.4 million, and the Senate agreed to $96.7million. The agency's request of $100.9 million contained $4.3 million for mandatory pay and price level increases, and $5.4 million to support, among other functions, a staff level of 729FTE positions, off-site computer back-up facilities ($622,000), (26) improvements in theLegislative Information System (LIS) ($549,000), (27) and procurement of research materials ($1million). (28) A request of $412,000 funded a pilotprogram for repayment of higher educationloans in an effort to retain staff. The CRS director noted during hearings on the agency's FY2005 budget that without an additional one-time $2.71 million appropriation, the CRS budget base would support 704 FTEpositions. This translated to a reduction of 25 FTE positions, attained through attrition withoutreplacements. (29) Government Printing Office. Conferees agreed to $120.8 million for the agency, a reduction of $14 million (-10.4%). The Houseearlier agreed to $121.3 million, and the Senate to $120.7 million. The agency's request wasa 12.1% increase. The current appropriation, contained in two accounts: congressional printing andbinding and Office of Superintendent of Documents (salaries and expenses), follows: Congressional printing and binding -- $88.8 million, a decrease of $1.8 million (-2.0%) over the FY2004 appropriation of $90.6 million; and, Office of Superintendent of Documents (salaries and expenses) -- $32.0million, a decrease of $2.3 million (-6.7%) from $34.3 million. Conferees agreed to a FTE limit of 2,621, proposed by the Senate, in lieu of 2,889 proposed by the House; expressed support for public access to Federal Depository Libraries;and revised the price discount on GPO publications. The agency's FY2005 request contained funds in two additional accounts: (1) the Office of Inspector General -- $4.2 million (a new account in FY2005); and (2) Government Printing Office Revolving Fund -- $25.0 million, an increase of $15.1 million,or 151.5%. The public printer requested that the Office of Inspector General be fundeddirectly, not through the revolving fund, and that appropriations to the revolving fund allowimplementation of "a multi-year plan to transform the information technology used at theGPO" to meet "Federal agency customer requirements for printed and digital documents" and"the public's increasing demand for authenticated, official government information to beavailable from the Internet." (30) Among legislative changes requested by GPO were those to extend incentives for early retirement and separation (current provisions expire September 30, 2004); authorize $500,000for contracts of "expert services to assist us in our effort to relocate the GPO and to financethis project through redevelopment of our existing structures;" and authorize GPO to acceptcontributions of property, equipment, and services. Table 3. Legislative Branch Appropriations, FY2005 (H.R. 4818, P.L. 108-447 , Omnibus AppropriationsAct) (in thousands of dollars; FY2005 conference figures are subject to a 0.80% rescission) Source: House Committee on Appropriations and Senate Committee on Appropriations (the latter for FY2005 request for Senate activities andFY2005 Senate bill as reported. Table contains budget amendments of May 6, 2004, to the FY2005 budget requestfor an additional $2.7 millionin net discretionary resources, including funds for the Senate ($1.7 million), Joint Economic Committee ($4,000),Capitol Guide Service andSpecial Services Office ($5,000), Library of Congress Copyright Office ($810,000), and Congressional ResearchService ($200,000). a. FY2004 funds are contained in P.L. 108-83 , FY2004 Legislative Branch Appropriations Act. Additional FY2004 provisions that did not containappropriations were contained in P.L. 108-199 , the FY2004 Consolidated Appropriations Act. b. This is a new account, effective with the FY2003 Legislative Branch Appropriation Act. Previously,Capitol Police funds were contained underthe joint items account. c. The center was named the Russian Leadership Program prior to FY2004. d. The House does not consider appropriations for internal Senate operations. e. The House does not consider appropriations for Senate office buildings contained in the budget of theArchitect of the Capitol. f. This figure does not contain funds for internal Senate operations, which are funded in a separateaccount, or for Senate office buildings, whichare contained in the budget of the Architect of the Capitol. The Senate determines funding levels of these twoaccounts. g. The Senate does not consider appropriations for internal House operations. h. In addition, the Senate Committee on Appropriations directed that $12.815 million of prior-year funds bemade available "to support personnelrequirements" ( S.Rept. 108-307 , 108th Cong.). i. The Senate does not consider appropriations for House office buildings contained in the budget of theArchitect of the Capitol. j. This figure does not contain funds for internal House operations, which are funded in a separate account,or for House office buildings, whichare contained in the budget of the Architect of the Capitol. The House determines the funding levels of these twoaccounts. Table 4. Capitol Police Appropriations, FY2005(H.R. 4818, P.L. 108-447 , Omnibus Appropriations Act) (inthousands of dollars; FY2005 conf. figures are subject to a 0.80% rescission) Source: House and Senate Committees on Appropriations a. FY2004 funds are contained in P.L. 108-83 , FY2004 Legislative Branch Appropriations Act. Additional FY2004 provisions, that did not containappropriations, were contained in P.L. 108-199 , the FY2004 ConsolidatedAppropriations Act. Table 5. Architect of the Capitol Appropriations,FY2005 (H.R. 4818, P.L. 108-447 , Omnibus AppropriationsAct) Source: House and Senate Committees on Appropriations a. FY2004 funds are contained in P.L. 108-83 , FY2004 Legislative Branch Appropriations Act. Additional non-funding provisions were contained in P.L.108-199 , FY2004 Consolidated Appropriations Act. b. An additional $6.3 million is contained under the Capitol Building appropriation of theArchitect of the Capitol. c. The House does not consider appropriations for Senate office buildings. d. This figure does not include appropriations for Senate office buildings. e. The Senate does not consider appropriations for House office buildings. f. This figure does not include appropriations for House office buildings. Table 6. Senate Appropriations, FY2005 (H.R. 4818, P.L.108-447 , Omnibus AppropriationsAct) (in thousands of dollars; FY2005 conference figures are subject to a 0.80% rescission) Source: House and Senate Committees on Appropriations. a. The Senate account contains seven appropriations headings, which are highlighted in bold. b. FY2004 funds are contained in P.L. 108-83 , FY2004 Legislative Branch Appropriations Act.Additional FY2004 provisions that did notcontain appropriations were contained in P.L. 108-199 , the FY2004 Consolidated Appropriations Act. c. Office operations of the Office of the Secretary of the Senate are also funded under "Salaries,Officers, and Employees." d. Activities of the Office of Sergeant at Arms and Doorkeeper are also funded under "Salaries,Officers, and Employees." e. This figure reflects a 0.59% rescission of $4.281 million from the appropriation of $310 million. Table 7. House of Representatives Appropriations, FY2005 (H.R.4755; H.R. 4818, Division G of P.L.108-447 , Omnibus Appropriations Act) (in thousands of dollars; FY2005 figures are subject to a 0.80%rescission) Sources : House Committee on Appropriations. a. The appropriations bill contains two House accounts: (1) payments to widows and heirs of deceased Members of Congress and (2)salaries and expenses. b. FY2004 funds are contained in P.L. 108-83 , FY2004 Legislative Branch Appropriations Act. Additional FY2004 provisions thatdid not contain appropriations were contained in P.L. 108-199 , the FY2004 Consolidated Appropriations Act. c. This appropriation heading was new in the FY1996 bill. The heading represents aconsolidation of: (1) the former headingMembers' clerk hire; (2) the former heading official mail costs; and (3) the former subheading official expenses ofMembers,under the heading allowances and expenses. d. This appropriation heading was new in the FY1996 bill. The heading represents aconsolidation of: (1) the former headingcommittee employees; (2) the former heading standing committees, special and select; (3) the former headingCommittee onBudget (studies); and (4) the former heading Committee on Appropriations (studies and investigations). CRS Report RL31812 . Legislative Branch Appropriations for FY2004 , by Paul Dwyer. CRS Report RL31312 . Legislative Branch Appropriations for FY2003 , by Paul Dwyer. These sites contain information on the FY2003 and FY2004 legislative branch appropriations requests and legislation, and the appropriations process. House Committee on Appropriations http://appropriations.house.gov/ Senate Committee on Appropriations http://appropriations.senate.gov/ CRS Appropriations Products Guide http://www.crs.gov/products/appropriations/apppage.shtml Congressional Budget Office http://www.cbo.gov General Accounting Office http://www.gao.gov Office of Management & Budget http://www.whitehouse.gov/omb/
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Congress agreed to a 1.2% increase in its budget authority for FY2005, appropriating $3.57 million, subject to a 0.80% rescission. Although legislative branch agencies requested an overall12.5% increase, the chairmen and some members of the House and Senate Subcommittees onLegislative Branch indicated early in budget discussions the probability of a fairly flat FY2005budget. Subsequently, during markup the House and Senate Committees on Appropriationsapproved a freeze on FY2005 legislative branch budget authority. The House bill ( H.R. 4755 ) contained a -0.1% change from FY2004, excluding Senate items; the Senate's version of H.R. 4755 , amended to contain the language of S. 2666 , contained a+0.33% change, excluding House items. Both bills fell below the 1.3% increase agreed to earlierthis year by the House and Senate for discretionary agencies and programs under jurisdictions of theHouse and Senate Subcommittees on Legislative Branch. Among elements under considerationduring discussions on the FY2005 budget were impact of a flat budget funded at the FY2004 level with additional appropriations to pay for mandatory expenses (annual salary increases and related increasedpersonnel costs), and for costs of goods and services increased due toinflation; impact of a budget funded at the FY2004 level with no additional funds formandatory expenses and inflationary increases; impact of a tight budget on funding to equip and startup the Capitol Visitors'Center (CVC) (the House bill did not contain funds, while the Senate bill contained $7.6 million;conferees authorized a transfer up to $10.6 million to the CVC; impact of funding restrictions on implementation of additional securityenhancements within and around the Capitol complex, including funding for the CapitolPolice; elimination of the Joint Economic Committee (proposed but postponed inHouse Subcommittee markup; not considered in full committee markup); authorization for the Government Accountability Office (GAO), formerlynamed the General Accounting Office, to study statutory jurisdictions of the joint economic andtaxation committees to determine possible overlap (included in the House bill, but specifically notsupported in the Senate bill); elimination of the Capitol Hill mounted police force (adopted during HouseSubcommittee markup, but supported in Senate report language); and extension of dental and vision benefits to Members and House employees(proposed for employees but postponed during House Subcommittee markup); considered and agreedto in full committee markup (applicable to both employees and Members). Key Policy Staff Division abbreviations: GOV/FIN = Government and Finance
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RS21815 -- Fairness in Asbestos Injury Resolution Act of 2004 (S. 2290, 108th Congress) Updated January 21, 2005 "Any individual [or, if he is deceased, his personal representative] who has suffered from a[n eligible] disease or condition . . . may file a claim with the Office for an award with respectto such injury" (� 113(a)). The claimant would have to "prove, by a preponderance of the evidence, that he suffersfrom an eligible disease or condition" (� 111(2)). He would not haveto prove that his injury "resulted from the negligence or other fault of any person" (� 112). The statute of limitations would be four years from the date the claimant first "received a medical diagnosis of an eligible disease or condition," or "discovered facts that would have leda reasonable person to obtain a medical diagnosis with respect to an eligible disease or condition" (� 113(b)(1)). If,however, a claimant had filed a timely claim that was pending infederal or state court on the date of enactment of the bill, such claim would have to be dismissed, and the statuteof limitations to file a claim under the bill would be four years from thedate of enactment of the bill (� 113(b)(2)). "Not later than 90 days after the filing of a claim, the Administrator shall provide to the claimant (and the claimant's representative) a proposed decision accepting or rejecting the claimin whole or in part and specifying the amount of the proposed award, if any" (� 114(b)). Any claimant not satisfiedwith the proposed decision of the Administrator would be entitled, onwritten request made within 90 days, to a hearing or to a review of the written record, by a representative of theAdministrator" (� 114(c)). After a hearing or review, or if no hearing orreview is requested within 90 days, the Administrator would issue a final decision (� 114(d)). A claimant wouldthen have 90 days to petition for judicial review of the final decision (�302(a)). Review would be by the U.S. Court of Appeals for the circuit in which the claimant resides at the time ofthe issuance of the final order (� 302(b)). The court would uphold thedecision unless it determined "that the decision is not supported by substantial evidence, is contrary to law, or is notin accordance with procedure required by law" (� 302(c)). The Administrator would "establish a comprehensive asbestos claimant assistance program" (� 104(a)), including a "legal assistance program" (� 104(d)). Attorneys could charge nomore than 2 percent of the amount of the award for filing an initial claim, and "10 percent with respect to any claimunder appellate review" (� 104(e)). The term "appellate review" isnot defined, so it is not clear whether it would include both the hearing or review by the representative of theAdministrator, and judicial review. The amount of an award under S. 2290 would be determined pursuant to the benefit table in section 131(b), which prescribes different amounts for different medicalconditions, and, in cases of lung cancer, different amounts for smokers, nonsmokers, and ex-smokers, as it definesthose terms. (5) Beginning in 2006, awards would beincreasedannually by a cost-of-living adjustment (� 131(b)(5)). Awards "shall be reduced by the amount of collateral source compensation" (� 134(a)). But the term "collateral source compensation" would refer only to "the compensation that theclaimant received, or is entitled to receive, from a defendant or an insurer of that defendant, or compensation trustas a result of a judgment or settlement for an asbestos-related injurythat is the subject of a claim filed under section 113" (� 3(6)). S. 2290 provides explicitly that collateralsource compensation would not include workers' compensation orveterans benefits (� 134(b)), but it would apparently also not include any other compensation, such as disability orhealth insurance payments, or medicare or medicaid, that was not paidby "a defendant or an insurer of that defendant, or compensation trust." A claimant, in other words, could receiveall these amounts in addition to his award from the Asbestos InjuryClaims Resolution Fund. Asbestos claimants would not receive lump-sum awards, but "should receive the amount of the award through structured payments from the Fund, made over a period of three years, andin no event more than four years after the date of final adjudication of the claim" (� 133(a)(1)). The Asbestos Resolution Claims Fund would be paid for by "defendant participants" and "insurer participants." Defendant participants would apparently be companies that have beensued for injuries caused by exposure to asbestos, and insurer participants would be the insurers of suchcompanies. (6) Subject to a "contingent call formandatory additional payments"(�204(m)), "the total payments required of all defendant participants over the life of the Fund shall not exceed" $57.5billion (�202(a)(2)). "[T]he aggregate annual payments of defendantparticipants" would be at least $2.5 billion for the first 23 years of the Fund, unless the $57.5 billion is receivedsooner (� 204(h)(1)). After the $57.5 billion has been paid, theAdministrator could, if necessary, issue a contingent call for mandatory additional payments of up to an aggregatemaximum of $10 billion. The Administrator would first, however,have to publish a notice in the Federal Register and consider comments from defendant participants on the necessityof additional payments (� 204(m)). "The total payment required of all insurer participants over the life of the Fund shall be equal to $46,025,000,000" (� 212(a)(2)(A)). Insurer participants would pay prescribed amountsfor 27 years (� 212(a)(3)(C)). The United States government would not be liable for any asbestos claims, even ifthe Fund is inadequate to pay them (� 406(b)). The Administrator would be authorized to sue any participant for failure to pay any liability imposed under the bill. In addition to the amount due, the Administrator could seek punitivedamages, the costs of the suit, "including reasonable fees incurred for collection, expert witnesses, and attorney'sfees," and "a fine equal to the total amount of the liability that has notbeen collected" (� 223(c)). "At any time after seven years following the date on which the Administrator begins processing claims, if the Administrator determines that . . . the Fund will not have sufficientresources," then the Fund would sunset (� 405(f)). If the Fund sunsets, then claimants could again file or pursuelawsuits. "[T]he applicable statute of limitations" would be deemedtolled for the time during which a claim had been pursued against the Fund, and "the applicable statute of limitationswould apply, except that claimants who filed a claim against theFund" before sunset would have two years after sunset to file a claim (� 405(f)(6)). Claims would have to be filedin federal district court, and "Federal common law" would govern,"except that where national uniformity is not required the court must utilize otherwise applicable state law . . ." (�405(g)). Defendant participants. "Defendant participants shall be liable for payments to the Fund . . . based on tiers and subtiers assigned to[them]" (� 202(a)(1)). "Tier I shall include all debtors that . . . have prior asbestos expenditures greater than$1,000,000" (� 202(b)). A "debtor" would be defined as a company,including its subsidiaries, that has filed in bankruptcy within a year preceding enactment of the bill, but a "debtor"would not include a company whose bankruptcy had been finallyadjudicated (� 201(3)). Tiers II through VI would include "persons or affiliated groups . . . according to the priorasbestos expenditures" they paid, ranging from $75 million or greaterfor Tier II, down to $1 million to less than $5 million for Tier VI (� 202(d)). An "affiliated group" would be definedas "an ultimate parent and any person [defined in � 3(12) asindividual or business] whose entire beneficial interest is directly or indirectly owned by that ultimate parent (�201(1)), and an "ultimate parent" would be defined as a person "thatowned, as of December 31, 2002, the entire beneficial interest, directly or indirectly, of at least 1 other person; and. . . whose own entire beneficial interest was not owned on December31, 2002, directly or indirectly, by any other single person (other than a natural person)" (� 201(9)). The term "prior asbestos expenditures" -- the amount of which would determine the amount that a defendant participant would have to contribute to the Fund -- would be defined as"the gross total amount paid . . . before December 31, 2002, in settlement, judgment, defense, or indemnity costsrelated to all asbestos claims against" the defendant, and would includepayments made by insurance carriers, but would not include payments made "by persons who are or were commoncarriers by railroads for asbestos claims" brought under the FederalEmployers' Liability Act (� 201(7)). (7) "A person or affiliated group that is a small business concern (as defined under section 3 of the Small Business Act (15 U.S.C. 632)), on December 31, 2002, is exempt from anypayment requirement under this subtitle" (� 204(b)). "[A] defendant participant may seek adjustment of the amountof its payment obligation based on severe financial hardship ordemonstrated inequity" (� 204(d)(1)). Insurer participants. S. 2290 would establish the Asbestos Insurers Commission, which would be composed of fivemembers, appointed for the life of the Commission, by the President, with the advice and consent of the Senate (�211). "The Commission shall determine the amount that each insurerparticipant will be required to pay into the Fund" (� 212(a)(1)(B)). "Insurers that have paid, or been assessed by a legal judgment or settlement, at least $1,000,000 in defense and indemnity costs before the date of enactment of this act in response toclaims for compensation for asbestos injuries . . . shall be insurer participants in the Fund" (� 212(a)(3)(A)). "TheCommission shall establish payment obligations of individual insurerparticipants to reflect, on an equitable basis, the relative tort system liability of the participating insurers in theabsence of this act . . . ." (� 212(a)(3)(B)(i)). (8) Judicial review. Defendant participants and insurer participants would be able to seek judicial review, in the U.S. Court of Appealsfor the District of Columbia, of a final determination by the Administrator or the Asbestos Insurers Commission(� 303(a)). The U.S. District Court for the District of Columbia wouldhave exclusive jurisdiction over any action for declaratory or injunctive relief challenging any provision of the bill(� 304). Title V of S. 2290 would add a section to the Toxic Substances Control Act that would require the Administrator of the Environmental Protection Agency to issueregulations that "prohibit persons, [sic] from manufacturing, processing, or distributing in commerce asbestoscontaining products." The Administrator would be permitted to grant anexemption if he determines that it "would not result in an unreasonable risk of injury to public health or theenvironment," and the person seeking the exemption "has made good faithefforts to develop, but has been unable to develop, a substance, or identify a mineral that does not present anunreasonable risk of injury to public health or the environment and may besubstituted for an asbestos containing product." The Administrator would also be able to grant exemptions to the Secretary of Defense and the Administrator of the National Aeronautics and Space Administration if "necessary to thecritical functions" of the Defense Department or NASA, "no reasonable alternatives" exist, and "use of asbestoscontaining products will not result in an unreasonable risk to health orthe environment." Finally, Title V would exempt the following two items from the prohibition: "(A) Asbestos diaphragms for use in the manufacture of chlor-alkali and the products and derivative [sic]therefrom. (B) Roofing cements, coatings and mastics utilizing asbestos that is totally encapsulated with asphalt,subject to a determination by the Administrator of the EnvironmentalProtection Agency . . . ."
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This report provides an overview of S. 2290, 108th Congress, theFairness in Asbestos Injury Resolution Act of 2004 (or FAIRAct of 2004), as introduced by Senator Hatch on April 7, 2004 and placed on the Senate legislative calendar. S.2290 was a revised version of S. 1125, 108thCongress, as reported by the Senate Committee on the Judiciary (S.Rept. 108-188). (1) A cloture vote failed on April 22, 2004, and S. 2290 was never votedon. S. 2290 would have created the Office of Asbestos Disease Compensation, within the Department of Labor,to award damages to asbestos claimants on a no-fault basis. Damages would have been paid by the Asbestos Injury Claims Resolution Fund, which would have been fundedby companies that have previously been sued for asbestos-relatedinjuries, and by insurers of such companies. Asbestos claims could no longer have been filed or pursued under statelaw, except for the enforcement of judgments no longer subject toany appeal or judicial review before the date of enactment of the bill. For background information on the history of asbestos litigation and on other proposals to address the situation,see CRS Report RL32286, Asbestos Litigation: Prospects for LegislativeResolution, by Edward Rappaport.
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On February 25, 2009, the House passed H.R. 1105 , Omnibus Appropriations Act, 2009, which would provide funding for 9 of the 12 regular appropriations acts, including Labor-HHS-Education appropriations. Subsequently, the Senate passed H.R. 1105 without amendment on March 10, 2009. H.R. 1105 , which became P.L. 111-8 on March 11, 2009, provides $5.31 billion for programs authorized under Title I of the Workforce Investment Act (WIA). On February 13, 2009, both the House and the Senate passed the conference version of H.R. 1 , the American Recovery and Reinvestment Act of 2009 (hereafter referred to as "the ARRA"); subsequently, H.R. 1 was signed by the President and became P.L. 111-5 on February 17, 2009. The House had previously passed its version of H.R. 1 (hereafter referred to as the "House bill") on January 28, 2009, while the Senate passed S.Amdt. 570 , an amendment in the nature of a substitute to H.R. 1 (hereafter referred to as the "Senate bill"), on February 10, 2009. Under the ARRA, funds were provided to several existing workforce development programs administered by the U.S. Department of Labor (DOL), including programs authorized by Title I of WIA. The ARRA provides $4.2 billion in funding for these WIA Title I workforce development programs. The Workforce Investment Act of 1998 ( P.L. 105-220 ) provides job training and related services to unemployed and underemployed individuals. WIA programs are administered by the DOL, primarily through its Employment and Training Administration (ETA). State and local WIA training and employment activities are provided through a system of One-Stop Career Centers. WIA programs operate on a program year (PY) of July 1 to June 30 (e.g., FY2009 appropriations fund programs from July 1, 2009, until June 30, 2010). Although WIA authorized funding through September 30, 2003, WIA programs continue to be funded through annual appropriations. Title I of WIA authorizes numerous job training programs, including: state formula grants for Youth, Adult, and Dislocated Worker Employment and Training activities; Job Corps; and national programs, including Native American programs, Migrant and Seasonal Farmworker programs, Veterans' Workforce Investment programs, the YouthBuild program, National Emergency Grants, and demonstration and pilot projects. In FY2009, programs and activities authorized under Title I of WIA were funded at $5.3 billion, including $3.0 billion for state formula grants for youth, adult, and dislocated worker training and employment activities. This report briefly summarizes each WIA Title I program, provides a recent funding history of Title I programs, and summarizes funding for WIA programs in the ARRA. Except for Job Corps and the Veterans' Workforce Investment Program, all WIA programs are administered by the Department of Labor's (DOL) Employment and Training Administration (ETA). The administration of Job Corps and Veterans' Workforce Investment is discussed below. The three formula grant programs for youth, adults, and dislocated workers provide funding for employment and training activities provided by the national system of One-Stop Career Centers. Funds are distributed to states by statutory formulas based on measures of unemployment and poverty status for youth and adult allocations and unemployment measures only for dislocated worker allocations. States in turn distribute funds to local workforce investment boards. This program provides training and related services to low-income youth ages 14-21 through formula grants allocated to states, which, in turn allocate funds to local entities. Programs funded under the youth activities chapter of WIA provide 10 "program elements" that consist of strategies to complete secondary school, alternative secondary school services, summer employment, work experience, occupational skill training, leadership development opportunities, supportive services, adult mentoring, follow-up services, and comprehensive guidance and counseling. In FY2009, funding for state grants for youth activities is $924 million. This program provides training and related services to individuals ages 18 and older through formula grants allocated to states, which in turn, allocate funds to local entities. Participation in the adult program is based on a "sequential service" strategy that consists of three levels of services. Any individual may receive "core" services (e.g., job search assistance). To receive "intensive" services (e.g. individual career planning and job training), an individual must have received core services and need intensive services to become employed or to obtain or retain employment that allows for self-sufficiency. To receive training services (e.g. occupational skills training), an individual must have received intensive and need training services to become employed or to obtain or retain employment that allows for self-sufficiency. In FY2009, funding for state grants for adult activities is $862 million. A majority of WIA dislocated worker funds are allocated by formula grants to states (which in turn allocate funds to local entities) to provide training and related services to individuals who have lost their jobs and are unlikely to return to those jobs or similar jobs in the same industry. The remainder of the appropriation is reserved by DOL for a National Reserve account, which in part provides for National Emergency Grants to states or local entities (as specified under Section 173). In FY2009, funding is $1.184 billion for state grants for dislocated worker training activities and is $283 million for the National Reserve. Job Corps is primarily a residential job training program first established in 1964 that provides educational and career services to low-income individuals ages 16 to 24, primarily through contracts administered by DOL with corporations and nonprofit organizations. Most participants in the Job Corps program work toward attaining a high school diploma or a General Educational Development (GED) certificate, with a subset also receiving career technical training. Currently, there are 122 Job Corps centers in 48 states, the District of Columbia, and Puerto Rico. In FY2009, total funding for Job Corps is $1.68 billion, including $1.54 billion for operations, $115 million for construction, and $29 million for administration. In addition to state formula grants, WIA establishes a number of competitive grant-based programs to provide employment and training services to special populations. This competitive grant program provides training and related services to low-income Indians, Alaska Natives, and Native Hawaiians through grants to Indian tribes and reservations and other Native American groups. In FY2009, funding for the Native Americans programs was $52.8 million. This competitive grant program, which is also referred to as the National Farmworker Jobs Program, provides training and related services, including technical assistance, to disadvantaged migrant and seasonal farmworkers and their dependents through discretionary grants awarded to public, private, and nonprofit organizations. The program was first authorized by the Economic Opportunity Act of 1964. This program is funded in FY2009 at $82.6 million. This program provides training and related services to veterans through competitive grants to states and nonprofit organizations. It has been administered by DOL's Veterans' Employment and Training Service (VETS) since FY2001. In FY2009, funding for the Veterans' Workforce Investment Program is $7.6 million. The purpose of pilot and demonstration programs is to develop and evaluate innovative approaches to providing employment and training services. In recent years, two programs have been specified in appropriations language and funded under the authority of Section 171. Each is described below. This competitive grant program combines two previous demonstration projects, the Prisoner Reentry Initiative (PRI) and the Responsible Reintegration of Youthful Offenders (RRYO). PRI, which was first funded in FY2005, funds faith-based and community organizations that help recently released prisoners find work when they return to their communities. RRYO, first funded in FY2000, supports projects that serve young offenders and youth at risk of becoming involved in the juvenile justice system. In FY2008, the Reintegration of Ex-Offenders program combined the PRI and RRYO into a single funding stream. In FY2009, funding for this single program is $108.5 million. This competitive grant program, also known as the Community College Initiative, funds entities to strengthen the capacity of community colleges to train workers in the skills required to succeed in high-growth, high-demand industries. CBJT grants were first funded in FY2005, with funds drawn from the Dislocated Worker National Reserve. In FY2009, funding for CBJT is $125 million. This competitive grant program funds projects that provide education and construction skills training for disadvantaged youth. Since its inception in 1992, the program was administered by the Department of Housing and Urban Development, but was moved to DOL by the YouthBuild Transfer Act ( P.L. 109-281 ), effective FY2007. Participating youth work primarily through mentorship and apprenticeship programs to rehabilitate and construct housing for homeless and low-income families. Funding in FY2009 for YouthBuild is $70 million. Table 1 shows appropriations for the FY2008 and FY2009. Amounts include all WIA programs described above, plus technical assistance; pilots, demonstrations and research; and evaluation. In FY2009, aggregate funding for WIA programs is $5.314 billion, an increase of 2.5% compared to the FY2008 funding level of $5.186 billion. The three state formula grant programs—youth, adult, and dislocated worker training—comprise $2.97 billion, or 56%, of WIA Title I funding. Job Corps, funded at $1.68 billion in FY2009, makes up just under 32% of Title I funding. In the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ), Congress rescinded $250 million from the unexpended balances for FY2005 and FY2006 that had been appropriated for state formula grants for the Youth, Adult, and Dislocated Worker programs authorized under Title I of WIA. On February 13, 2009, both the House and the Senate passed the conference version of H.R. 1 , the American Recovery and Reinvestment Act of 2009; subsequently, H.R. 1 was signed by the President and became P.L. 111-5 on February 17, 2009. Under the ARRA, funds were provided to several existing workforce development programs administered by the DOL, including programs authorized by Title I of WIA. The ARRA provides $4.2 billion in funding for these WIA Title I workforce development programs. The ARRA provides funding for a number of existing workforce development programs, including the three state formula grant programs that provide funding for youth, adults, and dislocated workers—Title I-B of the WIA. Other programs authorized by the WIA also received funding: National Reserve (WIA Title I-D, Section 173), YouthBuild (WIA Title I-D, Section 173A), and Pilot and Demonstration Programs (WIA Title I-D, Section 171). Table 2 shows details of funding for Title I programs in the ARRA.
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This report tracks recent appropriations and related legislation for Title I of the Workforce Investment Act of 1998 (WIA) (P.L. 105-220). Following a brief summary of each WIA program, the report presents information on WIA funding for FY2008 and FY2009 and the provisions for WIA Title I programs in the American Recovery and Reinvestment Act (ARRA), which was signed into law on February 17, 2009 (P.L. 111-5). WIA provides, in general, job training and related services to unemployed and underemployed individuals. WIA programs are administered by the Department of Labor (DOL), primarily through DOL's Employment and Training Administration (ETA). State and local WIA training and employment activities are provided through a system of One-Stop Career Centers. Authorization of appropriations under WIA expired in FY2003 but is annually extended through appropriations acts. Reauthorization legislation was considered in the 108th and 109th Congresses. WIA authorizes several job training programs: state formula grants for Adult, Youth, and Dislocated Worker Employment and Training Activities; Job Corps; and other national programs, including the Native American Program, the Migrant and Seasonal Farmworker Program, the Veterans' Workforce Investment Program, Responsible Reintegration for Young Offenders, the Prisoner Reentry Program, and Community-Based Job Training Grants (also known as the Community College Initiative). An additional national program, YouthBuild, formerly in the Department of Housing and Urban Development (HUD), was made a part of WIA on September 22, 2006, by the YouthBuild Transfer Act (P.L. 109-281). Appropriations for WIA are made through the Departments of Labor, Health and Human Services, and Education and Related Agencies Appropriations Act (Labor-HHS-ED). In FY2009, aggregate funding for WIA Title I programs is $5.31 billion, an increase of 2.5% compared to the FY2008 funding level of $5.19 billion. In the Consolidated Appropriations Act, 2008 (P.L. 110-161), Congress rescinded $250 million from the unexpended balances for FY2005 and FY2006 that had been appropriated for state formula grants for the Youth, Adult, and Dislocated Worker programs authorized under Title I of WIA. Funding of $4.2 billion for WIA Title I programs was provided through the ARRA and is in addition to the FY2009 appropriations. This report will be updated as major legislative developments occur.
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Over the past several Congresses, there have been ongoing efforts to develop comprehensive energy legislation. Energy bills were debated in the 107 th and 108 th Congresses, but final agreement was not reached in either Congress. The debate over omnibus energy legislation ( H.R. 6 ) continued in the 109 th Congress. On August 8, 2005, President Bush signed the Energy Policy Act of 2005 ( P.L. 109-58 ). The final version of H.R. 6 was enacted with some significant differences from the House- and Senate-passed bills. In many cases, the enacted law and the House and Senate versions treat environmental issues in a similar manner. However, there are several environmental provisions that were addressed by an earlier version of the bill but not the enacted law, or that were treated differently by different versions of the bill. The H.R. 6 environmental provisions addressed in this report are the following: limits on the use of MTBE; a renewable fuel mandate for gasoline; stricter regulation of underground storage tanks; climate change; Clean Water Act and Safe Drinking Water Act exemptions for oil and gas exploration and production (related to stormwater runoff and hydraulic fracturing); incentives and R&D funding for alternative fuels and vehicles; hydroelectric relicensing; ozone compliance deadlines; streamlining of environmental regulations; and a renewable portfolio standard. A short discussion of each of the above provisions is included in this report. It should be noted that not all environment-related provisions of H.R. 6 are discussed in this report; it focuses on the major environmental issues in the debate. Title XV of the enacted law contains several provisions addressing the gasoline additives methyl tertiary butyl ether (MTBE) and ethanol. Under the Clean Air Act Amendments of 1990, reformulated gasoline (RFG) sold in many areas of the country with poor air quality was required to contain an oxygenate (MTBE, ethanol, or other substances containing oxygen) to improve combustion and reduce emissions of ozone-forming compounds and carbon monoxide. A little more than 30% of the gasoline sold in the United States is RFG, and a majority of RFG has contained MTBE. MTBE has been implicated in numerous incidents of groundwater contamination, however, and 25 states have taken steps to ban or regulate its use. The most significant of these bans (in California, New York, and Connecticut) took effect at the end of 2003. The law repeals the Clean Air Act requirement to use oxygenates in RFG, eliminating a key incentive for refiners to use MTBE. The repeal will take effect on May 5, 2006 (270 days after enactment)—except in California, where it took effect immediately upon enactment, August 8, 2005. Both the House and Senate versions of H.R. 6 would also have banned the use of MTBE in motor vehicle fuel nationwide, with some exceptions, in 2014 or 2009 respectively. The enacted version does not contain a ban, however, effectively leaving the matter to the states to decide individually. In place of the oxygen requirement, P.L. 109-58 establishes a new requirement that an increasing amount of gasoline contain renewable fuels such as ethanol. The law requires that motor fuels contain at least 4.0 billion gallons of renewables in 2006, and requires an increase of 700 million gallons each year through 2011, before reaching a level of 7.5 billion gallons in 2012. (In 2004, about 3.4 billion gallons of ethanol were used in motor fuels.) The law also authorizes funds to clean up MTBE contamination in groundwater, as discussed further in the next section below. The enacted law also contains "anti-backsliding" provisions, to preserve the reductions in emissions of toxic substances achieved by the RFG program. The baseline emissions are set as the quantity emitted in 2001 and 2002. The most controversial of the MTBE provisions was dropped in conference: a "safe harbor" that the House bill would have provided for fuels containing MTBE. The safe harbor from liability would have meant that such fuels could not be deemed defective in design or manufacture by virtue of the fact that they contained MTBE. The effect of this provision would have been to protect anyone in the product chain, from manufacturers to retailers, from liability for cleanup of MTBE or for personal injury or property damage based on the nature of the product. (Defective product liability is a legal approach that has been used in California to require refiners to shoulder liability for MTBE cleanup.) If liability for manufacturing and design defects had been ruled out, plaintiffs would have needed to demonstrate negligence in the handling of such fuels to establish liability—a more difficult legal standard to meet. The House version of the bill had set a retroactive effective date of September 5, 2003, for the safe harbor, rather than the date of enactment. This effective date would have protected oil and chemical industry defendants from defective product claims in about 150 lawsuits that were filed in 15 states after that date. In addition to the House bill's safe harbor for MTBE producers, both the House and Senate versions of the bill contained a safe harbor for producers of renewable fuels, such as ethanol. This provision was less controversial, since there was no pending litigation that would have been affected, but it was also dropped from the enacted version. [This section prepared by James McCarthy, Specialist in Environmental Policy.] As part of the legislative effort to address drinking water contamination by MTBE, P.L. 109-58 (Title XV, Subtitle B) amends Subtitle I of the Solid Waste Disposal Act (SWDA) to allow funds appropriated from the Leaking Underground Storage Tank (LUST) Trust Fund to be used to enforce UST leak prevention regulations, and authorizes appropriations from the fund specifically for remediating gasoline tank leaks involving MTBE and other oxygenated fuels (including ethanol). The subtitle adds several leak prevention provisions and new requirements for states, EPA, and tank owners, and makes other changes to the underground storage tank (UST) regulatory program. To address a nationwide groundwater contamination problem caused by leaking underground storage tanks, Congress created the UST leak prevention, detection, and cleanup program in 1984 (Solid Waste Disposal Act, Subtitle I). In 1986, Congress established the LUST Trust Fund to help EPA and states pay the costs of cleaning up leaking petroleum USTs where owners fail to do so, and to oversee LUST cleanup activities. While much progress has been made in the program, several issues remain. A major issue has concerned the discovery of MTBE at thousands of LUST sites across the country. This gasoline additive, which has been used to reduce air pollution from auto emissions, is very water soluble. Once released, MTBE tends to spread further than conventional gasoline; consequently, these leaks are more likely to reach water supplies and are more costly to remediate. Another issue is that state resources have not met the demands of overseeing the UST regulatory program, which is aimed at preventing leaks. States have sought larger appropriations from the trust fund to support the LUST program, and some have sought flexibility to use LUST funds to enforce the UST leak prevention regulations. Subtitle B, which is based on the House bill, adds several leak prevention provisions to the UST program. It requires EPA or states to conduct compliance inspections of USTs every three years; prohibits fuel delivery to ineligible tanks, directs states to develop training requirements for persons responsible for operating and maintaining tanks and responding to spills; clarifies and expands UST compliance requirements for federal facilities; and requires EPA, with Indian tribes, to develop and implement a strategy to address releases on tribal lands. The subtitle further requires that, when determining the portion of cleanup costs to recover from a tank owner or operator, EPA or a state must consider the owner or operator's ability to pay for cleanup and still maintain basic business operations. It also allows EPA and states to use LUST funds to conduct inspections and enforce UST release prevention and detection requirements. To further protect groundwater, the enacted law requires states to do one of the following: (1) require that new tanks are secondarily contained and monitored for leaks if the tank is within 1,000 feet of a community water system or potable well; or (2) require that UST manufacturers and installers maintain evidence of financial responsibility to pay for corrective actions, and require that persons installing UST systems are certified or licensed, or that their UST system installation is certified by a professional engineer or inspected and approved by the state, or is compliant with a code of practice or other method that is no less protective of human health and the environment. This subtitle authorizes appropriations from the LUST Trust Fund, for each of FY2005 through FY2009, of $200 million for cleaning up leaks from petroleum tanks generally, and another $200 million for responding to tank leaks involving MTBE or other oxygenated fuel additives (e.g., ethanol). It also authorizes to be appropriated from the trust fund, for each of FY2005 through FY2009, $155 million for EPA and states to administer the LUST cleanup program and to enforce the UST leak prevention requirements. From general revenues, it authorizes $50 million to be appropriated for each of FY2005 through FY2009 for EPA and states to administer the remainder of Subtitle I. [This section prepared by [author name scrubbed], Specialist in Environmental Policy.] Title XVI of P.L. 109-58 establishes a voluntary national program designed to accelerate demonstration and deployment of less-carbon-intensive technology to encourage voluntary reductions in greenhouse gases. The sections of this title attempt to support actions focused on reducing U.S. carbon intensity (the ratio of greenhouse gas emissions per unit of gross domestic product). The enacted law does not establish a requirement to reduce emissions. This title also establishes a program to encourage exports of carbon intensity-reducing technologies to developing countries. Title XVI contains provisions similar to those added to the bill on the Senate floor by amendments that incorporated language found in S. 883 and S. 887 . The House bill did not expressly address climate change issues. Included in the Senate bill, but dropped in conference was a Sense of the Senate resolution that human activities are a substantial cause of greenhouse gas accumulation in the atmosphere, causing average temperatures to rise. Further, the resolution stated 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—(1) will not significantly harm the United States economy; and (2) will encourage comparable action by other nations that are major trading partners and key contributors to global emissions." This is the first Sense of the Senate resolution on climate change since S.Res. 98 was passed in 1997, which voiced concern over the economic effects of emissions limits and the sense that developing countries must participate in meaningful action to control emissions. The Senate also debated whether to adopt S.Amdt. 826 , which contained language similar to S. 1151 , the Climate Stewardship and Innovation Act of 2005. This amendment would have established a mandatory cap-and-trade system to limit greenhouse gas emissions from covered entities to year 2000 levels by 2010. This amendment was rejected on a 38-60 vote. Greenhouse gas emissions and climate change have been an issue of congressional interest for over two decades. In 1993, the United States ratified the United Nations' Framework Convention on Climate Change (UNFCCC), which called on industrialized countries to take the lead in making voluntary efforts to reduce greenhouse gases. Subsequently, a variety of voluntary and regulatory actions have been proposed or undertaken in the United States, including monitoring of utility carbon dioxide emissions, improved appliance efficiency, and incentives for developing renewable energy sources. Many of these policies were enacted as part of the Energy Policy Act of 1992. However, debate over the causes and effects of climate change, as well as the potential costs of any greenhouse gas reduction strategy, curtailed legislative action concerning the issue. In 2001, President George W. Bush rejected the Kyoto Protocol to the UNFCCC, which called for legally binding commitments by developed countries to reduce their greenhouse gas emissions. Instead, the Bush Administration has focused on voluntary actions to reduce the greenhouse gas intensity of the U.S. economy. [This section prepared by Brent Yacobucci, Specialist in Energy Policy.] Section 323 of P.L. 109-58 gives a permanent exemption from Clean Water Act (CWA) stormwater runoff rules for the construction of exploration and production facilities by oil and gas companies and the roads that service those sites. Currently under the CWA, the operation of facilities involved in oil and gas exploration, production, processing, transmission, or treatment generally is exempt from stormwater runoff regulations (so long as the runoff is uncontaminated by pollutants), but the construction of these facilities is not. Section 323 modifies the CWA to specifically include construction activities in the types of oil and gas facilities that are covered by the law's statutory exemption from stormwater rules. The issue arises from stormwater permitting rules for small construction sites and municipal separate storm sewer systems that were issued by EPA in 1999 and became effective March 10, 2003. Those rules, known as Phase II of the CWA stormwater program, require most small construction sites disturbing one to five acres and municipal separate storm sewer systems serving populations of up to 100,000 people to have a CWA discharge permit. The permits require pollution-prevention plans describing practices for curbing sediment and other pollutants from being washed by stormwater runoff into local water bodies. Phase I of the stormwater program required construction sites larger than five acres (including oil and gas facilities) and larger municipal separate storm sewer systems to obtain discharge permits beginning in 1991. As the March 2003 Phase II compliance deadline approached, EPA authorized a two-year extension of the rules for small oil and gas construction sites to allow the agency to assess the economic impact on that industry. EPA had initially assumed that most oil and gas facilities would be smaller than one acre in size and thus excluded from the Phase II rules, but newer data developed for the Department of Energy indicate that up to 30,000 new sites per year would be of sizes subject to the rules. In a February 2005 report, GAO reported that the actual number of oil and gas construction activities that could be affected is uncertain, and the financial and environmental implications (including additional environmental protections) are difficult to quantify. In March 2005, EPA extended the exemption until June 2006 and said it would propose a specific rule for small oil and gas construction sites by September 2005, and issue a final rule in June 2006. Section 323 of the law makes EPA's regulatory delay permanent and makes it applicable to construction activities at all oil and gas development and production sites, regardless of size, including those covered by Phase I rules. Industry had argued that the stormwater rule creates time-consuming permitting requirements, even though the short construction period for drilling sites carries little potential for stormwater runoff pollution. Supporters said the amendment was intended to clarify existing CWA language. Opponents argued that there is no evidence that construction at oil and gas sites causes less pollution than other construction activities, which are regulated under EPA's stormwater program. The legislative provision originated in House-passed H.R. 6 ; the Senate bill did not include similar language. As a result of the provision in the enacted law, which is intended to exempt from the CWA all uncontaminated stormwater discharges that occur while setting up drilling operations, EPA is expected to modify the rule that it said would be proposed in September 2005, developing a new rule for discharges of contaminated stormwater from oil and gas operations. [This section prepared by [author name scrubbed], Specialist in Resources and Environmental Policy.] Section 322 of P.L. 109-58 amends the Safe Drinking Water Act (SDWA), Section 1421(d), to specify that the definition of "underground injection" excludes the injection of fluids or propping agents (other than diesel fuels) used in hydraulic fracturing operations related to oil, gas, or geothermal production activities. This language prevents EPA from regulating the underground injection of fluids for hydraulic fracturing purposes, thus removing EPA's existing authority to do so under SDWA, as needed to protect sources of drinking water. It also would effectively overturn two court rulings. The provision is based on the House bill; conferees added the references to diesel fuel and geothermal production activities. The Senate bill contained no similar provision. The SDWA requires controls on the underground injection of fluids to protect underground sources of drinking water. EPA had not considered hydraulic fracturing to fall within the regulatory definition of underground injection until 1997, when the U.S. Court of Appeals for the 11 th Circuit ruled that the hydraulic fracturing of coal beds for methane production constitutes underground injection and must be regulated. (This decision applied only to Alabama (LEAF v. EPA, 118 F. 3d 1467).) While the practice of hydraulic fracturing has been used in the recovery of conventional oil and gas since the 1950s, this practice has been applied for recovery of coalbed methane primarily since the mid-1990s. Hydraulic fracturing involves the high-pressure injection of fluids into coal beds to enhance the recovery of oil and natural gas from underground formations. Water-based fluids are used commonly as fracturing fluids, but the industry reports that diesel fuel often is used; also, methanol and various toxic chemicals are used in fracturing fluids. The volume of fracturing and stimulation fluids injected into each well for coalbed fracturing is estimated to range from 55,000 gallons to 350,000 gallons. A growing concern, reported by EPA, is that, "in many coalbed methane-producing regions, the target coalbeds occur within USDWs [underground sources of drinking water], and the fracturing process injects stimulation fluids directly into the USDWs." EPA has determined that the use of diesel fuel as a fracturing fluid introduces benzene and other toxic and carcinogenic substances directly into underground sources of drinking water. Also, because the process fractures rock, fracturing can create new pathways for natural gas (primarily methane) and other contaminants to enter drinking water aquifers. As the number of coalbed methane (CBM) wells and the use of hydraulic fracturing have increased rapidly in recent years, so has concern over the potential impact on water resources, particularly in the water-scarce West, and very few studies have been done to evaluate these impacts. In January 2003, EPA's National Drinking Water Advisory Council (established by Congress under SDWA) submitted to the EPA Administrator a report on hydraulic fracturing, underground injection control, and coalbed methane production and its impacts on water quality and water resources. The council noted several concerns, including the use of diesel fuel and toxic additives in the hydraulic fracturing process, and the potential impact of coalbed methane development on local underground water resources and on the quality of surface waters. The Advisory Council recommended that EPA work through regulatory or voluntary means to eliminate the use of diesel fuel and related additives in fracturing fluids that are injected into formations containing sources of drinking water. In 2003, EPA entered into an agreement with three companies that provide most hydraulic fracturing services (BJ Services, Halliburton Energy Services, and Schlumberger Technology Corporation). Under this voluntary agreement, the firms conditionally agree to remove diesel fuel from CBM fluids injected directly into drinking water sources, if cost-effective alternatives are available. EPA has not sought to limit other toxic components in fracturing fluids, and other companies did not agree to cease injecting diesel fuel into drinking water sources. The National Drinking Water Advisory Council further recommended that EPA continue to study the extent and nature of public health and environmental problems that could occur as a result of hydraulic fracturing for coalbed methane production, and defend its authority to implement the UIC program in a manner that protects groundwater resources from contamination. However, oil and gas industry representatives argue that regulation is unneeded and would slow natural gas development. In response to the 1997 court decision and citizen complaints about water contamination attributed to hydraulic fracturing, EPA began to study the impacts of hydraulic fracturing practices used in CBM production on drinking water sources, and to determine whether further regulation was needed. In 2002, EPA issued a draft report that identified alleged water quality and quantity problems attributed to hydraulic fracturing in Alabama, New Mexico, Colorado, Wyoming, Montana, Virginia, and West Virginia. Based on the preliminary results of the study, EPA tentatively concluded that the potential threats to public health posed by hydraulic fracturing of coalbed methane wells appeared to be small. In 2004, EPA issued a final report, based primarily on a review of the available literature, and concluded that the injection of hydraulic fracturing fluids into CBM wells poses little threat to underground sources of drinking water and requires no further study; however, EPA noted that very little documented research has been done on the environmental impacts of injecting fracturing fluids. EPA also noted that estimating the concentration of diesel fuel components and other fracturing fluids beyond the point of injection was beyond the scope of its study. The report has been criticized by some, including EPA professional staff, and the EPA Inspector General has been asked to review a whistle-blower's assertions that EPA's findings are scientifically unfounded. (For more information, see CRS Report RL32262, Selected Legal and Policy Issues Related to Coalbed Methane Development .) [This section prepared by [author name scrubbed], Specialist in Environmental Policy.] P.L. 109-58 contains provisions on hydrogen and fuel cell research and development, as one strategy to promote expansion of alternative fuels and advanced technology vehicles and reduce dependence on foreign oil. Title VIII authorizes $3.3 billion for hydrogen fuel and fuel cell R&D over the course of FY2006-FY2010. The House version would have authorized $4.0 billion over the same time frame; the Senate bill would have authorized $3.2 billion. Further, the enacted law authorizes funding for the development of a nuclear plant to produce electricity and hydrogen. Title VI, Subsection C authorizes $1.25 billion over ten years for this project. Since FY2003, funding for hydrogen and fuel cell R&D through the Department of Energy has been steadily increasing, as part of the FreedomCAR and Hydrogen Fuel initiatives. For FY2004 through FY2008, the Bush Administration is seeking a total of $1.8 billion for the initiatives. If appropriated, the above authorizations would represent a significant increase in hydrogen research funding. P.L. 109-58 also authorizes research on vehicle energy efficiency; establishes a program to promote the domestic production and sale of hybrid and advanced diesel vehicles; and establishes tax credits for the purchase of alternative fuel, fuel cell, hybrid, and advanced lean-burn engine vehicles. The enacted law also provides grant funding for states, localities, school districts, and private cargo carriers to replace existing diesel engines and vehicles with alternative fuel, fuel cell, and advanced diesel technologies, or to retrofit emissions systems on existing engines. [This section prepared by Brent Yacobucci, Specialist in Energy Policy.] Section 241 of P.L. 109-58 will give applicants for hydroelectric licenses increased flexibility in complying with conditions imposed by federal agencies. Currently, the Federal Power Act (16 U.S.C. Section 791 et al.) gives certain federal agencies (conditioning agencies) the authority to attach conditions to Federal Energy Regulatory Commission (FERC) licenses. For example, federal agencies may require applicants to build passageways through which fish can travel around the dam, schedule periodic water releases for recreation, release minimum flows of water for fish migration, control water release rates to reduce erosion, or limit reservoir fluctuations to protect the reservoir's shoreline habitat. Once an agency issues such conditions, FERC must include them in its license. While these conditions often generate environmental or recreational benefits, they may also require construction expenditures and may increase power generation costs by reducing operational flexibility. The enacted law allows entities to propose alternative license conditions and will require federal agencies to consider the alternatives proposed by license applicants and other parties to the license proceeding. The law also requires an agency to accept a proposed alternative, if it finds that the alternative (1) provides for the adequate protection and utilization of the federal reservation, or is no less protective of the fish resource than the fishway initially prescribed, and (2) costs significantly less to implement than the original condition, and/or will improve operation of the project for electricity production. Agencies that are issuing conditions will also be required to provide FERC with a written statement demonstrating that the relevant Secretary gave "equal consideration" to the effects of the conditions on factors such as energy supply, flood control, navigation, water supply, and air quality. It remains to be seen how this equal consideration clause will affect agencies' resources and whether it will alter their responsibilities concerning the resources under their jurisdiction. [This section prepared by [author name scrubbed], Analyst in Energy and Environmental Policy.] P.L. 109-58 , amends the conditions pursuant to which the State of Alaska may regulate its small hydroelectric dams. Under current law (16 U.S.C. Section 823c), Alaska's regulatory program must meet certain conditions for FERC to grant it jurisdiction. For example, the program must require "conditions for the protection, mitigation, and enhancement of fish and wildlife based on recommendation received pursuant to the Fish and Wildlife Coordination Act" (16 U.S.C. Section 823c (a)(3)(c)). Under P.L. 109-58 , the State of Alaska may decide against issuing such conditions if it finds that the recommendation will not allow it to (1) protect the public interest, multiple purposes, and the environment to the same extent provided through FERC licensing and regulation, or (2) give equal consideration to the purposes of energy conservation, fish and wildlife, recreation, the interests of Alaska Natives, and other beneficial public uses (i.e., irrigation, flood control, water supply and, navigation). Pursuant to a November 2000 amendment to the Federal Power Act (16 U.S.C. 823c), the State of Alaska is finalizing regulations to the state's small hydroelectric dams. [This section prepared by [author name scrubbed], Analyst in Energy and Environmental Policy.] Section 1443 of the House version of H.R. 6 would have amended the Clean Air Act to extend deadlines for areas that have not attained the ozone air quality standard if upwind areas "significantly contribute" to their nonattainment. Under the 1990 Clean Air Act Amendments, ozone nonattainment areas with higher concentrations of the pollutant were given more time to reach attainment, but in return for the additional time, they were required to implement more stringent controls on emissions. Failure to reach attainment by the specified deadline was to result in reclassification of an area to a higher category and the imposition of more stringent controls. Section 1443 would have amended this system to extend deadlines (without requiring more stringent controls) in areas affected by upwind sources of pollution. There was no comparable provision in the Senate bill, and the conferees did not include the House provision in the enacted law. The enacted version does establish a demonstration project, however, to address the issue of upwind pollution. In Section 996, the enacted law requires EPA to work with State and local officials in a multi-county Western Michigan project area to determine the extent of ozone and ozone precursor transport, to assess alternatives to achieve compliance with the 8-hour ozone standard apart from local controls, and to determine the timeframe in which such compliance could take place. (Western Michigan is believed to be affected by pollution originating in the Chicago and Milwaukee metropolitan areas.) EPA is prohibited from imposing requirements or sanctions that might otherwise apply during the demonstration project. [This section prepared by James McCarthy, Specialist in Environmental Policy.] P.L. 109-58 includes a variety of provisions, applicable to several categories of energy projects, that are intended to expedite the process for completing or complying with environmental requirements. Commonly referred to as "streamlining," these provisions are most often specified for complex federal actions such as oil and gas development projects that may trigger compliance with literally dozens of federal, state, tribal, and local environmental statutory and regulatory requirements. Such projects, in turn, may require the participation or input of possibly dozens of agencies. Proponents of streamlining provisions indicate that they are intended to better coordinate the interagency consultations necessary to complete applicable environmental requirements. The environmental streamlining provisions in the enacted law primarily specify procedures intended to expedite the process for obtaining federal authorizations (e.g., permits, special use authorizations, or approvals) or to comply with the National Environmental Policy Act of 1969 (NEPA, P.L. 91-190). Federal authorizations for a given category of energy projects may be required under any of a number of local, state, tribal, or federal requirements (e.g., permitting requirements under the Clean Air Act or the Clean Water Act). Some element of NEPA compliance is required of all federal actions potentially impacting the environment. NEPA requires federal agencies to consider the environmental impacts of their proposed actions before final decisions are made. For proposed federal actions significantly affecting the quality of the environment, NEPA requires federal agencies to provide a detailed statement of environmental impacts (referred to as an environmental impact statement (EIS)). Projects for which it is not initially clear whether impacts will be significant require the preparation of an Environmental Assessment (EA) to determine the level of significance of the action's impacts. Projects that do not individually or cumulatively have a significant social, economic, or environmental effect, and have been determined from past experience to have no significant impact, are categorically excluded from the requirement to prepare and EIS or an EA. Streamlining provisions regarding NEPA often propose legislative or administrative procedures intended to expedite the process for completing the necessary NEPA documentation. Methods of expediting federal authorizations or NEPA compliance include designating a specific agency (e.g., the Department of Energy or the Federal Energy Regulatory Commission) as the "lead agency" to coordinate applicable federal authorizations; specifying procedures to coordinate interagency consultations (often accomplished through the creation of a "memorandum of understanding" between agencies specifying project milestones and deadlines); and/or designating specific types of projects that will be considered categorical exclusions. Some Members of Congress have argued that streamlining provisions in P.L. 109-58 are needed to reduce delays and more efficiently facilitate delivery of needed projects. Others members have argued that they are unnecessary or may undercut needed environmental protection. Categories of projects or actions for which environmental streamlining provisions are provided include Coordination of geothermal leasing and permitting on federal lands (Section 225); Procedures for complying with selected sections of the Natural Gas Act (14 U.S.C. 717n) regarding the siting, construction, or operation of liquefied natural gas import facilities and interstate natural gas pipelines (Section 313); Onshore oil and gas leasing and permitting (Section 361-366); The designation of right-of-way corridors for oil, gas, and hydrogen pipelines and electricity transmission and distribution facilities on federal land (Section 368); Commercial leasing of federal land for commercial development of oil shale and tar sands (Section 369); Granting rights-of-way on public land for natural gas pipelines and "utility facilities" (e.g., facilities or systems for the transportation or storage of oil, natural gas, synthetic liquid fuel, or gaseous fuel; or the generation, transmission, and distribution of electric energy) (Section 372); Environmental permitting for new petroleum refineries (Section 391-392); and Siting interstate electric transmission facilities (Section 1221). Also, P.L. 109-58 (Section 390) designates specific actions undertaken by the Secretary of the Interior in managing public lands or the Secretary of Agriculture in managing National Forest System Lands that will be presumed to be categorical exclusions under NEPA. Those activities, if conducted pursuant to the Mineral Leasing Act for the exploration or development of oil or gas, are: Individual surface disturbances of less than 5 acres (as long as the total surface disturbance on the lease is not greater than 150 acres and site-specific analysis in a document prepared pursuant to NEPA has been previously completed); Drilling an oil or gas well at a location or well pad site at which drilling has occurred previously within five years prior to the date of spudding the well; Drilling an oil or gas well within a developed field for which an approved land use plan or any environmental document prepared pursuant to NEPA analyzed such drilling as a reasonably foreseeable activity (if that plan or document was approved within the previous five years); Placement of a pipeline in an approved right-of-way corridor (as long as the corridor was approved within the previous five years); and Maintenance of a minor activity, other than any construction or major renovation or a building or facility. [This section prepared by [author name scrubbed], Analyst in Environmental Policy.] One major element of the energy debate in the 109 th Congress has been whether to approve energy development in the Arctic National Wildlife Refuge (ANWR) in northeastern Alaska, and if so, under what conditions, or whether to continue to prohibit development to protect the area's biological, subsistence, and recreational resources. Current law forbids energy leasing in the Refuge. As passed by the House, H.R. 6 would have opened ANWR (including Native lands) to energy leasing, specified environmental lease stipulations, modified existing law to allocate 50% of revenues to the federal government (rather than 10%, as specified in the Alaska Statehood Act), limited judicial review and requirements under the National Environmental Policy Act, and limited certain features of federal leasing development to no more than 2,000 acres. The Senate version of H.R. 6 had no ANWR development provisions. In the end, the enacted law dropped the ANWR development provisions, although the matter is likely to recur in the debate over reconciliation for the FY2006 budget. [This section prepared by [author name scrubbed], Specialist in Natural Resources.] The Senate version of H.R. 6 contained a renewable energy portfolio standard (RPS). There was no RPS in the House version and the Senate provision was dropped in conference. A description of the Senate provision follows. For retail electricity suppliers, a renewable portfolio standard (RPS) sets a minimum requirement (often a percentage) for electricity production from renewable energy resources or for the purchase of tradable credits that represent an equivalent amount of production. In the markup of H.R. 1640 (which was incorporated into H.R. 6 ) by the House Committee on Energy and Commerce, an amendment to add an RPS (1% in 2008, increasing by 1% annually and reaching 20% in 2027) was rejected. Proponents noted a growing number of states with an RPS and noted that EIA reports show an RPS could reduce electricity bills. Opponents raised concerns about the exclusion of existing hydropower facilities and renewable energy resource limits for the southeastern United States. The Senate-passed version of H.R. 6 had an RPS in Section 291. It set an initial target of 2.5% in 2008, rising in steps to 10% by 2020, and remaining at 10% through 2030. Multiplying 10% times the Energy Information Administration's (EIA's) projected total generation for 2020 yields an estimate of renewable energy peak generation slightly greater than 500 billion kilowatt-hours (kWh). Further, EIA projects that the renewable energy stimulated by a 10% RPS would mostly displace natural gas, but also some coal, with a cumulative (2005 through 2025) value of saved energy projected at about $5 billion. Production from hydropower and municipal solid waste facilities would have been excluded from the base amount used to calculate the annual target. "Existing renewable energy" was defined as electricity produced from facilities already placed in service that use solar, wind geothermal, ocean, or biomass (open and closed loop) resources. Only "new renewable energy" would have been eligible to satisfy the target. It would have been defined as electricity produced from facilities placed in service after the RPS is enacted, that use solar, wind geothermal, ocean, or biomass (open and closed loop), landfill gas, or incremental hydropower resources. Further, for existing facilities, any "incremental" production above the previous three-year average would also have qualified. Double value would have been given to production from facilities on Indian land and triple value would be given to production from distributed generators that are smaller than one megawatt in capacity. The retail obligation to meet the annual target could have been met through direct generation, purchases of renewable energy, and/or purchases of tradable credits from the Department of Energy. Tradable credits would have had a cost cap of 1.5 cents/kWh, adjusted annually for inflation, and credits for surplus generation exceeding the annual target could be carried forward for up to three years. A noncompliance penalty would have been imposed, with a value that was the greater of 1.5 cents/kWh or two times the national average market value of the tradable credits. A federal RPS would set a minimum requirement. The states would have been free to set a higher requirement. DOE collections from credit sales and penalties would have gone into an account that provided state grants to promote renewables, especially in states with a small share of renewable energy capacity. Exempt retail suppliers included those in Hawaii and all those that produced less than four million megawatt-hours (million watt-hours) of electricity per year. [This section prepared by [author name scrubbed], Specialist in Energy Policy.]
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Debate over a national energy policy has been ongoing since the 107th Congress. Both the 107th and 108th Congresses were unable to complete action on an omnibus energy bill. The 109th Congress debated and passed H.R. 6, the Energy Policy Act of 2005, which was signed by President Bush August 8, 2005 (P.L. 109-58). The enacted law contains various provisions involving environmental protection and regulation. This report briefly summarizes and discusses the background and implications of key environmental provisions. Title XV of P.L. 109-58 eliminates the reformulated gasoline (RFG) oxygen standard, and in its place establishes a renewable fuel mandate for gasoline. Because of related concerns over MTBE (a gasoline additive that competes with ethanol) contamination, the enacted law modifies existing authority for cleanup of leaking underground storage tanks, and authorizes funding for MTBE cleanup. Title XVI establishes a program to promote the development and deployment of low-carbon technologies both domestically and in developing countries. Section 322 amends the Safe Drinking Water Act to exempt certain hydraulic fracturing techniques from EPA regulation. Hydraulic fracturing involves the underground injection of fluids into coal beds to enhance recovery of oil gas. Section 323 gives permanent exemption from Clean Water Act stormwater runoff rules for the construction of exploration and production facilities by oil and gas companies and roads that service those sites. Various sections in Titles VII, VIII, and XIII authorize R&D funding for hydrogen, fuel cells, and alternative fuel vehicles or establish tax incentives for their use. Section 241 gives applicants for hydroelectric licenses increased flexibility in complying with conditions imposed by federal agencies. These conditions can include water release controls to limit erosion, and protection of habitat. Section 966 requires EPA to work with state and local officials in western Michigan to determine ozone pollution and transport, and assess alternatives to achieve compliance with air quality standards. A variety of provisions are intended to expedite the process for completing or complying with environmental requirements. Not included in the enacted law are provisions on oil exploration in the Arctic National Wildlife Refuge (ANWR) and a renewable portfolio standard. This report will not be updated.
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Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. This process anticipates the enactment of 12 regular appropriations bills each fiscal year. If regular appropriations are not enacted prior to the start of the fiscal year (October 1), continuing appropriations may be used to provide temporary funding until the annual appropriations process can be concluded. Continuing appropriations acts are often referred to as continuing resolutions (CRs) because they are typically enacted in the form of a joint resolution. CRs may be enacted for a period of days, weeks, or months. If any of the 12 regular appropriations bills are not enacted by the time that the first CR for a fiscal year expires, further extensions of that CR might be enacted until all regular appropriations bills have been completed or the fiscal year ends. None of the FY2017 regular appropriations bills was enacted prior to the enactment of H.R. 5325 . As enacted, the measure provides continuing appropriations for projects and activities covered by 11 of the 12 regular appropriations bills from the beginning of the fiscal year—October 1, 2016—through December 9, 2016 (Division C). It also provides appropriations in the Military Construction and Veterans Affairs Appropriations Act for all of FY2017 (Division A), as well as emergency funds to combat the Zika virus and provide relief for flood victims in Louisiana and other affected states (Division B). H.R. 5325 was passed by the Senate and House on September 28, 2016, and signed into law by the President on September 29 ( P.L. 114-223 ). The purpose of this report is to provide an analysis of the continuing appropriations provisions in H.R. 5325 . The first two sections summarize the overall funding provided ("Coverage, Duration, and Rate") and budget enforcement issues associated with the statutory discretionary spending limits ("The CR and the Statutory Discretionary Spending Limits"). The third section of this report provides short summaries of the provisions in this CR that are agency-, account-, or program-specific. These summaries are organized by appropriations act title. In some instances, additional information about those appropriations and how they operate under a CR is provided. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by James V. Saturno and Jessica Tollestrup. This section of the report discusses the three components of a CR that generally establish the purpose, duration, and amount of funds provided by the act. A CR's "coverage" relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular (and, occasionally, supplemental) appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as "covering" that act. The "duration" of a CR refers to the period of time for which budget authority is provided for covered activities. CRs usually fund projects and activities using a "rate for operations" or "funding rate" to provide budget authority at a restricted level, but they do not prescribe a specified dollar amount. The funding rate for a project or activity is based on the total amount of budget authority that would be available annually for that project or activity under the referenced appropriations acts and is prorated based on the fraction of a year for which the CR is in effect. Division C covers 11 of the 12 regular annual appropriations bills by providing continuing budget authority for projects and activities funded in FY2016 by that fiscal year's regular appropriations acts—Divisions A-L (except for Division J) of the FY2016 Consolidated Appropriations Act, P.L. 114-113 —with some exceptions. Statutory limits on discretionary spending are in effect for FY2017, as established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and modified most recently by the Bipartisan Budget Act of 2015 ( P.L. 114-74 ). The CR includes both budget authority that is subject to those limits and budget authority that is effectively exempt from those limits. Budget authority that is effectively exempt includes that designated or otherwise provided as "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT), "continuing disability reviews and redeterminations," "health care fraud and abuse control," "disaster relief," and "emergency requirements." Budget authority is provided by the CR under the same terms and conditions as the referenced FY2016 appropriations acts. Effectively, this requirement extends many of the provisions in the FY2016 acts that stipulated or limited agency authorities during FY2016. In addition, in general none of the funds are to be used to initiate or resume an activity for which budget authority was not available in FY2016. A goal of these and similar provisions in other CRs, as well as many of the other provisions discussed in the sections below, is to protect Congress's constitutional authority to provide annual funding in the manner it chooses in whatever final appropriations measures are enacted. Section 106 provides that funding in the CR is effective October 1, 2016, through December 9, 2016—about the first 10 weeks of the fiscal year. The CR provides that, in general, budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to or on December 9. For projects and activities funded in the CR that a subsequent appropriations act does not fund, budget authority would immediately cease upon such enactment, even if prior to December 9. The CR provides budget authority for projects and activities funded in the 11 FY2016 appropriations acts covered by the CR at a rate based on the amount of funding provided in those acts for the duration of the CR (through December 9). The rate is based on the actual amounts made available in FY2016 and so would be the net of all funding provisions, including those that had the effect of reducing FY2016 budget authority. For entitlement and other mandatory spending that is funded through appropriations acts, Section 111 provides funding to maintain program levels under current law. Most projects and activities funded in the CR are subject to an across-the-board decrease that would have the effect of reducing the rate about one-half of 1% (0.496%) below the level of FY2016 funding. Under Section 114, however, this decrease does not apply to appropriations designated or otherwise provided as OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, disaster relief, and emergency requirements. This decrease does apply to advance appropriations enacted in previous fiscal years that first became available in FY2017. Appropriations for FY2017 are subject to statutory discretionary spending limits on categories of spending designated as "defense" and "nondefense" spending pursuant to the BCA. The defense category includes all discretionary spending under budget function 050 (defense). The nondefense category includes discretionary spending in the other budget functions. If discretionary spending is enacted in excess of a statutory limit in either category, the BCA requires the level of spending to be brought into conformance through "sequestration," which involves primarily across-the-board cuts to nonexempt spending in the category of the limit that was breached (i.e., defense or nondefense). The Office of Management and Budget (OMB) provides a preview report at the beginning of the calendar year calculating any adjustments to the existing statutory spending limits. For FY2017 the adjusted discretionary spending caps are $551.068 billion for defense and $518.531 billion for nondefense. Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2017 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2016 congressional session adjourns sine die . For any FY2017 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment. The Congressional Budget Office (CBO) estimates the budgetary effects of interim CRs on an "annualized" basis, meaning that those effects are measured as if the CR were providing budget authority for an entire fiscal year. According to CBO, when the funding provided in Division A (the Military Construction and Veterans Affairs Appropriations Act) is added to the annualized amount for the 11 appropriations acts covered by the continuing appropriations provisions in Division C, the total amount of annualized discretionary budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $1,066.582 billion—less than combined amount of the statutory discretionary spending limits for FY2017. A breach in one category, however, may not be offset by savings in the other. CBO estimates defense spending in H.R. 5325 to total $546.484 billion, which is about $4.6 billion below the defense limit, and nondefense spending is estimated to total $520.098 billion, which is about $1.6 billion above the nondefense limit. Because the earliest that the statutory discretionary spending limits could be enforced by a sequester is 15 days after the end of the congressional session, and the CR expires on December 9, 2016, these amounts can be adjusted prior to that time by further appropriations legislation for FY2017. When spending effectively not subject to those limits—because it was designated or otherwise provided as OCO/GWOT, continuing disability reviews and redeterminations, health care fraud and abuse control, disaster relief, and emergency requirements—is included, CBO estimates total annualized budget authority in the CR of $1,149.084 billion. In addition to the general provisions that establish the coverage, duration, and rate, CRs typically include provisions that are specific to certain agencies, accounts, or programs. These provisions are generally of two types. First, certain provisions designate exceptions to the formula and purpose for which any referenced funding is extended. These are often referred to as "anomalies." The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only short-term funding is provided. Second, certain provisions may have the effect of creating new law or changing existing law. Most typically, these provisions are used to renew expiring provisions of law or extend the scope of certain existing statutory requirements to the funds provided in the CR. Substantive provisions that establish major new policies have also been included on occasion. Unless otherwise indicated, such provisions are temporary in nature and expire when the CR sunsets. These anomalies and provisions that change law may be included at the request of the President. Congress could accept, reject, or modify these proposals in the course of drafting and considering appropriations measures that provide continuing appropriations. In addition, Congress may identify or initiate any other anomalies and provisions changing law that they want to be included in the CR. This section of the report summarizes provisions in this CR that are agency-, account-, or program-specific, alphabetically organized by appropriations act title for 10 of the 11 regular appropriations acts covered in Section 101 (there are no anomalies concerning items funded in the State Foreign Operations, and Related Programs Appropriations Act), as well as a provision directing the use of FY2017 advance appropriations provided in the medical services account of the FY2016 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act ( P.L. 114-113 , Division J) for the Jason Simcakoski Memorial and Promise Act (title IX of the Comprehensive Addiction and Recovery Act of 2016, P.L. 114-198 ). The summaries generally provide brief explanations of the provisions. In some cases they include additional information, such as whether a provision was requested by the President or included in prior year CRs. For additional information on specific provisions in the CR, congressional clients may contact the CRS appropriations experts listed in Table 1 at the end of the report. For the duration of the CR, Section 116 increases funding for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Instead of funding the program based on the FY2016 funding level ($222 million), this CR provision would use a base of approximately $236 million. This anomaly is typically included to maintain current caseload and participation while accounting for increased food costs. This CR anomaly allows Commodity Credit Corporation (CCC) to receive its estimated $13 billion appropriation about a month earlier than usual to avoid running out of money. The CCC is the funding mechanism for most of the mandatory spending programs in the 2014 farm bill ( P.L. 113-79 ), including the farm commodity program subsidies. Most of its payments to farmers this year are due in October, and without the anomaly, it would have exhausted its $30 billion credit line at the Treasury. This new anomaly in the CR does not change the appropriations level. This provision was reportedly requested by the President and permits OMB to apportion funding to the Department of Agriculture's Rural Housing Service for the Rural Rental Assistance program at a higher rate than would normally be permitted under the standard terms of the CR as described earlier in this report. About 40% of rental assistance contract renewal costs occur in the first few months of the fiscal year, requiring a higher rate of spending in the first quarter. Similar authority was included in the FY2016 CR. This provision extends the Food and Drug Administration's Rare Pediatric Disease Priority Review Voucher Program for the duration of the CR. However, subsequent to the CR, the Advancing Hope Act ( P.L. 114-229 ) further extends the program until December 31, 2016, and makes other changes to the voucher program. A sponsor of an approved new drug or biological product for a rare pediatric disease may receive a transferable voucher to be used under specified conditions for priority review of another application. The initial sunset date for issuing vouchers was March 2016 and was extended to September 30, 2016, by the Consolidated Appropriations Act of 2016. The CR does not extend Section 728 of the FY2016 Agriculture appropriation, as indicated by Section 101(a)(1) of the CR. In the FY2016 Agriculture appropriation, Section 728 provided $271 million of supplemental funding for three land rehabilitation programs, and $130 million of that amount was declared disaster relief and was not subject to budgetary caps. Section 116(b) provides $20 million to the Department of Justice to fund authorizations in the Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198 ) for the duration of the CR. In 2016, Congress passed CARA to address the epidemic of heroin and other opioid abuse through provisions for multiple federal agencies. The $20 million appears to be for Section 201 of CARA, the newly authorized Comprehensive Opioid Abuse Grant Program for states, units of local government, and Indian tribes. As authorized, these grants are intended to provide services primarily relating to opioid abuse, including (1) treatment alternatives to incarceration programs; (2) collaboration between criminal justice and substance abuse agencies; (3) training and resources for first responders to administer opioid overdose reversal; (4) investigation of illicit activities related to unlawful distribution of opioids; (5) medication-assisted treatment programs used by criminal justice agencies; (6) prescription drug monitoring programs; (7) programs to prevent and address opioid abuse by juveniles; (8) programs to use technology that provides secure containers for prescription drugs; (9) prescription drug take-back programs; and (10) a comprehensive opioid abuse response program. Section 102 is similar to provisions typically included in interim CRs in previous years. It prohibits the Department of Defense from funding either so-called new starts —that is, procurement or research and development of a major program for which funding was not provided in FY2016 or acceleration of rate of production for any major program for which FY2016 procurement funding was provided. Among the Administration's proposed new starts barred by this provision are production of a new class of ballistic missile-launching submarines and the CH-53K heavy lift helicopter, modernization of the radars on B-52 bombers, and replacement of the wings on A-10 ground attack aircraft. Among the programs for which the Administration has proposed production rate increases that are barred by this provision are the KC-46A aerial refueling tanker, the Joint Light Tactical Vehicle, the Marine Corps's vertical take-off version of the F-35 Joint Strike Fighter, and the E-2D Advanced Hawkeye carrier-borne radar plane. Section 121 authorizes the Defense Department to use up to $95.0 million to develop, acquire, and sustain new information technology systems to support the personnel security background investigations of the Office of Personnel Management. Section 122 would extend through FY2017 authorization (that otherwise would have expired at the end of FY2016) for the Office of Security Cooperation with Iraq, originally established by Section 1215(f)(1) of P.L. 112-81 , the FY2012 National Defense Authorization Act. Section 123 would authorize the Department of Energy (DOE) to apportion funding for the Uranium Enrichment Decontamination and Decommissioning Fund through December 9, 2016, up to the rate for operations that would be necessary to avoid disruption of continuing projects or activities. This account primarily funds the decommissioning and environmental remediation of three federal uranium enrichment facilities in Kentucky, Ohio, and Tennessee. DOE would be required to notify the House and Senate Appropriations Committees within three days after each use of this authority. This provision is similar to provisions in previous years. This section grants congressional approval of the District of Columbia general fund and capital budgets for FY2017, consistent with the requirements of the District of Columbia home rule act ( P.L. 93-198 ), which requires congressional approval of the District's budget. Section 124 grants the District the authority to expend locally raised funds only for those programs and activities that received funding the previous year under the District of Columbia Appropriations Act, 2016 (title IV of P.L. 114-114 –113, Division E). District officials can expend locally raised funds at the rate set forth under ''Part A—Summary of Expenses'' as included in the Fiscal Year 2017 Local Budget Act of 2016 (D.C. Act 21–414). District of Columbia political leaders have consistently expressed concern that passage of the appropriations act for the District (in which Congress approves the city's budget) has too often been delayed until well after the start of the District's fiscal year, hindering their ability to manage the District's financial affairs and negatively affecting the delivery of public services. This section provides the General Services Administration (GSA) funding at a rate for operations of $9,500,000 to carry out the Presidential Transition Act of 1963, as amended. Funding for the GSA Pre-Election Presidential Transition account is prohibited. The appropriation is for purposes related to the presidential election and is in addition to amounts otherwise appropriated for GSA. The provision is similar to transition funding provided in P.L. 110-329 enacted on September 30, 2008. This section provides funding at a rate of operations of $7,582,000 for the Office of Administration under the Executive Office of the President (EOP) for expenses to carry out the Presidential Transition Act of 1963, as amended. The appropriation is for Presidential Transition Administrative Support and is in addition to amounts otherwise appropriated for the office. The funds may be transferred to other accounts, in this act or other acts, that fund the EOP and the Office of the Vice President to carry out such purposes. The provision is similar to transition funding provided in P.L. 110-329 . This section provides additional funding for the District of Columbia at a rate for operations of $19,995,000. The appropriation is for emergency planning and security costs related to the presidential inauguration. This is in addition to amounts otherwise appropriated for planning and security operations surrounding presidential inauguration activities. The provision is similar to transition funding provided in P.L. 110-329 . This section provides the National Archives amounts at a rate of operations of $4,850,000. The appropriation is to carry out the presidential transition responsibilities of the Archivist of the United States under the Presidential Records Act of 1978 and is in addition to amounts otherwise appropriated for the archives. This provision is similar to one in the FY2016 CR. This section authorizes the apportionment of appropriations that are provided by the CR up to the rate that is necessary to allow the Small Business Administration (SBA) to continue issuing general business loans under the 7(a) loan guaranty program if "increased demand for commitments" should exceed the program's fiscal year authorization ceiling, which is currently $26.5 billion. A similar provision was included in P.L. 114-53 , the Continuing Appropriations Act, 2016. On July 23, 2015, for just the second time since the agency began operations in 1953, the SBA suspended the consideration of 7(a) loan guaranty program applications because the demand for 7(a) loans was projected to exceed the program's then $18.75 billion FY2015 authorization ceiling. The SBA resumed issuing 7(a) loans on July 28, 2015, following enactment of P.L. 114-38 , the Veterans Entrepreneurship Act of 2015, which increased the 7(a) loan guaranty program's FY2015 authorization ceiling to $23.5 billion. Previous CRs had increased the 7(a) loan program's authorization ceiling to a specified amount to reduce the likelihood that the demand for commitments would exceed the ceiling. For example, P.L. 113-164 , the Continuing Appropriations Resolution, 2015, increased the ceiling from $17.5 billion to $18.5 billion, and P.L. 113-235 , the Consolidated and Further Continuing Appropriations Act, 2015, increased the ceiling to $18.75 billion. This section provides for the Department of Homeland Security (DHS) to obligate funds in the account and budget structure of the new Common Appropriations Structure (CAS) as laid out in a report submitted to the appropriations committees prior to the start of FY2017. Authorization to implement the CAS structure as outlined in the FY2017 request was laid out in the FY2016 Department of Homeland Security Act. This provision allows modifications to the structure developed since that time. This section is similar to provisions from past years and allows DHS to adjust the apportionment of FY2017 funds in order to maintain the staffing levels for Transportation Security Administration (TSA) screeners and Customs and Border Protection personnel attained at the end of FY2016. This provision is functionally similar to one included in the CR for FY2015 ( P.L. 113-164 ). In its request, the Administration indicated that this exception was necessary because TSA had repurposed funding provided for FY2016 to allow hiring of additional screeners and converting a number of part-time screeners to full-time. This section extends special procurement authorities for research and development activities at DHS, known as "other transaction authority." Similar provisions have previously been included in CRs covering DHS, including, most recently, Section 129 of the FY2016 CR ( P.L. 114-53 ). This provision extends, through September 30, 2018, the authority in the Federal Lands Recreation Enhancement Act for five agencies to establish, collect, and retain recreation fees on federal recreational lands and waters. The five agencies are the Bureau of Land Management, Bureau of Reclamation, Fish and Wildlife Service, and National Park Service in the Department of the Interior and the Forest Service in the Department of Agriculture. In FY2015, the agencies collected approximately $329 million in recreation fees under the program. Each agency can retain and spend the collected fees without further appropriation. Most of the monies are retained at the site where collected for on-site improvements to benefit visitors. Without this extension, the authority of the agencies would expire on September 30, 2017 under P.L. 114-53 (Section 134). Section 134 contains two provisions related to the Dwight D. Eisenhower Memorial Commission and the Dwight D. Eisenhower Memorial. First, the section extends, through the end of the CR (December 9, 2016), the Eisenhower Memorial Commission's authorization to establish a "permanent" memorial to President Eisenhower in the District of Columbia. Without the extension, the commission's authority to establish the Eisenhower Memorial would have expired on September 30, 2016 (under P.L. 114-113 , Division G, Title IV, Section 419(a)). Second, Section 134 suspends language in the FY2016 appropriations law that prohibits the Secretary of the Interior, during FY2016, from issuing a construction permit to build the Eisenhower Memorial until 100% of the necessary funds are raised. Without this prohibition, the commission has authority to request a construction permit prior to collecting 100% of the funds necessary to complete the memorial. Under current law, the Bureau of Land Management (BLM) collects a fee for new applications for permits to drill (APD) on federal and Indian land. BLM uses the collected fees to process APDs, with 85% of the fees retained in a "Fee Account" and 15% provided to the BLM field offices that collected the fees. The Administration expects the amount of revenue in the Fee Account carried over from FY2016 to be insufficient to continue processing oil and gas APDs into FY2017. Due to this anticipated shortfall, this section provides $26.0 million of "upfront" revenue to allow for continuous processing of APDs at the start of FY2017. The $26.0 million in upfront revenue would be offset by an equal amount later, as fees are collected throughout the year. This provision increases funding for the National Park Service (NPS) by $4.2 million to support security and visitor safety activities related to the presidential inaugural ceremonies in January 2017. The monies are added to NPS's largest budget account, titled "Operation of the National Park System." NPS requested this funding increase in its FY2017 budget justification in anticipation of the inauguration being designated as a National Special Security Event. NPS manages or co-manages multiple sites in Washington, DC, where inaugural activities take place, including the White House and the National Mall. Section 137 provides the U.S. Environmental Protection Agency (EPA) with an additional $3.0 million for FY2017 within the Environmental Programs and Management appropriations account for operations and necessary expenses of activities as defined in Section 26(b)(1) of the Toxic Substances Control Act (TSCA). The Frank R. Lautenberg Chemical Safety for the 21 st Century Act ( P.L. 114-182 ) amending TSCA was enacted June 22, 2016, subsequent to the submission of the FY2017 budget request. P.L. 114-182 requires EPA to implement new requirements and undertake various activities, including the publication of multiple proposed rules to revise chemical regulatory procedures and criteria of TSCA and a proposed rule for the collection and use of authorized fees to defray TSCA implementation programmatic costs. Section 137 also authorizes fees collected in FY2017 and credited to the TSCA Service Fee Fund to be counted as discretionary offsetting receipts toward the $3.0 million appropriation. Section 116(a) provides $17 million to the Secretary of Health and Human Services (HHS), in addition to the amounts otherwise provided by Section 101 (and notwithstanding Section 104), to carry out the authorizations in the Comprehensive Addiction and Recovery Act of 2016 (CARA, P.L. 114-198 ). Enacted on July 22, 2016, CARA aims to address the epidemic of heroin and other opioid abuse through provisions authorizing activities by multiple federal agencies, including HHS. CARA authorizes HHS to administer appropriations for various grant programs with the goal of preventing or treating opioid abuse or overdose. The language of the CR does not specify which HHS authorizations in CARA the $17 million is intended to fund or whether $17 million is expected to be enough to fund all or only some CARA-authorized HHS activities for the duration of the CR. Section 138 extends the duration of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) through December 9, 2016. NACIQI is a committee tasked with assessing the process of accreditation in higher education and the institutional eligibility and certification of institutions of higher education to participate in federal student aid programs authorized under Title IV of the Higher Education Act of 1965 (HEA). Section 114(f) of the HEA provides that NACIQI shall terminate on September 30, 2016. Section 422 of the General Education Provisions Act (GEPA) generally provides an automatic one-year extension of the authorization of appropriations for, or the duration of, programs administered by the Department of Education. This automatic extension would occur only if Congress and the President—in the regular session that ends prior to the beginning of the terminal fiscal year of authorization or duration of an applicable program—do not enact legislation extending the program. GEPA Section 422 also explicitly states that the automatic one-year extension does not apply to the authorization of appropriations for, or the duration of, committees that are required by statute to terminate on a specific date. Thus, the automatic one-year extension does not apply to NACIQI, and NACIQI would have terminated on September 30, 2016, had it not been extended. Section 139 eliminates the requirement that states and territories spend $127 million (in the aggregate) on activities to improve the quality of child care for infants and toddlers. It has been a common practice in recent years for appropriations acts to specify an amount that states must spend on these activities. However, the 2014 CCDBG reauthorization law ( P.L. 113-186 ) established a new statutory requirement that takes effect in FY2017 requiring states to spend at least 3% of their allotted funds on activities to improve the quality of care for infants and toddlers. This anomaly ensures that states are not required to spend an additional $127 million on these activities on top of the 3% required by statute, which would have effectively reduced amounts available for other purposes or activities (e.g., subsidizing the costs of child care for low-income working families). Section 140(a) ensures that the $140 million in cost-of-living adjustments provided to Head Start and Early Head Start grantees in FY2016 is included in the formula for each grantee's "base grant" for FY2017. This allows grantees to maintain program enhancements (e.g., salary increases) that had been supported by these funds in the previous year, consistent with common practice. The Head Start Act defines a base grant as the "amount of permanent ongoing funding" provided to Head Start agencies for a given fiscal year. Section 140(b) ensures that amounts reserved for "duration expansion" grants under the FY2016 appropriations act ( P.L. 114-113 ) will not be considered part of a grantee's base grant for the duration of the FY2017 CR. The FY2016 appropriation reserved $294 million for these grants outside the statutory allocation formula. The law specified that these funds be awarded to grantees that applied for additional funds to support costs of increasing Head Start program hours. Typically, such funds would be incorporated into the grantee's base grant in the subsequent fiscal year. However, funding under the FY2017 CR would be insufficient to support both the increased base grant levels and a $294 million set-aside for duration expansion grants. This anomaly ensures that the amount available for base grants under the terms of the CR is equal to the base grant calculation under the Head Start Act. Section 141(a) would make the funding appropriated to the State Children's Health Insurance Program's (CHIP) Child Enrollment Contingency Fund for the first semi-annual allotment period of FY2017 unavailable for obligation. Section 141(b) would rescind $6.2 billion from CHIP. The rescinded funds would be from two sources: the performance bonus payment fund ($5.7 billion) and unobligated national allotments ($0.5 billion). Previously, multiple appropriations laws rescinded a total of $35.2 billion from FY2011 through FY2016 from the CHIP performance bonus payments fund, the Child Enrollment Contingency Fund, and unobligated national allotments. Section 142 provides one gratuity payment to the widow of a deceased Member of the House. A gratuity equal to one year's salary has long been given to the heirs of Members of Congress who die in office. The payment is generally included in the next legislative branch, supplemental, or continuing appropriations act following the death. Section 116(c) requires the Department of Veterans Affairs (VA) to use FY2017 advance appropriations provided in the medical services account of the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2016 ( P.L. 114-113 ) to implement the numerous provisions contained in the Jason Simcakoski Memorial and Promise Act (Title IX of P.L. 114-198 ). No new additional funding is provided by this provision for implementation purposes. The Jason Simcakoski Memorial and Promise Act was enacted as part of the Comprehensive Addiction and Recovery Act of 2016 ( P.L. 114-198 ). It requires the VA to expand the Opioid Safety Initiative to include all VA medical facilities, designate pain management teams at each VA medical facility to coordinate and oversee pain management therapy, participate in state prescription drug monitoring programs, disclose certain veteran information to state controlled substance monitoring programs, and eliminate copayments for veterans receiving opioid antagonists such as naloxone and naltrexone. Furthermore, the act would establish an office of patient advocacy within the office of the Under Secretary for Health, who would be required to carry out patient advocacy programs within the VA health care system. Moreover, this act, among other things, requires the VA to establish a pilot program to assess the feasibility of complimentary and integrative health care to compliment the provision of pain management services, and it would establish the Creating Options for Veterans Expedited Recovery Commission to examine complimentary and integrative health care treatment models. Lastly, the act would require the VA to document medical license violations going back 20 years as part of the hiring process of health care providers into the VA health care system, and it would require the VA to share any violations happening at VA medical facilities with state medical licensing boards, whether such information is requested by those entities or not. Section 143 would allow the Department of Transportation to provide funding to Amtrak according to the new Amtrak budget structure Congress created in the Fixing America's Surface Transportation (FAST) Act (Division A of P.L. 114-94 ). Amtrak is in the process of switching over to the new budget structure, and both the House and Senate versions of the FY2017 Transportation, Housing and Urban Development, and Related Agencies appropriations bills would provide funding to Amtrak using the new budget structure. Without Section 143, the changeover will be delayed and other FAST Act provisions will be affected. Section 144 allows continued funding for the Maritime Security Program through the duration of the CR. This program provides direct payments to U.S.-flag ship operators engaged in foreign commerce to partially offset the higher operating costs of U.S. registry. The purpose of the program is to establish and sustain a fleet of 60 active ships that are privately owned, commercially viable, and militarily useful to meet national defense and other emergency sealift requirements. Participating operators are required to make their ships and commercial transportation resources available upon request by the Secretary of Defense during times of war or national emergency. The act appropriates $500 million in Community Development Block Grant (CDBG-DR) funds for disaster relief, recovery, and mitigation activities in response to massive flooding in the state of Louisiana and a number of disasters that occurred earlier in 2016. CDBG-DR funds are to be awarded to states and local governments that received major disaster declarations during the first nine months of the 2016 calendar year. The act includes several terms and conditions surrounding the use of those funds that vary from the rules governing the regular CDBG program but are consistent with language included in previous CDBG-DR supplemental appropriations. The act: requires states and local government grantees to submit, and for the Department of Housing and Urban Development (HUD) to approve disaster plans before CDBG disaster funds may be obligated; requires that a grantee's disaster plans articulate how proposed activities will support long-term recovery efforts; and requires HUD to certify that state and local government grantee disaster plans include adequate financial controls and procurement processes that would prevent duplication of benefits; reduce waste, fraud, and abuse; and encourage timely expenditure of funds. The act allows grantees to use up to 5% of their CDBG disaster grant allocation for administrative expenses; prohibits CDBG-DR funds from being used for activities that are reimbursable by, or made available by, the Federal Emergency Management Agency (FEMA) or the Army Corps of Engineers; requires grantees to maintain a publicly accessible website identifying how all grant funds are to be used, including information on contracting and procurement processes; and holds harmless a state or community's regular CDBG allocation by ensuring that the amount of such funds awarded to grantees would not be affected by CDBG disaster-assistance allocations. Finally, the act grants HUD broad authority to waive or establish alternative program requirements, except for provisions governing fair labor standards, fair housing, civil rights, and environmental review. However, the act includes two exceptions related to environmental review requirements. Specifically, it allowed CDBG-DR grantees who use their funding to meet certain FEMA matching requirements to adopt, without public review, environmental reviews performed by other federal agencies. In cases where a grantee has already performed an environmental review or the activity or project is excluded from an environmental review, the act explicitly allows for the expedited release of funds.
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The purpose of this report is to provide an analysis of the continuing appropriations provisions for FY2017 in H.R. 5325. The measure also included provisions covering appropriations in the Military Construction and Veterans Affairs Appropriations bill for all of FY2017 (Division A), as well as emergency funds to combat the Zika virus and provide relief for flood victims in Louisiana and other affected states (Division B). On September 29, 2016, the President signed H.R. 5325 into law (P.L. 114-223). Division C of H.R. 5325 was termed a "continuing resolution" (CR) because measures to provide temporary authority for federal agencies and programs to continue spending are typically in the form of a joint resolution. It provides temporary funding in FY2017 for the programs and activities covered by the remaining 11 regular appropriations bills, since none of them had been enacted previously. These provisions provide continuing budget authority for projects and activities funded in FY2016 by that fiscal year's regular appropriations acts, with some exceptions. It includes both budget authority that is subject to the statutory discretionary spending limits on defense and nondefense spending and also budget authority that is effectively exempt from those limits, such as that designated as for "Overseas Contingency Operations/Global War on Terrorism." Funding under the terms of the CR is effective October 1, 2016, through December 9, 2016—roughly the first 10 weeks of the fiscal year. The CR generally provides budget authority for FY2017 for projects and activities at the rate at which they were funded during FY2016. Most projects and activities funded in the CR, however, are also subject to an across-the-board decrease of 0.496% (pursuant to Section 101(b) of Division C). According to the cost estimate prepared by the Congressional Budget Office (CBO), the total amount of budget authority for the Military Construction and Veterans Affairs appropriations act—and the annualized budget authority for the other regular appropriations in the FY2017 CR that are subject to the statutory discretionary spending limits—totals approximately $1,067 billion. When spending that is effectively not subject to those limits (Overseas Contingency Operations, disaster relief, emergency requirements, and program integrity adjustments) is included in the CBO estimate, the total is $1,149 billion. In addition to the general provisions that establish the coverage, duration, and rate of spending, CRs usually include provisions that are specific to certain agencies, accounts, or programs. These include provisions that designate exceptions to the formula and purpose for which any referenced funding is extended (referred to as "anomalies") as well as provisions that have the effect of creating new law or changing existing law (often used to renew expiring provisions of law). The CR includes a number of such provisions, each of which is briefly summarized in this report. CRS appropriations process experts for each of these provisions are listed in Table 1. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices, by James V. Saturno and Jessica Tollestrup.
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Since FY1989, Congress has appropriated just under $271 billion (constant 2008 dollars) for disaster assistance in 34 appropriations measures, primarily supplemental appropriations acts, after significant catastrophes occurred in the United States. The median annual funding during the 20-year period FY1989 through the present was $2.7 billion; the mean annual funding was $12 billion ($241 billion/20)—both in current dollars. The mean funding in current dollars for all 34 enacted emergency supplemental bills was $7 billion ($241 billion/34). The median annual funding in constant dollars during the 20 year period FY1989 through the present was $3.8 billion; the mean annual funding in constant dollars was $13.6 billion. The mean funding in constant dollars for all 34 enacted emergency supplemental bills was $8 billion ($271 billion/34). Disasters during 2001 and 2005 were especially costly. In FY2001 and FY2002, supplemental appropriations for disaster assistance exceeded $26 billion, most of which went toward recovery following the terrorist attacks of September 11, 2001. In FY2005 and FY2006, after Hurricanes Katrina, Rita, and Wilma struck in 2005, supplemental appropriations for disaster assistance have reached an all-time high. From FY2005 through FY2008, Congress appropriated over $130 billion, almost 60% of the total appropriated since FY1989. Since the start of the 110 th Congress, the President has signed into law four measures ( P.L. 110-28 , P.L. 110-116 , P.L. 110-252 , and P.L. 110-329 ). These four statutes together provided roughly $41 billion in supplemental appropriations for disaster relief and recovery. P.L. 110-28 , signed on May 25, 2007, included an appropriation of $7.6 billion for disaster assistance, $3.4 billion of which was classified as "Hurricane Katrina Recovery." P.L. 110-116 , signed into law on November 13, 2007, provided a total of $6.355 billion for continued recovery efforts related to Hurricanes Katrina, Rita, and Wilma, and for other declared major disasters or emergencies. This total includes $500 million for firefighting expenses related to 2007 California wildfires. P.L. 110-252 , signed into law June 30, 2008, provided $7 billion in disaster assistance, most of which was directed at continuing recovering 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 $21.4 billion. Of this amount, roughly $2 billion is continued disaster relief for the 2005 hurricane season. The majority of the funding (just over $8.8 billion) in the law is for disasters occurring in 2008 which included Hurricanes Gustav and Ike, wildfires, and flooding. One of the largest components funding in P.L. 110-329 is for the Department of Housing and Urban Development's (HUD) Community Development Fund, which received $6.5 billion specifically for disaster relief, long-term recovery, and economic revitalization in areas affected by disasters that occurred in 2008. Other funding in the law includes $135 million for wildfire suppression, and a $100 million direct appropriation for the American Red Cross for reimbursement of disaster relief and recovery expenditures associated with emergencies and disasters that have also taken place in 2008. This report provides summary information on emergency supplemental appropriations legislation enacted since 1989 after significant catastrophes. It includes funds appropriated to the Disaster Relief Fund (DRF) administered by the Federal Emergency Management Agency (FEMA), as well as funds appropriated to other departments and agencies. This report uses a broad concept of what constitutes emergency disaster assistance. The funds cited in this report include appropriations for disaster relief, repair of federal facilities, and hazard mitigation activities directed at reducing the impact of future disasters. DRF appropriations are obligated for all major disasters and emergencies issued under the Stafford Act, not only those significant events that lead to supplemental appropriations. 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 below, supplemental appropriations have been enacted as stand-alone legislation. However, in some instances, emergency disaster relief funding has been enacted as part of regular appropriations measures, continuing appropriations acts (continuing resolutions), or in omnibus appropriations legislation. Requested funding levels noted in the third column of Table 1 reflect House Appropriations Committee data on total requested funding for the entire enacted bill. Where possible, Office of Management and Budget (OMB) data taken from correspondence to Congress requesting emergency supplemental funding are used to identify dates of Administration requests for supplemental funding. In response to the widespread destruction caused by three catastrophic hurricanes at the end of the summer of 2005, the 109 th Congress enacted four emergency supplemental appropriations bills. Two of the statutes were enacted as FY2005 supplementals after Hurricane Katrina devastated parts of Florida and Alabama and resulted in presidential major disaster declarations for all jurisdictions in Louisiana and Mississippi. The two supplementals ( P.L. 109-61 and P.L. 109-62 ) together provided $62.3 billion for emergency response and recovery needs; most of the funding in these two bills was provided for the Disaster Relief Fund (DRF) administered by FEMA. After Hurricanes Rita and Wilma struck, the 109 th Congress enacted two other supplementals; the costs of both were offset by rescissions. The FY2006 appropriations legislation for the Department of Defense ( P.L. 109-148 ) rescinded roughly $34 billion in funds previously appropriated (almost 70% of which was taken from funds previously appropriated to the Department of Homeland Security) and appropriated $29 billion to other accounts primarily to pay for the restoration of federal facilities damaged by the hurricanes. Also in FY2006, Congress agreed to an Administration request for further funding—$19.3 billion was appropriated in supplemental legislation ( P.L. 109-234 ) for recovery assistance, with roughly $64 million rescinded from two accounts ($15 million from flood control, Corps of Engineers, and $49.5 million from Navy Reserve construction, Department of Defense). On May 25, 2007, the President signed into law P.L. 110-28 , which appropriated $120 billion in emergency supplemental funding for Iraq, Afghanistan, and other matters, including $6.9 billion for continued Gulf Coast relief. The measure was a successor to previous emergency supplemental legislation in the 110 th Congress, H.R. 1591 , vetoed by the President on May 1, 2007. This was the fifth supplemental measure enacted containing disaster assistance specifically provided in response to Hurricanes Katrina and Rita. The sixth supplemental measure enacted as part of P.L. 110-116 on November 13, 2007, provided an additional $5.9 billion for emergency assistance, most, but not all of which, can be attributed to the Gulf Coast recovery. The $3 billion appropriated for Department of Housing and Urban Development—Community Planning and Development Fund can only be used for the Louisiana Road Home program. However, the $2.9 billion appropriated for the Disaster Relief Fund can be used not only for the Gulf Coast but for other declared disasters as well. As a result, after enactment of P.L. 110-252 , the total amount appropriated by Congress in supplemental funding after the 2005 hurricanes surpassed the $130 billion mark. Table 2 provides information on the appropriations made in the six supplementals enacted after Hurricanes Katrina, Rita, and Wilma. Table 3 identifies the departments and agencies from which funds were rescinded in P.L. 109-148 . In addition to these rescissions and appropriations, Congress enacted other funding changes by transferring $712 million from FEMA to the Small Business Administration for disaster loans ( P.L. 109-174 ). On June 30, 2008, the 110 th Congress enacted the Supplemental Appropriations Act, 2008 ( P.L. 110-252 ). Some of the funding from P.L. 110-252 includes $100 million for the Economic Development Administration's economic development assistance programs, $73 million for the Department of Housing and Urban Development's (HUD) Road Home Program and $300 million for HUD's Community Development fund. The majority of disaster assistance funding (over $4 billion) in P.L. 110-252 is directed at the Corps of Engineers for projects aimed at repairing damages incurred from the 2005 hurricane season, as well as programs designed to mitigate against future hurricanes. Another supplemental, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 was passed three months later on September 30, 2008 ( P.L. 110-329 ). P.L. 110-329 includes ongoing disaster relief for destruction resulting from the 2005 hurricane season, including $85 million for the Disaster Housing Assistance program administered by the Department of Housing and Urban Development (HUD). The program enables families to settle in areas across the United States that were not affected by hurricane Katrina, Rita, or Wilma. The amount provided in the statute for disaster relief as a result of the 2005 hurricane season is roughly $1.3 billion. CRS Report RL33330, Community Development Block Grant Funds in Disaster Relief and Recovery , by [author name scrubbed] and [author name scrubbed]. CRS Report RL34711, Consolidated Appropriations Act for FY2009 (P.L. 110-329): An Overview , by [author name scrubbed]. CRS Report RL33999, Defense: FY2008 Authorization and Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report RL33053, Federal Stafford Act Disaster Assistance: Presidential Declarations, Eligible Activities, and Funding , by [author name scrubbed] (pdf). CRS Report RL33900, FY2007 Supplemental Appropriations for Defense, Foreign Affairs, and Other Purposes , coordinated by [author name scrubbed]. CRS Report RL34451, FY2008 Spring Supplemental Appropriations and FY2009 Bridge Appropriations for Military Operations, International Affairs, and Other Purposes (P.L. 110-252) , by [author name scrubbed] et al.
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This report provides summary information on emergency supplemental appropriations enacted after major disasters since 1989. During the 20-year span from FY1989 through the present, Congress appropriated almost $271 billion in constant 2008 dollars. Most of the appropriations were preceded by a presidential request for supplemental funding. In 2008 a number of major natural disasters took place including Hurricanes Ike and Gustav, the California wildfires, and the Midwest floods. To date however, the most costly disasters occurred in the summer of 2005 when Hurricanes Katrina, Rita, and Wilma made landfall in Gulf Coast states. Since Hurricane Katrina struck in August of 2005, more than $151 billion has been appropriated for supplemental disaster funding, most of it needed for the recovery from the 2005 hurricanes. Portions of the appropriations were offset by rescinding more than $34 billion in previously appropriated funds, explained in the section titled "Hurricanes Katrina, Rita, and Wilma." Prior to FY2005 and the hurricanes, only the terrorist attacks of 2001 led to supplemental appropriations legislation that exceeded $20 billion. Congress appropriated a total of more than $26 billion for disaster assistance in response to the attacks. Other supplemental appropriations legislation enacted after catastrophic disasters (or several significant disasters that occurred in short time intervals) range from almost $366 million in FY2001 before the terrorist attacks (largely due to the Nisqually earthquake in the summer of 2001) to more than $12 billion for the Midwest floods of 1993 and the Northridge earthquake of 1994. At times, the supplementals enacted by Congress have included only disaster funding. The supplementals enacted after Hurricane Hugo and the Loma Prieta earthquake, in addition to the first two enacted after Hurricane Katrina, serve as examples. On other occasions, however, disaster funding has been part of larger pieces of legislation that appropriated funds for purposes other than disaster assistance. The most recent supplemental disaster assistance appropriation occurred on September 30, 2008 when the President signed into law H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. The statute, P.L. 110-329, provides $21.3 billion in emergency supplemental appropriations for relief and recovery from hurricanes, floods, and other natural disasters. This report will be updated as events warrant.
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On February 14, 2011, President Barack Obama submitted to Congress his request for military construction appropriations to support federal government operations during FY2012, which will begin on October 1, 2011 (see Table 1 ). The timing of his request was unusual because it overlapped the congressional process of appropriating for government operations during FY2011. A full-year continuing appropriations bill ( H.R. 1473 , P.L. 112-10 ) that included military construction was enacted on April 15, 2011. The House Committee on Appropriations introduced its Military Construction, Veterans Affairs, and Related Agencies Appropriations Act for 2012 ( H.R. 2055 ) on May 31. The House began debate on June 2 and passed the bill on June 14, 2011. Debate and amendment on the House floor encompassed several provisions that could affect the cost of and competition for military construction projects. One debate centered on Section 415, which was eventually stricken by recorded vote, 204-203 ( H.Amdt. 411 , Roll no. 413). The section would have barred the use of military construction funds to enforce Executive Order 13502 (41 U.S.C. 251 note). This order permits executive agencies to specify that "project labor agreements" (PLA) be used on construction costing $25 million or more. These PLAs are pre-hire collective bargaining agreements with labor organizations that establish the terms and conditions of employment on specific construction projects. Another amendment, proposed on the floor, would have barred the imposition of Davis-Bacon prevailing wage standards on military construction projects. The motion was defeated in a recorded vote, 178-232 ( H.Amdt. 413 , Roll no. 414). The Senate received H.R. 2055 on June 15 and referred it to the Committee on Appropriations. The committee reported H.R. 2055 with an amendment in the form of a substitute on June 30, 2011. The bill was placed on the Senate Legislative Calendar under General Orders (Calendar N. 31). On July 11, a motion to proceed to consideration of the measure was made ( Congressional Record , S4478), along with a cloture motion. With unanimous consent, the cloture motion was accepted and the motion to consider H.R. 2055 was withdrawn. Section 114 of Title 10, United States Code, requires that Congress authorize the appropriation of funding to the Department of Defense for certain purposes, including military construction, as part of the annual appropriations cycle. This authorization is effected through the enactment of the annual National Defense Authorization Act (NDAA), of which one division constitutes the Military Construction Authorization Act. The NDAA for FY2012 ( H.R. 1540 ) was introduced in the House on April 14, 2011. The House Committee on Armed Services reported its amendment of the bill on May 17 ( H.Rept. 112-78 , with a supplemental report, H.Rept. 112-78 , Part 2, submitted on May 23). The House passed the bill by recorded vote, 322-96 (Roll no. 375), on May 26, and the Senate received it on June 6, 2011, referring it to the Committee on Armed Services. The Senate Committee on Armed Services reported its version of the NDAA (S. 1253) on June 22. In addition to authorizing military construction appropriations, the act provides additional authorities related to military construction and family housing. It routinely authorizes specific construction projects and land acquisitions, property improvements, and the like. It can also forbid various actions. For example, Section 2307 of the House version of H.R. 1540 would prohibit the disestablishment, closure, or realignment of any element of the Air Force's Air and Space Operations Center until the Department of the Air Force takes certain specified actions. The military construction appropriation, Title I of the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, pays for the building of new military facilities required for new weapons systems, including aircraft and naval vessels; the redeployment of military forces to new locations; the improvement of military living and working conditions; the reduction of facility operating costs; and the improvement of military productivity at both active and reserve component facilities. Military construction funds also pay for construction and movement of organizations mandated in base closure and realignment actions, and for the environmental remediation required for the disposal of defense real property as required by the base closure acts of 1988 and 1990, as amended. Another appropriation within the bill provides funding for the North Atlantic Treaty Organization (NATO) Security Investment Program (NSIP), which constitutes the U.S. contribution to a 28-nation collective account for the acquisition and construction of international collective defense facilities within the North Atlantic Treaty Area. Other subaccounts finance costs associated with construction, improvement, operation, and leasing of all government-provided military family housing. The Family Housing Improvement Fund (FHIP) finances the DOD portion of the various public-private partnerships resulting from the privatization of much of the inventory of domestic military family housing under the Military Housing Privatization Initiative (MHPI) begun during the late 1990s. A separate account, the Unaccompanied Housing Improvement Fund, performs the same function for the barracks or dormitories that house single service members or those whose families do not relocate with a change of duty stations. The Homeowners Assistance Fund (HAF) was created during the mid-1960s to assist DOD family homeowners who are forced to sell their houses in markets depressed by base closures, but eligibility to apply for such assistance was temporarily expanded to include military members who purchased homes during the so-called "housing bubble" and who were ordered to change duty stations during the subsequent "housing crisis." The Secretary of Defense terminated this temporary eligibility late in 2010, as permitted under the enabling statute. A final subaccount funds the construction of facilities at several chemical munitions depots. These munitions, such as nerve gases, have been banned from use in warfare by international treaty, and highly sophisticated industrial plants at select depots have been constructed to demilitarize (render non-lethal) and safely dispose of U.S. chemical munitions stockpiles. Construction for this program is nearing completion. Titles II and III of the bill fund the benefits programs and operations of the Department of Veterans Affairs and several federal agencies, including the American Battle Monuments Commission, the Armed Forces Retirement Home, the U.S. Court of Appeals for Veterans Claims, and Arlington National Cemetery. These titles are not addressed in this report. Title IV was a temporary appropriation provision dedicated to military construction supporting "overseas contingency operations" (OCO), such as the ongoing ground force deployments to U.S. Central Command (CENTCOM). During the first years of active military engagement in CENTCOM, such construction was paid for through a series of emergency supplemental appropriations. In recent years, the Obama Administration has moved this funding into the regular appropriations process, designating it as "Title IV (OCO)" military construction. FY2012 marks the first year when no funds have been requested to fund OCO construction. On June 2, 2011, the House took up H.R. 2055 , its version of the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act for FY2012, passing an amended version on June 14. This bill would appropriate $14.2 billion in new budget authority for military construction and family housing. This would be a reduction of $0.6 billion (4.1%) below the presidential request, but this figure does not count $237.1 million in budget authority from previous appropriations that would be rescinded, effectively recycling funding into the new fiscal year. Therefore, the total military construction and family housing appropriation that would be enacted in this bill would come to $14.4 billion—$14.2 billion in new budget authority and $0.2 billion in unexpired, unobligated funds reclaimed from previous fiscal years. The Senate received H.R. 2055 on June 15 and referred it to the Committee on Appropriations. On June 30, the committee reported the bill with an amendment in the form of a substitute, along with its written report ( S.Rept. 112-29 ). The bill was introduced to the Senate on July 11 through a motion to consider that was accompanied by a cloture motion. The motion to consider was then withdrawn. The Senate amendment would appropriate $13.7 billion in new budget authority for military construction and family housing, $1.0 billion (7.1%) below the President's request. As FY2010 expired at the end of September of that year, Congress passed the first of what would become eight continuing appropriations bills to fund FY2011. The initial continuing appropriation, while allowing for spending on military construction at a rate equal to that enacted for FY2010, barred DOD from initiating any new construction projects. Section 101 of the act permitted the continuation of projects that were provided for in the FY2010 appropriation, but Section 102 stated that no funds provided under the appropriation could be used to initiate any project "for which appropriations, funds, or other authority were not available during fiscal year 2010." This restriction was not lifted until the enactment of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) on April 15, 2011, more than halfway into FY2011. The forced moratorium allowed Congress to reclaim some FY2011 funding through the rescission process and apply it to the FY2012 appropriation. The House began debate on the Military Construction Appropriations Act for FY2012 ( H.R. 2055 ), on June 2, and passed the bill in its amended form on June 14, 2011. Funding enacted for FY2010 and FY2011, the President's request for FY2012, and H.R. 2055 are laid out in Table 2 . The amounts shown are "new budget authority" (NBA), the new appropriations needed to fund the various accounts for the years indicated. NBA is the total appropriation amount required for a given year minus reductions and rescissions mandated by subsequent legislation. A more detailed comparison, which includes these additional details, may be found in the Appendix in Table A-1 and Table A-2 . The geographic land area comprising U.S. Northern Command includes the contiguous United States, Alaska, Canada, and Mexico. The principal military construction issues within Northern Command center on the relocation of personnel and organizations within the continental United States and the redeployment of troops from garrisons overseas to domestic duty stations. The largest portion of domestic relocation was required by the 2005 Defense Base Closure and Realignment Commission (also known as the BRAC Commission). Over the past six years, the defense agencies and military departments have carried out a highly complex—and often contentious—program of construction and movement mandated by the commission that required the appropriation of approximately $35 billion. The 2005 BRAC round, save for environmental cleanup and disposal of surplus property, is scheduled to be completed not later than September 15, 2011. Nevertheless, perceiving military service inability to fully implement some of the more complex commission recommendations by the statutorily mandated deadline, Section 2704 of H.R. 1540 , the NDAA for FY2012, would permit the Secretary of Defense to extend the completion of as many as seven recommendations for up to a year. Another section of the bill, Section 2707, would prevent the use of more than 1,000 parking spaces at the site of BRAC Commission Recommendation 133 until the Secretary of Defense takes certain actions, including the completion of a number of traffic mitigation projects. BRAC 133, as it is called, will move a large number of defense workers to newly constructed facilities at the Mark Center in Arlington, VA. Congress has questioned the ability of that site to absorb the expected increase in surface traffic generated by the transfers and has written provisions similar to this into previous versions of the NDAA. Associated with the domestic BRAC, and funded through the BRAC appropriation, is the construction needed to house units repositioned to the United States as part of the parallel Integrated Global Presence and Basing Strategy (IGPBS), later renamed the Global Defense Posture Realignment (GDPR). Separate from the 2005 BRAC round, DOD announced plans to permanently move one of the Navy's aircraft carriers from its home port of Norfolk, VA, to a new duty station in Mayport, FL. The announced reasoning for the move is strategic. Currently, the naval station at Norfolk is the sole Navy facility along the nation's eastern or southern coasts with the needed facilities and capacity to service a nuclear-powered aircraft carrier. The Navy became concerned that stationing all Atlantic Fleet carriers at a single port facility could offer a vulnerability to potential adversaries and decided to build a second facility at Mayport, estimating the cost of the project at $580 million. Thus far, Congress has not appropriated the necessary construction funds, although the budget request includes some ancillary items that would support future facility construction. The FY2012 request does not include funding to build the needed facilities, though there is a $15.0 million request for "Massey Avenue Corridor Improvements" and a like amount for planning and design that are seen as supporting the eventual construction of a carrier home port. Section 2204 of H.R. 1540 (NDAA for FY2012) would bar the use of any appropriations for FY2012 for "architectural and engineering services and construction design of any military construction project necessary to establish a homeport for a nuclear-powered aircraft carrier at Naval Station Mayport, Florida." A provision in H.R. 2055 , Section 412 of the House version of the military construction appropriation, would prevent the use of funds for any construction in the United States to house any Guantanamo detainees. Section 128 would forbid the use of funds to support "any action that relates to or promotes the expansion of the boundaries or size of the Piñon Canyon Maneuver Site, Colorado." This prohibition stems from an attempt several years ago by the Army to request authorization to begin exploring the expansion of the maneuver area. Stiff local resistance led to the insertion of this language into the annual military construction appropriation. U.S. Pacific Command (PACOM) is geographically the largest of the combatant commands, holding within its area of responsibility most of the Pacific and Arctic Oceans; the People's Republic of China; Mongolia; the Democratic People's Republic of Korea (North Korea); the Republic of Korea (South Korea); Japan and the Philippines; Indonesia; the countries of Southeast Asia; the southern Asian, Oceanic, and Australian landmasses to the western border of India; and the corresponding sea areas of the Indian Ocean. Three major force movements and their associated construction are imminent or underway in the Pacific region. GAO recently completed an analysis of the costs associated with changes in the U.S. military posture in Asia, finding that DOD's posture planning guidance does not require the U.S. Pacific Command to include comprehensive cost data in its theater posture plan, and as a result, DOD lacks critical information that could be used by decision makers as they deliberate on posture requirements and affordability.... Without comprehensive and routine reporting of posture costs, DOD decision makers will not have the full fiscal context in which to develop posture plans and requirements, and congressional committees will lack a full understanding of the potential funding requirements associated with DOD budget requests. As the result of intergovernmental agreements, Japan has undertaken the construction of a new air facility in the Prefecture of Okinawa for the use of U.S. Marine Corps aviation units now operating from Marine Corps Air Station (MCAS) Futenma, near the prefecture capital of Naha. Upon completion of the new station, the existing facility is to be returned to sole Japanese control. The selection of a new site for the Futenma Replacement Facility (FRF) and other Japanese domestic political considerations have delayed initiation of construction of the new facility. Nevertheless, the Japanese press recently announced agreement between the two national governments on a potential site and runway configuration. These plans were formalized at a joint U.S.–Japan ministerial meeting on June 21, 2011, though both governments concluded that adherence to the original 2014 completion date would be impossible, announcing afterward that the FRF would be completed "at the earliest possible date after 2014." Nevertheless, the Senate Committee on Armed Services, in their report on the NDAA for 2012, has expressed considerable concern, stating that the "committee believes that the proposed plan for the relocation of Marine Corps Air Station (MCAS) Futenma, located on the island of Okinawa, has become untenable and must be resolved sooner and more economically than the current plan will allow," estimating that "even under the most reasonable circumstances, the FRF ... would likely take at least 7 to 10 years to complete at a cost to the Government of Japan of approximately $5.0–10.0 billion dollars." That committee would direct the Secretary of Defense to report on the feasibility of relocating Marine aviation assets from MCAS Futenma to the nearby Kadena Air Base instead of to the projected new facility. In addition, Section 1079 of S. 1253 , the Senate's version of the NDAA, would create an independent panel to assess U.S. force posture in East Asia and the Pacific Region, emphasizing examination of the current plans for force realignments on Okinawa and Guam. The two governments have also agreed to move approximately 8,000 Marines from their present garrisons in Okinawa to facilities in the U.S. Territory of Guam, approximately 1,400 miles to the east. Japan has pledged to provide approximately $6 billion of the estimated $10 billion needed for the relocation. Congress has criticized the pace of DOD planning for the move. During consideration of FY2011 appropriations, the Senate Committee on Appropriations recommended deferring $464.6 million in requested construction funding from overseas projects in Guam, Europe, Korea, and other locations pending the completion of a DOD review of its global posture. Nevertheless, the redeployment is inextricably linked to the FRF project. DOD is awaiting "tangible progress" on the part of the Japanese in constructing the FRF before commencing the construction necessary to house the Marines relocating from Okinawa. While noting that official DOD plans continue to adhere to a 2014 deadline for completion of the Guam redeployment, the House Committee on Appropriations stated, "The Committee remains supportive of the realignment of Marine Corps forces from Okinawa to Guam. At the same time, the Committee has serious concerns about the Department of Defense's (DOD) ability to adequately fund and complete construction on time and within budget." In its report on H.R. 2055 , the FY2012 military construction appropriation bill, the Senate Committee on Appropriations reiterated its concerns, stating that Due to the lack of verifiable cost estimates for the Guam buildup, the failure of DOD to submit to the congressional defense committees a comprehensive master plan for the initiative, and continuing uncertainty over the ability of the Government of Japan to fulfill its commitment to relocate United States troops on Okinawa, the Committee has deferred funding for fiscal year 2012 military construction projects associated with the relocation of United States Marines to Guam. This included two major Navy projects, a $77.2 million improvement of water utility services to the planned cantonment area at Finegayan and a $78.6 million increment for the development of utility services to the north ramp area on Andersen Air Force Base, a site used by the Navy and planned to host Marine aviation units moved from Japan. The Senate version of the NDAA would also strike the requested funding for these construction projects. The House version of the NDAA, H.R. 1540 , authorizes full funding of both construction projects. Nevertheless, Section 2208 of S. 1253 , the Senate's version of the NDAA for 2012, would bar the obligation or expenditure of any appropriated funds or funds provided to the United States by the Government of Japan to implement the Marine relocation to Guam until the Commandant of the Marine Corps provides to the congressional defense committees his "preferred force lay-down" in the Pacific Region and the Secretary of Defense provides a master construction plan supporting that lay-down, certifies that "tangible progress" has been made on the relocation of MCAS Futenma, and provides an interagency plan for the work necessary on Guam's non-military facilities to prepare for the relocation. At the end of bilateral consultations between the Secretary of State, the Secretary of Defense, and their Japanese counterparts on June 21, 2011, the Department of State issued a press release stating, in part, "The Ministers noted that completion of the FRF and the Marine relocation will not meet the previously targeted date of 2014 and confirmed their commitment to complete the above projects at the earliest possible date after 2014 in order to avoid the indefinite use of the Marine Corps Air Station (MCAS) Futenma, while maintaining Alliance capabilities." Since the Armistice on the Korean Peninsula ended combat in 1954, U.S. ground forces have been concentrated in a number of forward bases distributed along the demarcation line between South Korea and North Korea, with a major headquarters complex at Yongsan, adjacent to the capital of Seoul. Following agreements between South Korea and the United States, the headquarters of U.S. Forces, Korea (USFK) and U.S. Army and Air Force units are being concentrated into two large military communities centered on Osan Air Base and Camp Humphreys, south of the capital. Additionally, tours of duty for military personnel are being lengthened, and servicemembers will soon be permitted to bring their families with them, significantly increasing the size of those communities. In its May 2011 report on the military posture in Asia, the GAO noted that they obtained DOD cost estimates that total $17.6 billion through 2020 for initiatives in South Korea, but DOD cost estimates are incomplete. One initiative, to extend the tour length of military service members and move thousands of dependents to South Korea ... could cost DOD $5 billion by 2020 and $22 billion or more through 2050, but this initiative was not supported by a business case analysis that would have considered alternative courses of action and their associated costs and benefits. As a result, DOD is unable to demonstrate that tour normalization is the most cost-effective approach to meeting its strategic objectives. This omission raises concerns about the investments being made in a $13 billion construction program at Camp Humphreys, where tour normalization is largely being implemented. The House Committee on Appropriations expressed its views on the issue of "tour normalization" in its report on the military construction appropriations bill, stating The Department of Defense has taken on an arduous and expensive task to normalize deployments to Korea by establishing a two-year tour for single members of the service and three-year tours for married servicemembers to include their families. The task will require great investment in military construction for schools, family housing and child development centers just to name a few. The Committee is concerned that this investment may be an expense that the United States should not incur. The Committee directs the Secretary of Defense to report to the Committee on Appropriations within 60 days of enactment of this Act the total cost and plan for Tour Normalization in Korea. The Senate Committee on Appropriations voiced its concerns with both tour normalization and the redeployment of U.S. forces on the peninsula in its report on H.R. 2055 . This lack of a business case analysis ... raises concerns about the investments being made in a $13,000,000,000 construction program at Camp Humphreys, Korea, to accommodate the relocation of United States troops south of Seoul and the first phase of tour normalization. Full tour normalization would require additional land, housing, schools and other facilities at Camp Humphreys, which would require a revised master plan for the base and would likely require changes to the current construction program. Given the extent of construction currently underway at Camp Humphreys, any substantive change in the plan could impact efficiency and drive up costs considerably. ... No funding was requested in the fiscal year 2012 budget for military construction related to tour normalization in Korea, but the Committee will expect detailed cost information and a completed business case analysis, approved by the Secretary of Defense, for the strategic objectives that to this point have driven the decision to implement tour normalization, before approving any funding requests in future years. This business case analysis should clearly articulate the strategic objectives, identify and evaluate alternative courses of action to achieve those objectives, and recommend the most cost-effective alternative. Finally, the Senate Committee on Armed Services included Section 2113 into S. 1253 , their version of the NDAA for FY2012, that would bar any funds from being obligated or expended in support of tour normalization until DOD's Director of Cost Assessment and Program Evaluation (CAPE) conducts an appropriate analysis of alternatives to the program being pursued by the Army, the Secretary of the Army submits a master plan detailing the schedule and costs for the needed facility and infrastructure construction, and subsequent legislation authorizes such obligation. U.S. European Command (EUCOM) encompasses the countries in Europe, Russia, Israel, Greenland, and Iceland. The EUCOM commander simultaneously serves as NATO's Supreme Allied Commander, Europe (SACEUR). Because Europe was long considered the front line during the Cold War, the bulk of U.S. forces permanently garrisoned overseas was stationed within the EUCOM area of responsibility. In 1980, more than 331,000 servicemembers were on duty in the countries of Western and Southern Europe and afloat on adjacent seas. Of these, more than 244,000, along with their families and associated civilian employees, were stationed in what was then West Germany. With the end of the Cold War, these garrisons saw significant reductions in their size. By 1999, Europe and adjacent waters hosted approximately 116,200 U.S. servicemembers, with 65,000 of those located in Germany. As of September 30, 2010, the number in and around Europe had fallen to 79,000, with 53,900 located in Germany, 9,600 in Italy, and 9,200 in the United Kingdom. As part of the GDPR mentioned earlier, Army and Air Force personnel in the Federal Republic of Germany are being consolidated into two large military communities centered at Kaiserslautern (known to many servicemembers as "K-Town") in the country's southwest near Frankfurt, and Grafenwöhr-Vilseck in eastern Bavaria near the Czech border. For the past several years, military construction supporting this relocation has concentrated in these areas. A significant portion of the combat power remaining in the Army portion of EUCOM was scheduled to redeploy to new posts in the southwestern United States as part of the GDPR, but the Secretary of Defense agreed to reconsider the movement of two brigade combat teams after the most recent Quadrennial Defense Review reviewed the U.S. interest in supporting NATO. The President's FY2012 request includes $563 million for construction in Germany. It includes $249 million for Army construction of the relocated European Army and Air Force Exchange Central Distribution Facility (later not supported by the House), various training and communications facilities, barracks, and family housing. The DOD Education Agency (DODEA) is requesting $207 million to build, expand, or replace elementary, middle, and high schools at several locations. The Tricare Management Agency plans to replace the military medical center at Rhine Ordnance Barracks at a total cost of $1.2 billion and is requesting $71 million for the first increment of funding. The Air Force is asking for $35 million to build a new airman's dormitory at Ramstein Air Base, and the Defense Information Systems Agency (DISA) is asking for $2.4 million to upgrade its facility serving U.S. Army, Europe, headquarters near Stuttgart. The Senate Committee on Appropriations took note of the potential impact of efficiency initiatives announced by the Secretary of Defense during August of 2010 when it wrote The Committee remains concerned with the United States Army transformation and realignment plans in Europe. This year, DOD announced the restructuring of headquarters commands in Europe from four-star to three-star staff billets to reduce overhead as part of the Secretary of Defense's efficiency initiative. Subsequently, the Army announced its decision to reduce Army Brigade Combat Teams [BCTs] in Europe from four to three after 2015. In light of these developments, the Army continues to have challenges articulating its long term plans and justification for its forces and installations in Europe. ... In order to better understand future requirements for military construction in Germany, the Committee directs that no later than 90 days after enactment of this act, the Army and European Command provide a report on installations and properties in Germany that they intend to return to the host nation. Until U.S. Africa Command (AFRICOM) was activated in 2008, military affairs on the continent were the responsibility of EUCOM. With creation of AFRICOM headquarters, much of that responsibility shifted to the new command (Egypt, though, did not transfer to AFRICOM). Funds for the construction of two headquarters buildings at Camp Lemonier, Djibouti, were requested in FY2011. One of these was intended for Camp Lemonier itself, while the other was planned for the use of Combined Joint Task Force-Horn of Africa (CJTF-HOA). While the task force comprises the majority of personnel assigned to the installation, Camp Lemonier is limited in size. In its report on the military construction appropriation for FY2011, the Senate Committee on Appropriations noted that DOD had not submitted a requested report on plans for future operations of both Camp Lemonier and CJTF-HOA and recommended that funds for a separate task force headquarters be denied. The President's request for FY2012 includes $43.5 million for construction of housing at the camp and $46.0 million for facility improvements at the adjoining airfield. The House version of H.R. 2055 fully funded this request, as does the version of the bill reported by the Senate Committee on Appropriations. Nevertheless, the committee noted in its report that it remains concerned about the long range mission of AFRICOM at Camp Lemonier and the planned development and security of the installation. ... Although it is a Navy installation, its primary mission is to support the Combined Joint Task Force– Horn of Africa [CJTF–HOA], which is focused on anti-terrorism and capacity building in East Africa. DOD has designated Camp Lemonier as an enduring location, but by DOD definition, joint task forces are temporary in nature, designed to address specific, limited objectives, and are normally dissolved when their mission has been achieved or is no longer required. ... The Committee therefore directs the Secretary of the Navy to submit a comprehensive master plan for Camp Lemonier that can serve as a baseline to measure progress, total costs, and total funding requirements for all current and future projects associated with Camp Lemonier. Since its creation, AFRICOM headquarters has been located in Germany. Press reports have mentioned discussions concerning its potential movement to the Norfolk, VA, area. In its report on the NDAA for FY2012, the House Committee on Armed Services noted that Commander, U.S. Africa Command, has studied various alternatives for moving his headquarters to the United States and directed the Secretary of Defense to report the conclusions of that study not later than April 1, 2012. The area of responsibility assigned to U.S. Central Command (CENTCOM) includes Egypt, the Arabian Peninsula, and much of South and Southwestern Asia. CENTCOM has been the primary focal point of U.S. military operations since early 2002. While considerable construction in the CENTCOM area has been funded in previous years, the FY2012 request for appropriations includes only $80 million for a new entry control point and phases (slices) of funding for a barracks and drainage system at Bagram Air Base in Afghanistan and $137.2 million for three construction projects in Qatar and Bahrain Island. The House versions of both military construction appropriations and authorization support that funding. The Senate versions would strike the funding of the two projects on Bahrain Island, with Senate authorizers citing concerns that the Navy could not execute them during the fiscal year. Nevertheless, since FY2004, Congress has annually renewed a temporary authority permitting the Secretary of Defense to use operations and maintenance (O&M) funding in the defense appropriation for military construction in support of overseas contingency operations. This discretion, referred to as "Section 2808 authority" for the provision originally granting it in the FY2004 National Defense Authorization Act ( P.L. 108-136 ), has varied over the years in the amount of funding available and the locations where it may be used, rising as high as $500 million for FY2009. Section 2804 of the Ike Skelton National Defense Authorization Act, 2011 ( P.L. 111-383 ) limited funding to $100 million and restricted its use to Afghanistan. Section 2805 of the House version of the FY2012 NDAA would reauthorize this authority for an additional year, through September 30, 2012, as would Section 2802 of the Senate's version of the bill. Legislative language used by congressional appropriators and authorizers has sought to distinguish between construction intended to support short-term expeditionary military operations and permanent garrisoning of troops in either Iraq or Afghanistan. That language has prevented funds from being used for the "permanent stationing" of forces and stressed that construction is to support "operational requirements of a temporary nature." Nevertheless, this stance has softened somewhat in recent years. Section 2806 of P.L. 110-417 , the Duncan Hunter National Defense Authorization Act for FY2009, exempted construction in Afghanistan from the existing ban on the use of O&M funds "deemed as supporting a long-term presence." A detailed discussion of war-related construction funding may be found in CRS Report R41232, FY2010 Supplemental for Wars, Disaster Assistance, Haiti Relief, and Other Programs , coordinated by [author name scrubbed]. Federal funding for FY2011 was provided through a series of eight continuing appropriations of varying lengths. Normally, a continuing appropriation permits government agencies to operate at the same rate as experienced in the most recent full-year appropriation—in this case FY2010—for the duration of the appropriation. The first bill of the series, the Continuing Appropriations Act, 2011 ( P.L. 111-242 ), was enacted on September 30, 2010, and provided funding through December 3, 2010. This original act, rather than merely extending existing appropriations into the new year, adjusted the amounts available to several appropriations accounts from their prorated FY2010 levels. The most substantial adjustment to military construction accounts was the reduction of the BRAC 2005 account from the $8.0 billion needed near the height of BRAC construction in FY2010 to $2.4 billion. Nevertheless, the act also contained the following text: Sec. 102. (a) No appropriation or funds made available or authority granted pursuant to section 101 for the Department of Defense shall be used for (1) the new production of items not funded for production in fiscal year 2010 or prior years; (2) the increase in production rates above those sustained with fiscal year 2010 funds; or (3) the initiation, resumption, or continuation of any project, activity, operation, or organization (defined as any project, subproject, activity, budget activity, program element, and subprogram within a program element, and for any investment items defined as a P-1 line item in a budget activity within an appropriation account and an R-1 line item that includes a program element and subprogram element within an appropriation account) for which appropriations, funds, or other authority were not available during fiscal year 2010. This section, therefore, did not permit the initiation of any new FY2011 construction projects. None of the subsequent enacted appropriations altered this language until the enactment of the Full-Year Continuing Appropriation Act for FY2011 ( P.L. 112-10 ) on April 15, 2011. The President submitted his FY2012 appropriation request for military construction and family housing to Congress on February 14, 2011, and the House passed its version of the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act ( H.R. 2055 ) on June 14, 2011. The overall level of funding in the President's request represents a 17.1% ($3.0 billion) reduction below the combined Title I (military construction) and Title IV (Overseas Contingency Operations construction) amount enacted for FY2011. The House version of H.R. 2055 funding levels in New Budget Authority represent a 20.5% ($3.6 billion) reduction from FY2011 enacted amounts. The major portion of that reduction comes from the $2.1 billion less in BRAC 2005 funding needed to support the first post-implementation year of that program. The President's FY2012 request is less than one-quarter of the amount needed during the last year of BRAC construction and movement. The President also requested no funds for the Overseas Contingency Operations construction account. This represented $1.2 billion in the FY2011 appropriation. Even though the FY2012 base budget request includes $80 million in construction for Afghanistan, plus another $137 million elsewhere in Central Command, this marks a substantial reduction in construction activity in the area of the most intense U.S. military operations. The House passed its version of a military construction appropriations bill ( H.R. 2055 ) on June 14, 2011. The Senate Committee on Appropriations reported its amendment to H.R. 2055 on June 30, and the chamber may take up the measure in the near future. As Members of Congress and the defense committees consider the President's request for FY2012, a number of questions may suggest themselves: To what extent did the delay in FY2011 appropriations disrupt executive branch planning and commitment of construction funds? Do the findings made by the GAO regarding U.S. basing in Asia indicate inadequate management and planning on the part of DOD, or are there extenuating circumstances that inhibit DOD's ability to effectively plan and execute the adjustment of its military posture there? How, and to what extent, will limits on government debt impact both the timing and the number of military construction projects that can be undertaken? Does the prohibition on congressionally directed spending ("earmarks") limit Congress's ability to exercise its constitutional power to "raise and support Armies" and "provide and maintain a Navy," and if so, how and to what extent? Is it appropriate for DOD to assist local jurisdictions in absorbing the demands on infrastructure and services created by significantly increased military community size? If so, what legislation is required to create the necessary authority and/or additional funding? Would new authority to extend implementation of some recommendations of the 2005 BRAC Commission reflect the complexity of the current BRAC round, or have the military services not adequately planned to the mandatory deadline?
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This report focuses on those government activities funded under the FY2012 military construction appropriation, examines trends in military construction funding, and outlines military construction issues extant in each of the major regions of U.S. military activity. President Barack Obama submitted his FY2012 appropriations request to Congress on February 14, 2011. His military construction appropriations request for $14.7 billion in new budget authority fell approximately $9.9 billion below the amount enacted for FY2010 and $3.0 billion below that enacted for FY2011. Much of that reduction came from military base closure accounts. Initiated in late 2005, the current base realignment and closure (BRAC) round is expected to conclude in September 2011. Funding needed in FY2010 and FY2011 for construction and movement of organizations will not be needed in FY2012 and subsequent years. In addition, the President requested less regular military construction for FY2012 than in earlier years. Finally, funding for construction supporting Overseas Contingency Operations (OCO, or active military operations in Iraq and Afghanistan), appropriations for which totaled $1.4 billion in FY2010 and $1.3 billion in FY2011, has been virtually eliminated, with only $217 million in the regular FY2012 appropriation requested for construction within U.S. Central Command (CENTCOM). The first military construction bill (H.R. 2055) was passed by the House on June 14, 2011. Construction issues within the United States center on relocations associated with BRAC movements; the proposed transfer of a nuclear-powered aircraft carrier from Norfolk, VA, to Mayport, FL; the potential to move detainees from Naval Station Guantanamo; and the possible expansion of the Army's Piñon Canyon Maneuver Site. In the Pacific region, topics of major interest include planned relocations of U.S. Marine forces within the Japanese Prefecture of Okinawa and from Okinawa to the U.S. Territory of Guam; movement of U.S. garrisons in the Republic of Korea; and normalization of duty there, which will lengthen tours and bring many more military families to Korea. Troops are also moving within Europe and redeploying to the United States. Active duty military personnel stationed in Europe now number only one-quarter of the force present in 1980, and garrisons in Germany are being concentrated into two large military communities near Landstuhl and Vilseck. At least one major combat formation scheduled to move to the United States during the past few years has been retained at its garrison in Germany pending a military basing review. Military responsibility for much of Africa is now exercised by U.S. Africa Command (AFRICOM). Though headquartered in Germany, AFRICOM has one enduring military garrison site on the continent, at Camp Lemonier, Djibouti. Press accounts have indicated that a new permanent home for AFRICOM headquarters might be located in southeastern Virginia. Southwest Asia, the area of responsibility for CENTCOM, has seen ongoing military operations for almost a decade. Since FY2004, Congress has given DOD special authority to use some operations and maintenance funds for military construction outside of the normal appropriations process. Both House and Senate versions of the National Defense Authorization Act for 2012 would extend that authority into FY2012. Funds for military construction had been provided through special emergency supplemental appropriations, but beginning in FY2010, these funds were folded into the base budget—though still categorized separately from normal construction requests. CENTCOM construction has fallen with the FY2012 request.
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This report presents an analysis of the discretionary appropriations for the Department of Homeland Security (DHS) for fiscal year 2014 (FY2014). It compares unsequestered enacted FY2013 appropriations for DHS, the President's request for FY2014 funding for DHS, and the appropriations legislation crafted in response to that request. The first portion of this report provides an overview and historical context for reviewing DHS appropriations, highlighting various aspects including the comparative size of DHS components, the amount of non-appropriated funding the department receives, and trends in the timing and size of the department's appropriations legislation. The second portion of the report outlines the legislative chronology of major events in funding the department for FY2014. The third portion of the report provides detailed information on DHS appropriations, broken down by component, with discussing of associated policy issues. Discussion of appropriations legislation involves a variety of unique budgetary concepts. Appendix A to this report explains a variety of these concepts, including budget authority, obligations, outlays, discretionary and mandatory spending, offsetting collections, allocations, and adjustments to the discretionary spending caps under the Budget Control Act. This report pays particular attention to discretionary funding amounts. The report does not provide in-depth analysis of specific issues related to mandatory funding—such as retirement pay—nor does the report systematically track any other legislation related to the authorization or amendment of DHS programs, activities, or fee revenues. For FY2014, the Administration requested $39.028 billion in adjusted net discretionary budget authority for DHS, as part of an overall budget request of $60.0 billion (including fees, trust funds, and other funding that is not appropriated or does not score against the overall discretionary spending caps budget allocation for the bill). On June 6, 2013, the House passed H.R. 2217 with several amendments by a vote of 245-182. This report uses House-passed H.R. 2217 and the accompanying report ( H.Rept. 113-91 ) as the source for House-passed appropriations numbers. After floor action the House bill carried a net discretionary appropriation of $38.991 billion for DHS for FY2014. Several House-adopted floor amendments used management accounts as offsets, leaving funding for those activities 40% below the requested level. Increases approved by the House above the committee-recommended level for DHS activities included Customs and Border Protection's Border Security Fencing, Infrastructure, and Technology account, Coast Guard's Operating Expenses account, the Federal Emergency Management Agency's Urban Search and Rescue Response activities and grant programs. On July 17, the Senate Appropriations Committee reported out H.R. 2217 with an amendment by a vote of 21-9. The Senate-reported bill carried a net discretionary appropriation of $39.100 billion for DHS for FY2014. Late on September 30, 2013, the Office of Management and Budget (OMB) gave notice to federal agencies that an emergency shutdown furlough would be put in place as a result of the failure to enact appropriations legislation for FY2014. On September 27, 2013, DHS released its "Procedures Relating to a Federal Funding Hiatus," which included details on how DHS planned to determine who was required to report to work, cease unexempted government operations, recall certain workers in the event of an emergency, and restart operations once an accord was reached on funding issues. More than 31,000 DHS employees were furloughed, and tens of thousands of others who were excepted from furlough and whose salaries were paid through annual appropriations worked without pay. For a broader discussion of a federal government shutdown, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects , coordinated by [author name scrubbed]. On October 17, 2013, the Senate and the House of Representatives passed, and the President signed into law, a Senate-amended version of H.R. 2775 , which carried a short-term continuing resolution (CR) that funded government operations at a rate generally equivalent to FY2013 post-sequestration levels through January 15, 2014. The Senate passed the amended bill by a vote of 81-18, while the House passed it 285-144. This act temporarily resolved the lapse in funding, ending the emergency furlough, returning federal employees to work, and retroactively authorizing pay for both excepted and unexcepted employees for the duration of the funding lapse. Although a handful of legislative provisions were included to extend expiring authorities for the department and provide some flexibility for Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) in operating under the constraints of the CR, as is usually the case with this type of legislation, account-level direction for funding was not provided, and no explanatory statement of congressional intent (such as a committee report) exists. On January 14, 2014, the House passed by voice vote H.J.Res. 106 , a short term continuing resolution, that would allow for three days of continued funding under the same terms as P.L. 113-46 . On January 15, the bill passed the Senate by a vote of 86-14, and was signed into law that same day, becoming P.L. 113-73 and preventing an additional lapse in appropriations while a consolidated appropriations act for FY2014 completed the legislative process. On January 17, 2014, the President signed into law the Consolidated Appropriations Act, 2014, which included annual appropriations legislation covering the entire discretionary budget for FY2014. Division F of P.L. 113-76 is the Homeland Security Appropriations Act, 2014, which includes $39,270 million in adjusted net discretionary budget authority for DHS. This is $922 million more than DHS reportedly received in its annual appropriation for FY2013 after taking into account the impact of sequestration. The act also included an additional $5.6 billion requested by the Administration for FEMA in disaster relief funding as defined by the Budget Control Act, and an additional $227 million for the Coast Guard to pay the costs of overseas contingency operations. Those additional costs are compensated for by adjustments in the discretionary spending limits outlined through the Balanced Budget and Emergency Deficit Control Act as amended. Data used in this report for FY2013 amounts are taken from CRS analysis of H.R. 933 as enacted as the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ) and the Senate explanatory statement that accompanied it, plus the Disaster Relief Appropriations Act of 2013 ( P.L. 113-2 ). Information on the FY2014 request is from the President's budget documents, the FY2014 DHS Congressional Budget Justification , and the FY2014 DHS Budget in Brief. Information on the House-passed FY2014 DHS appropriations bill is from H.R. 2217 and H.Rept. 113-91 , while information on the Senate-reported version is from H.R. 2217 (as amended) and S.Rept. 113-77 . Enacted levels are drawn from Division F of P.L. 113-76 and its accompanying explanatory statement. Historical funding data used in the appendices are taken from the Analytical Perspectives volumes of the FY2006-FY2013 budget request documents. Except when discussing total amounts for the bill as a whole, all amounts contained in this report are rounded to the nearest million. Past CRS reports on DHS appropriations have carried detailed comparisons with previous years' funding levels. However, due to the impact of sequestration on budget authority available to the federal government under P.L. 113-6 and the Disaster Relief Appropriations Act of 2013 ( P.L. 113-2 ), official post-sequestration numbers are not available at the program, project, and activity level. While DHS released an FY2013 Post-Sequestration Operating Plan on April 26, 2013, which outlined funding provided as a result of P.L. 113-6 , press reports have indicated that reprogramming and transfer activity is underway to address the impact of the nearly across-the-board cut administered through the sequestration process on priority programs. Because no detailed comprehensive statement of post-sequestration resources is available with a parallel methodology to the numbers historically provided in these reports, the charts in this report contain information on pre-sequester funding levels for FY2013. In all cases, the data from P.L. 113-6 account for the two across-the-board cuts included in the general provisions of the act. 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 created by the act. Appropriations measures for DHS have generally been organized into five titles: Title I contains appropriations for the Office of Secretary and Executive Management (OSEM), the Office of the Under Secretary for Management (USM), the Office of the Chief Financial Officer, the Office of the Chief Information Officer (CIO), Analysis and Operations (A&O), and the Office of the Inspector General (OIG); and Title II contains appropriations for Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), the Transportation Security Administration (TSA), the Coast Guard (USCG), and the Secret Service; Title III contains appropriations for the National Protection and Programs Directorate (NPPD), Office of Health Affairs (OHA), Federal Emergency Management Agency (FEMA); Title IV contains appropriations for U.S. Citizenship and Immigration Services (USCIS), the Science and Technology Directorate (S&T), and the Federal Law Enforcement Training Center (FLETC); and Title V contains general provisions providing various types of congressional direction to the department. The structure of the bill is not automatically symmetrical between House and Senate versions. Additional titles are sometimes added to address special issues. For example, the FY2012 House full committee markup added a sixth title to carry a $1 billion emergency appropriation for the Disaster Relief Fund (DRF). The Senate version carried no additional titles beyond those described above. The DHS appropriations bill includes funding for all components and functions of the department. Table 2 compares the pre-sequester enacted totals for FY2013 with the FY2014 request and congressionally supported levels. The heavy lines in this table and in similar ones later in the report serve as a reminder that direct comparisons between the pre-sequester FY2013 funding and FY2014 proposals are not comparisons of current levels of actual spending and proposals for the coming fiscal year, as one would normally see in this type of report. As shown in Table 2, for FY2013, pre-sequester DHS discretionary appropriations were $46.2 billion, with $12.1 billion in supplemental appropriations. For FY2014, the total request was $44.7 billion. House-passed and Senate-reported DHS appropriations legislation have similar total funding levels, $44.6 billion and $44.7 billion, respectively. Under the terms of P.L. 113-76 , DHS received $46.0 billion in discretionary appropriations. Totals represent net discretionary budget authority, taking into account impacts of rescissions, and include emergency spending and disaster relief. Analyses that include the impact of fees and mandatory spending are found later in this report. The Administration proposed a 1% pay increase for all civilian federal employees in its FY2014 budget request. Almost all DHS employees are considered civilians, with the significant exception of Coast Guard military personnel. On August 30, 2013, the Administration submitted its pay plan to Congress, which was originally slated to take effect as of January 1, 2014. While the House did not fund the proposed civilian pay raise, it also did not prohibit it, and noted that if the Administration chose to pursue it, it should do so within the appropriated funds for DHS. The Senate Appropriations Committee included similar language in its report, noting that it "assumes the cost of living adjustment for civilian employees across the Department will be absorbed within amounts appropriated in this act." The Administration issued an executive order implementing the pay increase effective January 1, 2014 on December 20, 2013. Unlike some other appropriations bills, breaking down the DHS bill by title does not provide a great deal of transparency into where DHS's appropriated resources are going. The various components of DHS vary widely in the size of their appropriated budgets. The largest component is Customs and Border Protection (CBP), with an FY2014 request of $10,833 million and final appropriation of $10,420 million. Table 3 and Figure 1 show DHS's discretionary budget authority broken down by component, from largest to smallest. Table 3 presents the raw numbers, while Figure 1 presents the same data in a graphic format, with additional information on the disaster relief adjustment to the allocation allowed under the Budget Control Act ( P.L. 112-25 ). For each set of appropriations shown in Figure 1 , the left column shows discretionary budget authority provided through the legislation, while the right column shows that amount plus resources available under the adjustments. For the purposes of this report, funding provided under these adjustments is not treated as appropriations. This comparison looks only at the new budget authority requested or provided—not budget authority rescinded to offset the cost of the bill—so the totals will differ from Table 2 , which includes the impact of prior-year rescissions. Figure 1 , even with its accounting for discretionary cap adjustments, does not tell the whole story about the resources available to individual DHS components. Much of DHS's budget is not derived from discretionary appropriations. Some components, such as the Transportation Security Administration (TSA), rely on fee income or offsetting collections to support a substantial portion of their activities. U.S. Citizenship and Immigration Services (USCIS), for example, obtains less than 4% of its funding through direct appropriations—the bulk of the component's funding is derived from fee income. Figure 2 highlights how much of the DHS budget is not funded through discretionary appropriations. It presents a breakdown of the FY2014 budget request, showing the proposed discretionary appropriations, mandatory appropriations, and adjustments under the Budget Control Act, in the context of the total amount of budgetary resources proposed to be made available to DHS, as well as other non-appropriated resources. For FY2014, 67% of the proposed DHS gross budget was funded through discretionary appropriations. The remainder of the proposed budget was funded through fees, mandatory appropriations, BCA adjustments, and other non-appropriated resources. The amounts shown in this graph are derived from the Administration's budget request documents, and therefore do not exactly mirror the data presented in congressional documents, which are the source for the other data presented in the report, including Table 3 and Figure 1 . Table 4 presents DHS discretionary appropriations, as enacted, for FY2004 through FY2014. Generally speaking, annual appropriations for DHS rose from the establishment of the department, peaking in FY2010. However, the structural changes effected by the Budget Control Act that allowed disaster funding to be included in regular appropriations bills without being scored against the bill's allocation altered the downward trend as funding that might have been provided in a supplemental appropriations bill now was provided in the annual process. Without the impact of disaster relief funding, the nominal level of annual appropriations for the department declined each year since the FY2010 peak, until increasing in FY2014. Supplemental funding, which frequently addresses congressional priorities, such as disaster assistance and border security, varies widely from year to year and as a result distorts year-to-year comparisons of total appropriations for DHS. Note that the table includes two lines for FY2013. The first line for FY2013, in italics, describes pre-sequester resources provided to DHS. The second FY2013 line is derived from the post-sequester operating plan for the department, which examined only what was provided through the annual appropriations bill for DHS included in P.L. 113-6 , and data provided by HUD's Hurricane Sandy Rebuilding Task Force. Figure 3 shows the history of the timing of the DHS appropriations bills as they have moved through various stages of the legislative process. Initially, DHS appropriations were enacted relatively promptly, as stand-alone legislation. However, the bill is no longer an outlier from the consolidation and delayed timing that has affected other annual appropriations legislation. Title I of the DHS appropriations bill provides funding for the department's management activities, Analysis and Operations (A&O) account, and the Office of the Inspector General (OIG). The Administration requested $1,239 million for these accounts in FY2014. The House-passed bill would have provided $883 million in Title I, a decrease of 28.0% from the requested level. The Senate-reported bill would have provided $1,054 million in Title I, 14.9% below the requested level. Division F of P.L. 113-76 included $1,037 million in Title I, 16.3% below the requested level. Table 5 lists the pre-sequester enacted amounts for the individual components of Title I for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . The heavy lines in this table and in similar ones later in the report serve as a reminder that direct comparisons between the pre-sequester FY2013 funding and FY2014 proposals are not comparisons of current levels of actual spending and proposals for the coming fiscal year, as one would normally see in this type of report. The departmental management accounts cover the general administrative expenses of DHS. They include the Office of the Secretary and Executive Management (OSEM), which comprises the Immediate Office of the Secretary and 12 entities that report directly to the Secretary; the Under Secretary for Management (USM) and its components— the offices of the Chief Readiness Support Officer (formerly, the Office of the Chief Administrative Officer (OCAO)), Chief Human Capital Officer (OCHCO), Chief Procurement Officer (OCPO), and Chief Security Officer (OCSO); the Office of the Chief Financial Officer (OCFO); and the Office of the Chief Information Officer (OCIO). The Administration has usually requested funding for the consolidation of DHS headquarters here as well. In this section and in each section hereafter, a graphic follows the component or element description and provides a numeric and graphic representation of the discretionary appropriation provided to the relevant part of DHS described in the report. This graphic provides a quick reference to the size of a DHS component's appropriations relative to those of other DHS components in DHS as well as a visual comparison of the component's appropriation under the FY2014 request, the House-passed and Senate-reported bills for FY2014, and Division F of P.L. 113-76 . The Administration requested the following appropriations for these departmental management accounts: OSEM, $127 million; USM, $203 million; OCFO, $49 million; and OCIO, $327 million. The Administration requested $127 million for OSEM and 628 full-time employee equivalents (FTEs). As in the FY2013 budget, the Administration once again proposed separate line items for three offices—the Office of International Affairs, the Office of State and Local Law Enforcement, and the Private Sector Office—that are currently funded under the Office of Policy. Two program changes from the FY2012 baseline were included in the request for the Office for Civil Rights and Civil Liberties: $135,000 to support the department's role in countering domestic violence extremism; and more than a million dollars for oversight support of ICE's Secure Communities and 287(g) programs. A program change for the Office of Public Affairs included $3 million to continue and expand the "If You See Something, Say Something" campaign. The Administration requested $203 million for the USM and 872 FTEs. Several program changes from the FY2012 baseline were proposed under this appropriation: The Office of the Chief Readiness Support Officer included a $1.7 million reduction for the Asset Management Portfolio Review and a $271,000 reduction for the Nebraska Avenue Complex Facility Design; Human Resources Information Technology included a $4.5 million reduction in funding for contract support and systems implementation; and The Office of the Chief Procurement Officer included a $3.8 million reduction for In-Residence Course Offerings and a $3.4 million reduction for Security Support Services. The Administration requested $49 million for the OCFO and 208 FTEs. Program changes from the FY2012 baseline included a $4 million increase for Financial Systems Modernization and a $2.7 million reduction in contract support. The Administration requested $327 million for the OCIO and 274 FTEs. Program changes totaling more than $80 million were requested from the FY2012 baseline. These included increases of $35 million for Sharing and Safeguarding Classified Information, $6 million for Identity, Credential, and Access Management, and $54 million for Data Center Migration and reductions of $1.2 million for Enterprise-Wide Human Capital Planning, $1 million for Geospatial Information Infrastructure, and $10 million in Information Security and Infrastructure Activities. H.R. 2217 , as passed by the House, would have provided the following appropriations as compared with the President's request: OSEM, $100 million ($27 million or 21.2% less); USM, $135 million ($68 million or 33.5% less); OCFO, $31 million ($18 million or 36.7% less); OCIO, $211 million ($116 million or 35.5% less). The House Committee on Appropriations justified some of these reductions on the basis of the need to cover the lack of revenue from unrealized funding proposals that were intended to offset the cost of the bill and because of the department's failure to comply with several statutory requirements that were included in previous appropriations acts. Within OSEM, $5 million would be provided for enhancements to the "If You See Something, Say Something" campaign. The proposed separate line items for the Office of International Affairs, the Office of State and Local Law Enforcement, and the Private Sector Office would have been denied under House-passed H.R. 2217 . The offices were directed to remain within the Office of Policy, and a $2 million reduction in the requested aggregate funding for these three offices would have been realized proportionally through "reductions in duplicative administrative functions." A floor amendment to H.R. 2217 was adopted by voice vote on June 5, 2013, which used funding for the OSEM as an offset, thus reducing the amount available for OSEM by $3 million from the House Appropriations Committee recommendation of $103 million. The House-reported bill included $171 million for the USM, $32 million below the requested level. Under the USM appropriation, funding of $30 million would have been provided for the Chief Administrative Officer, of which $4 million would have been allocated for improvements, maintenance, and current operations at the Nebraska Avenue Complex. Four floor amendments, adopted by voice vote on June 5, 2013, used funding for the USM as an offset, thus reducing the amount available for the USM by $36 million from the House Appropriations Committee recommended level of $171 million, including H.Amdt. 100 , to increase funds for Border Security Fencing, Infrastructure, and Technology by $10 million; H.Amdt. 102 , to increase funds for Firefighter Assistance Grants by $5 million; H.Amdt. 103 , to increase funds for the Urban Search and Rescue Response System by $7,667,000; and H.Amdt. 104 , to increase funds for Transportation Security Administration Surface Transportation Security by $15,676,000. The House-reported bill included $41 million for the USM, $8 million below the requested level. Under the OCFO account, 50% of the total appropriation would have been withheld from obligation until the committee received all reports that were, by statute, required to be submitted with or in conjunction with the FY2015 budget request. The House report expressed concern with the significant cost of international rotations of DHS personnel through secondment positions in foreign countries and the expectation that the CFO would review the costs of all such positions. Funding for any further secondment positions in FY2014 would have been denied. The House report continued to provide direction to the department on the contents for its budget justifications for the coming year through this office, including a Future Years Homeland Security Plan covering FY2015 through FY2019. An adopted floor amendment further reduced the amount that would have been available for OCFO by $10 million from the House Appropriations Committee recommended level of $41 million. The House-passed appropriation of $211 million for the Office of the Chief Information Officer would have been allocated to two sub-appropriations: $99 million for salaries and expenses and $111 million for development and acquisition of information technology equipment, software, services, and related activities through September 30, 2015. Data Center Migration would have been funded through a general provision under Title V of the bill and would have received an appropriation of $34 million. H.R. 2217 , as reported by the Senate Committee on Appropriations, would have provided the following appropriations, as compared with the President's request: OSEM, $124 million ($3 million or 2.3% less); USM, $198 million ($4.5 million or 2.2% less); OCFO, $48 million ($779,000 or 1.6% less); and OCIO, $263 million ($64.2 million or 19.6% less). The total funding provided by the Senate-reported bill for departmental management in Title I would have been $633 million. This would have represented a decrease of $72.3 million, or 10.2%, from the President's request of $705 million, not including the funding for DHS headquarters consolidation. See Table 6 for additional detail. As in the House-passed version of the legislation, the Senate bill would have rejected the Administration's proposal to fund certain offices separately from the Office of Policy. However, the Senate committee report did not include the House's $2 million reduction to the Office of Policy. According to the Senate report, proposed reductions in funding for individual offices below the request, unless otherwise specifically addressed, were "due to a constrained budget environment and to focus limited resources on the Department's critical operational missions." In addition to continuing to produce annual comprehensive and quarterly acquisition status reports, the Senate Appropriations Committee directed DHS to revise the acquisition instruction manual by requiring the collection and distribution of information on lessons learned with regard to canceled acquisition programs, consistent with the recommendations made in a May 2013 GAO report. For the OCFO, the Senate Appropriations Committee-recommended appropriation of $48 million would have included the requested $4 million increase for Financial Systems Modernization, which would have allowed the OCFO to provide governance and oversight of some components' migration to a "financial systems solution." The Coast Guard was expected to undertake the migration of its financial management system in FY2014—a move anticipated to support financial management at the Transportation Security Administration and the Domestic Nuclear Detection Office. Like the House report, the Senate report continued to provide direction to the department on the contents for its budget justifications for the coming year through this office, including a Future Years Homeland Security Plan covering FY2015 through FY2019. The Senate report also continued to carry under the OCFO the minimum parameters for the all expenditure plans for specific DHS programs required by the appropriations committees. For the OCIO, the Senate Appropriations Committee-recommended appropriation of $263 million would have included $115 million for salaries and expenses and $148 million to be available through FY2016 for technology investments across the department that are overseen by the OCIO, including $45 million for development and acquisition of IT equipment, software, services, and related activities and $54 million to complete data center migration carried in a general provision at Section 546. The committee report affirmed that the migration "will lead to operational efficiencies, reduced geographic footprint, data sharing synergies, reduced energy consumption, and clarity of mission throughout the Department" and noted that "investment in data center consolidation of the first 10 data centers is already resulting in annual savings of $17,000,000 and could result in savings of $3,000,000,000 by 2030." The Senate committee report recommended an increase of almost $30 million in the appropriation for implementing "information sharing and safeguarding measures to protect classified national security information" to be compliant with the implementation of Executive Order 13587, as opposed to the request of $35 million. The act provided the following appropriations, as compared with the President's request: OSEM, $122 million ($4.2 million or 3.3% less); USM, $196 million ($6.7 million or 3.3% less); OCFO, $46 million ($2.8 million or 5.7% less); and OCIO, $257 million ($70 million or 21.4% less). The total funding provided by Division F of P.L. 113-76 for Departmental Management in Title I was $622 million. This was a decrease of $97 million, or 13.7%, from the President's request of $705 million, not including the funding for DHS headquarters consolidation at St. Elizabeths. See Table 6 for additional detail. As in FY2013 and in the House-passed and Senate-reported versions of H.R. 2217 , P.L. 113-76 included a $45,000 limit on the use of OSEM appropriations for official reception and representation expenses, and the explanatory statement directed DHS to continue to submit quarterly reports on those expenses. Requirements are included in the OSEM appropriation for expenditure plans for the Offices of Policy, Intergovernmental Affairs, Civil Rights and Civil Liberties, and Citizenship and Immigration Services Ombudsman, and the Privacy Officer, although previous provisions withholding funds until these plans were delivered were not included. The explanatory statement noted that "no funds from OSEM are withheld from obligation until these plans are submitted so as to afford the department's new leadership an opportunity to demonstrate compliance with the law." Like the House-passed and Senate-reported bills, the act continued to fund the Office of International Affairs, the Office of State and Local Law Enforcement, and the Private Sector Office within the appropriation for the Office of Policy and provided additional direction for the office's expenditure plan and FY2015 budget justification. The Office of Public Affairs received an additional $3 million to enhance the "If you See Something, Say Something" public awareness campaign. The Deputy Secretary, joined by CBP and ICE, was directed to report within 60 days of enactment on further efforts to address corruption by DHS employees. DHS was directed to develop a hiring strategy including background investigations of potential new hires. The law directed the USM to submit a Comprehensive Acquisition Status Report to the House and Senate Committees on Appropriations at the same time that the President submits his FY2015 budget and quarterly thereafter, not later than 45 days after the completion of each quarter. As with OSEM, FY2014 funds were not withheld from obligation by the USM to afford the department's new leadership an opportunity to demonstrate its compliance with reporting requirements carried in statute. According to the explanatory statement, reduced appropriations for offices within the USM account resulted from disproportionally high lapsed balances at the end of FY2013 and funding needs across DHS. P.L. 113-76 included a directive under the OCFO account that the Secretary of Homeland Security submit the Future Years Homeland Security Program (FYHSP) to the House and Senate Committees on Appropriations at the same time as the President's FY2015 budget is submitted. As with other departmental management elements, FY2014 funds were not withheld from obligation by the OCFO to afford the department's new leadership an opportunity to demonstrate its compliance with reporting requirements carried in statute. The CFO was directed to continue briefings (at least semiannually) on Financial Systems Modernization for the House and Senate Committees on Appropriations and to submit a detailed expenditure plan on the modernization within 45 days after enactment. A new general provision at Section 547 provided almost $30 million for financial systems modernization. Within the OCIO account, $115 million was provided for salaries and expenses and $142 million was to remain available until September 30, 2015, for the development and acquisition of information technology equipment, software, services, and related activities for the department. An appropriation of $21 million funded information sharing and safeguards to protect classified national security information. Section 546 of the law provided $42 million for data center migration. The CIO was required to submit a detailed expenditure plan for the migration within 45 days after enactment. Under Section 551, the CIO was required to submit a multi-year investment and management plan for FY2014 through FY2017 to the House and Senate Committees on Appropriations, concurrent with the submission of the President's FY2015 budget. The reports of the House and Senate Appropriations committees that accompanied the House and Senate versions of H.R. 2217 , as well as the explanatory statement accompanying Division F of P.L. 113-76 , identified several issues before the department. Among the issues were those on vacancies in the department's political leadership positions, the morale of DHS employees, bonuses and awards for personnel, measures for determining the department's performance, and containing departmental travel costs. Brief discussions of each of these issues follow. Stating that the Office of Personnel Management's 2012 Federal Employee Viewpoint Survey noted a lack of effective leadership at DHS, the House committee report stated that "Innovation and proactive thinking are often lacking when a government agency or office is under acting leadership as career leaders seek to reinforce established business processes without disruption." The report expressed concern about leadership vacancies in CBP and OIG, stating that, "No Senate confirmed CBP Commissioner has been in place since the beginning of 2009," and "[N]o Senate confirmed Inspector General has been in place since early 2011." On March 6, 2014, R. Gil Kerlikowske was confirmed as Commissioner of CBP, and John Roth was confirmed as the DHS Inspector General. Concerns about "findings of low morale and a weak environment for innovation across the Department" were expressed in the House committee report. Specifically, the report noted that one independent study placed DHS "among the lowest-rated Federal agencies in both employee morale and innovative workplaces, with eight offices ranked in the bottom 12 percent and the Office of the Under Secretary for Science and Technology ranking 292 nd out of 292 agencies." The department was directed, within 60 days after the act's enactment, to provide "a corrective action plan" to address the morale and innovation issues to the "relevant Congressional Committees of jurisdiction." The "root causes" of the deficiencies and "metrics of success" that are "clear and measureable" were to be examined in the plan. The House committee report affirmed that bonuses and monetary awards are "important tools in recognizing and motivating high achieving agency personnel" and could be a means for encouraging employees to increase their productivity and employ creative ideas. The House Appropriations Committee was concerned, however, that more than half the employees (and, in some case, 90% of employees) in a component or office had received awards, including quality step increases, and that this practice "may cause these awards to lose their value as a form of recognition or incentive." The report stated that DHS did not grant performance awards in FY2013 because of reductions in funding and directed the department to include award amounts, estimated by component, and the standards and criteria that would be applied in making determinations of awards, with the FY2015 budget request. Noting that the department's annual performance reports "do not satisfactorily tie resources to results," the House committee report stated that Congress "is forced to make resource allocation decisions without sufficient information about the impact of those decisions." It also stated that DHS "must make significant additional progress" in defining its missions, strategies, goals, and priorities, including development of the next Quadrennial Homeland Security Review (QHSR), Future Years Homeland Security Programs (FYHSP), and the annual budget requests. Of particular interest to the committee was performance-based budgeting that "more systematically and comprehensively tie[s] long-term strategies and goals to performance measures involving programs, assets, capabilities, policies, and authorities" and "clearly link[s] prioritized goals to anticipated resources." The department was directed to include "in future QHSRs, FYHSPs, and annual budget proposals, clearly defined and prioritized mission goals and associated, multi-year plans for providing sufficient resources to realize those goals." In addition, budget justifications were to include performance measures that "measure outcome (results/impact), output (volume) and efficiency." DHS, working with the Government Accountability Office, was directed to submit "a comprehensive report that provides updated performance metrics that are measurable, repeatable, and directly linked to requests for funding." The Senate committee report spoke to the issue of metrics as well, noting that DHS undertook an efficiency review in March 2009, to reduce overhead and administrative costs, streamline operations, and establish a culture of efficiency. An independent third-party assessment of this process in November 2012 resulted in recommendations including those on "emphasizing consistency in efficiency review investments across all components" and "expanding metrics reporting." The report directed the department to brief the committee on the implementation of the recommendations within 60 days of enactment. The act continued a provision first included in the FY2010 appropriation for OSEM directing that all official costs associated with the use of government aircraft by DHS personnel in support of the Secretary's and the Deputy Secretary's official travel be paid from amounts made available for their immediate offices. The explanatory statement directed the department to provide further reporting on travel costs to improve transparency, and directed DHS to "significantly reduce the number of offline travel bookings in FY2014." The explanatory statement also directed the Office of the Inspector General to "examine department-wide travel costs and to identify excessive expenditures and potential savings." The Department of Homeland Security's headquarters footprint occupied more than 7.5 million square feet of office space in more than 40 locations in the greater Washington, DC area, as of the beginning of FY2014. This is largely a legacy of how the department was assembled in a short period of time from 22 separate federal agencies that were themselves spread across the National Capital region. The fragmentation of headquarters is cited by the Department as a major contributor to inefficiencies, including time lost shuttling staff between headquarters elements; additional security, real estate, and administrative costs; and reduced cohesion among the components that make up the department. To unify the department's headquarters functions, the department and General Services Administration (GSA) approved a master plan in October 2006 to create a new DHS headquarters on the grounds of St. Elizabeths in Anacostia. According to GSA, this would be the largest federal office construction since the Pentagon was built during World War II. The Administration requested $106 million for the activities related to the St. Elizabeths DHS headquarters project as part of the budget for departmental operations. This included $93 million for construction and $13 million in costs for campus security. House-passed H.R. 2217 included no funding for construction at St. Elizabeths, and the House Appropriations Committee did not indicate that the bill included any funding for campus security costs. Senate-reported H.R. 2217 included no funding under Title I, but $43 million for costs associated with headquarters consolidation under the bill's general provisions, and $13 million in Coast Guard Operating Expenses for campus security costs. Division F of P.L. 113-76 included no funding for the headquarters consolidation project under Title I, but like the Senate-reported bill, included $35 million for costs associated with headquarters consolidation under the bill's general provisions, and $13 million in Coast Guard Operating Expenses for campus security costs. The initial cost estimate for the St. Elizabeths project was $3.4 billion. Of this project, $1.4 billion was to be funded through the DHS budget and $2 billion through the GSA. The latest cost estimates for the project present a phased approach to construction that would require less yearly funding, but would take longer to complete and be more expensive as a result. If funding is provided for one segment each year, DHS and GSA indicate the project will cost $4.5 billion to complete, with the final segment being finished in FY2026. Even so, GSA estimates $532 million in savings over 30 years solely comparing construction costs to lease costs. According to DHS, $1,368 million has been invested in the project so far through FY2013—$460 million through DHS and $908 million through GSA. Phase 1A of the project—a new Coast Guard headquarters facility—has been completed as is operational. FY2014 funding was below the requested level for both DHS and GSA elements of the planned construction on the center building complex. The spending plan envisioned $93 million from DHS for construction, and $262 million from GSA—which received only $35 million and $155 million, respectively. Nevertheless FY2014 funding represented the largest tranche of funding provided for the project since FY2009. Congress may wish to consider whether to continue with the consolidation effort at St. Elizabeths—taking into account the existing Coast Guard presence and investment in infrastructure on the site, the size of the future investment needed to complete the project, and the potential savings and benefits—and if the decision is made to continue, whether to proceed more quickly than the latest baseline projects in order to reduce costs and generate the efficiencies of consolidation more quickly. Funds included in the Analysis and Operations account support both the Office of Intelligence and Analysis (I&A) and the Office of Operations Coordination and Planning (OPS). I&A is responsible for managing the DHS intelligence enterprise and for collecting, analyzing, and sharing intelligence information for and among all components of DHS, and with the state, local, tribal, and private sector homeland security partners. Because I&A is a member of the intelligence community, its budget comes in part from the classified National Intelligence Program. OPS develops and coordinates departmental and interagency operations plans. It also manages the National Operations Center, the primary 24/7 national-level hub for domestic incident management, operations coordination, and situational awareness; fusing law enforcement, national intelligence, emergency response, and private sector information. The FY2014 request for the Analysis and Operations account was $309 million. The account request included funding for 852 FTEs (874 positions). House-passed H.R. 2217 would have included $292 million for the Analysis and Operations account, $17.6 million (5.7%) below the amount requested. According to H.Rept. 113-91 , the House Committee on Appropriations reduced funding for OPS because of a need to "offset severe flaws within [DHS's] budget request and due to an inadequate justification." The committee also denied the requested decrease to cybersecurity analysis and counterintelligence, restoring funding for these functions. Details on this were included in the classified annex accompanying H.Rept. 113-91 . Senate-reported H.R. 2217 would have included $304 million for the Analysis and Operations account, $5.5 million (1.8%) below the amount requested. The Senate committee report required DHS's Chief Intelligence Officer (the Under Secretary for I&A) to submit an FY2014 expenditure plan no later than 60 days after the enactment of DHS appropriations. The committee required the plan to detail areas where the department could provide unique expertise or serve intelligence customers who are not supported by other components of the U.S. Intelligence Community, consistent with current statute and executive orders, and in a way that does not impair intelligence support to the senior DHS leadership. The committee directed that the plan include the following elements: fiscal year 2014 expenditures and staffing allotted for each program as compared to fiscal years 2012 and 2013; all funded versus on-board positions, including Federal FTE, contractors, and reimbursable and nonreimbursable detailees; a plan, including dates or timeframes for achieving key milestones; allocation of funding within each PPA for individual programs; funding, by object classification, including a comparison to fiscal years 2013 and 2012; and the number of I&A-funded employees supporting organizations outside I&A including those within and outside DHS. In addition, the committee report directed I&A to continue semi-annual briefings on the State and Local Fusion Centers program. Division F of P.L. 113-76 (the Homeland Security Appropriations Act, 2014) provided $301 million in funding for Analysis and Operations. This was approximately $9 million more than House-passed H.R. 2217 , $3 million less than Senate-reported H.R. 2217 , and $8 million less than the FY2014 request. Issues for Congress In the recent past, some Members of Congress have voiced concerns about I&A's mission. In January 2012, Representative Sue Myrick stated that "I&A historically has suffered from a lack of focus in its mission. This challenge partially stems from vague or overlapping authorities in some areas." Representative Myrick made these comments in an opening statement for a House of Representatives Permanent Select Committee on Intelligence Subcommittee on Terrorism, Human Intelligence, Analysis, and Counterintelligence hearing about DHS's role in the intelligence community. The hearing centered on a report about DHS's intelligence mission issued by the Aspen Institute. While not specifically covering I&A, the report suggested that intelligence activities at DHS should avoid duplication of efforts—such as general analysis of terrorist activities—performed by other agencies. Rather, according to the Aspen Institute, DHS's mandate should allow for collection, dissemination, and analytic work that is focused on more specific homeward-focused areas. First, the intelligence mission could be directed toward areas where DHS has inherent strengths and unique value (e.g., where its personnel and data are centered) that overlap with its legislative mandate. Second, this mission direction should emphasize areas that are not served by other agencies, particularly state/local partners whose needs are not a primary focus for any other federal agency. The requirement made in the Senate committee's report accompanying Senate-Reported H.R. 2217 that DHS submit an FY2014 expenditure plan may help clarify some of the issues inherent in the above critique. The DHS Office of the Inspector General (OIG) is intended to be an independent, objective body that conducts audits and investigations of the department's activities to prevent waste, fraud, and abuse; keeps Congress informed about problems within the department's programs and operations; ensures DHS information technology is secure pursuant to the Federal Information Security Management Act; and reviews and makes recommendations regarding existing and proposed legislation and regulations to the department. The OIG reports to Congress and the Secretary of DHS. The Administration requested $119 million in appropriations for the OIG, plus a transfer of $24 million from the Disaster Relief Fund (DRF). New funding of $2.5 million was for executing audits mandated by the Implementing Recommendations of the 9/11 Commission Act of 2007, which required audits of DHS-administered preparedness grants to States and territories and high-risk urban areas. The House-passed bill included $114 million for the DHS OIG, plus a transfer of $24 million from the DRF as requested for disaster-related audits and investigations. The House committee report stated that this represented the funding required to maintain the current level of services, and noted with concern the lack of a confirmed head of the OIG since early 2011. The Senate-reported bill included $117 million for the DHS OIG, plus a transfer of $24 million from the DRF as requested and included in the House-passed bill. The Senate committee report also stated that this was the level required to provide the current level of services, including completion of audits of the State Homeland Security Program and the Urban Area Security Initiative grant programs by their legislatively mandated deadline. Division F of P.L. 113-76 included $115 million for the DHS OIG, as well as the requested $24 million transfer from the DRF. Both the House bill and report required the OIG to conduct reviews and provide reports, briefings, or determinations to the Appropriations Committees on a variety of matters. The FY2014 budget request for the OIG noted 18 separate reports that were required by statute and four that were required by Executive Order. Four of these predate the establishment of the department. New requirements for oversight of DHS participation in conferences and special events were not included in the Administration's analysis, due to the timing of its release. In addition, the House report directed that the OIG Provide a detailed expenditure plan for the OIG with its annual budget justification starting in FY2015, as well as an expenditure plan specifically for its work with Immigration and Customs Enforcement and Customs and Border Protection on integrity investigations of their operations; Provide a semiannual briefing on fraud and waste at the department; and Enhance their "red team" investigations in conjunction with TSA's Office of Inspection to ensure TSA screeners are properly trained and equipped to address the latest evolution of threats and vulnerabilities. The Senate report similarly directs that the OIG Provide a detailed expenditure plan for the OIG with its annual budget justification starting in FY2015, as well as expenditure plans that cover its entire portfolio, as well as a coordinated plan with ICE and CBP for their integrity oversight funding; and Report with FEMA on improvements in implementing disaster recovery programs and preventing waste, fraud and abuse. Division F of P.L. 113-76 and its accompanying explanatory statement direct the OIG to Examine DHS travel costs and "identify excessive expenditures and potential savings"; Review the department's hiring strategy for CBP and ICE personnel to see if the background investigations are effective in ensuring the integrity of their personnel, and provide input to the department on the matter. Provide the expenditure plan as requested in the House and Senate reports; and Brief the committees quarterly on joint OIG/FEMA work to prevent waste, fraud and abuse. Title II of the DHS appropriations bill, which includes more than three-quarters of the budget authority provided in the legislation, contains the appropriations for U.S. Customs and Border Protection (CBP), U.S. Immigration and Customs Enforcement (ICE), the Transportation Security Administration (TSA), the U.S. Coast Guard (USCG), and the U.S. Secret Service (USSS). The Administration requested $30,283 million for these accounts in FY2014. The House-passed bill would have provided $30,768 million, an increase of 1.60% from the requested level. The Senate-reported bill would have included $30,289 million, an increase of less than 0.1% from the requested level. Division F of P.L. 113-76 included $30,877 million in Title II, 2.1% above the requested level. Both the Senate-reported bill and the enacted annual appropriations act also included an additional $227 million in funding for overseas contingency operations of Coast Guard, compensated for by an adjustment in the discretionary spending limits outlined through the Balanced Budget and Emergency Deficit Control Act, as amended. Table 7 lists the enacted amounts for the individual components of Title II for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . CBP is responsible for security at and between ports of entry (POE) along the border, with a priority mission of preventing the entry of terrorists and instruments of terrorism. CBP officers inspect people (immigration enforcement) and goods (customs enforcement) at POEs to determine if they are authorized to enter the United States. CBP officers and U.S. Border Patrol (USBP) agents enforce more than 400 laws and regulations at the border to prevent illegal entries. CBP's major programs include Border Security Inspections and Trade Facilitation , which encompasses risk-based targeting and the inspection of travelers and goods at POEs; Border Security and Control between Ports of Entry , which includes the Border Patrol; Air and Marine Operations ; Automation Modernization , which includes customs and immigration information technology systems; Border Security Fencing, Infrastructure, and Technology (BSFIT); and Construction and Facilities Management . The agency also manages a number of immigration and customs user Fee Accounts . See Table 7 for account-level detail for all of the agencies in Title II, and Table 8 for subaccount-level detail for CBP appropriations and funding for FY2013-FY2014. The Administration requested an appropriation of $10,833 million in net budget authority for CBP for FY2014. The Administration's total request included $2,064 million in fees, mandatory spending, and trust funds, for a gross budget request of $12,897 million. This request included the following program changes from the FY2012 baseline: Transfer of most of the U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program from the DHS National Protection Programs Directorate (NPPD) into CBP, with a $253.5 million increase to CBP (also see "Entry-Exit System"); Increase of $210.1 million to fund approximately 1,600 additional CBP officers, to include 70 canine teams at Ports of Entry, as well as 245 operational and mission support personnel (also see " Border Enforcement Personnel "); Increase of $70.5 million to be divided among the Automated Targeting System (ATS) Operations and Maintenance ($31.1 million), targeting systems ($31.6 million), and CBP's National Targeting Center (NTC, $7.8 million). These programs analyze information about goods and travelers passing into and out of the United States, and check such information against targeting algorithms to prioritize certain flows for secondary inspections; Increase of $10.8 million for 1,500 additional mobile devices, handheld license plate/document readers, and related technology; Increase of $8 million for the acquisition of 60 automated kiosks at airports and at 8 high-volume pedestrian crossings for participants in CBP's trusted traveler programs; Decrease of $119.2 million as a result of reductions to mission support staffing ($103.7 million) and early retirement incentives ($15.5 million) for a number of CBP administrative offices; Decrease of $53.9 million from information technology (IT) infrastructure and systems support; Decrease of $48.4 million as a result of deferring the replacement of certain vehicles in the CBP fleet; Decrease of $47.9 million as a result of reduced Border Patrol overtime hours; Decrease of $30.9 million as a result of reduced acquisitions of Non-Intrusive Inspection (NII) equipment; Decrease of $23.8 million from CBP's Transportation Program (i.e., for the transportation of aliens apprehended near the border) due to a reduction of the transportation workload and through cost savings as a result of a re-competition of the transportation contract; Decrease of $18.9 million as a result of efficiencies in CBP's training and development programs; Decrease of $16.0 million from the CBP officer Foreign Language Awards Program; Decrease of $10 million from programs to combat port running (i.e., persons fleeing enforcement at a port of entry), reducing such programs at low-risk ports; Decrease of $7.9 million as a result of decreased mission support staffing for the US-VISIT program resulting from the proposed consolidation of the program within CBP (see "Entry-Exit System"); Decrease of $7 million from background investigations and periodic reinvestigations of CBP agents and officers; Decrease of $6.4 million as a result of centralizing ammunition procurement and distribution for firearms training; Decrease of $6.0 million as a result of reduced procurements for the Western Hemisphere Travel Initiative Land Border Integration program, which is designed to increase the efficiency of flows at land border ports of entry. Decrease of $5.3 million as a result of reducing the number of Tactical Analysis Units, which provide intelligence to front-line CBP officers; Decrease of $5 million as a result of extending the validation cycle for Customs-Trade Partnership against Terrorism (C-TPAT) members from three to four years. The House approved $10,617 million in net budget authority for CBP for FY2014, a decrease of $216 million (2.0%) from the President's request. Under the House-passed bill, CBP would have received $12,680 in gross budget authority, a $216 million (1.7%) decrease from the President's request. These numbers include an amendment to add $10 million to the Border Security Fencing, Infrastructure, and Technology (BSFIT) account to support emergency communication in rural areas, with a corresponding reduction to the DHS Office of the Undersecretary of Management. The House also passed an amendment to prohibit the use of funds for CBP preclearance operations at Abu Dhabi International Airport in the United Arab Emirates. The Senate Appropriations Committee-reported version of H.R. 2217 included $10,360 million in net budget authority for CBP for FY2014, a decrease of $473 million (4.4%) from the President's request. Under the Senate committee-reported bill, CBP would have received $12,424 million in gross budget authority, a $472 million (3.7%) decrease from the President's request. Division F of P.L. 113-76 (the Homeland Security Appropriations Act, 2014) provided $12,289 million in gross budget authority for CBP. This was approximately $608 million less than the FY2014 request, $391 million less than House-passed H.R. 2217 , and $135 million less than Senate-reported H.R. 2217 . In the FY2013 appropriations act, the "Air and Marine Operations—Salaries" subaccount was moved from the Salaries and Expenses account to the Air and Marines Operations account. Although the Administration's FY2014 appropriations request did not reflect this change, the FY2014 act, similar to the House-passed and Senate-reported bills, kept the account under Air and Marine Operations. The FY2014 budget justification recommended that the US-VISIT entry-exit program be transferred from DHS's National Protection and Program Directorate (NPPD) to CBP and recommended $254 million in appropriations for the program. The act, similar to the House- and Senate-passed bills, kept the program in NPPD. For the FY2014 budget cycle, issues for Congress included an ongoing discussion on determining the proper mix of human resources and technology at and between ports of entry, including discussions on increasing personnel at the nation's ports of entry and improving ports of entry infrastructure through appropriations through reimbursable agreements. There were also discussions on whether to increase various user fees. CBP's front-line enforcement personnel include CBP officers at ports of entry, agriculture specialists, U.S. Border Patrol agents, air interdiction agents, and marine interdiction agents. Taken together, these personnel numbers grew from 31,695 in FY2005 to 46,666 in FY2013, an increase of 14,971 (47%). Border Patrol agents accounted for the greatest share of this growth, with an increase of 10,106 agents during this period. Proportionally among all CBP personnel, the number of CBP officers grew the least during this period, increasing from 17,881 in FY2005 to 21,775 in FY2013, a 22% increase. The Administration thus proposes to hire 3,477 additional CBP officers in FY2014, including 1,600 officers through $210 million of additional appropriations, and 1,877 officers through revenues generated by proposed user fees increases (see "Customs User Fees"). The House Appropriations Committee report expressed general support for increasing the number of CBP officers, but recommended just half the requested increase for CBP officers and related expenses (i.e., $105 million) "to allow for a more methodical phase-in of the additional personnel." The committee rejected the Administration's request to designate increased user fees for additional CBP officers on the grounds that such authority is outside the jurisdiction of the Appropriations Committee. The Senate-reported bill would have provided $96 million to add 876 new CBP officers, and would have partially supported the Administration's user fee proposal by adding 974 more CBP officers though the use of such fees. Division F of P.L. 113-76 included $256 million to increase CBP officers at ports of entry by no fewer than 2,000 by the end of FY2015 – 1,477 fewer than the Administration's request, 400 more than what the House recommended and 150 more than what the Senate recommended. CBP collects several different types of user fees, including fees paid by passengers and by cargo carriers and importers for the provision of customs services. These fees are often referred to as COBRA fees because they were passed as part of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA, P.L. 99-272 ). Under 19 U.S.C. Sections 58c(f)(1)-(3), a portion of these fees directly reimburses CBP for certain customs functions, including overtime compensation and certain benefits and premium pay for CBP officers, certain preclearance services, foreign language proficiency awards, and—to the extent funds remain available—certain officer salaries. Another portion of COBRA fees—merchandise processing fees—is deposited in CBP's Customs User Fee Account to pay for additional customs revenue functions but is only available to the extent provided for in appropriations acts. The collection and disposition of certain COBRA user fees have been subjects of some controversy in recent appropriations cycles. In FY2012 and FY2013, CBP's Budget Justification proposed to use revenue from elimination of a fee exemption enacted through the United States-Colombia Trade Promotion Agreement Implementation Act of 2011 ( P.L. 112-42 ) to fund CBP officer salaries and expenses. The use of these additional revenues was not approved by Congress, requiring additional appropriated funding. In its FY2014 request, CBP did not propose to use the revenues generated by P.L. 112-42 for officer salaries and expenses. Instead, the FY2014 proposal included new fee increases: a $2.00 increase to the Immigration User Fee (IUF) and COBRA air and sea passenger user fees, and proportional increases in other COBRA fee categories. The Administration proposed to use increased fee revenues to pay for CBP officer salaries and expenses, and proposed to tie these user fees to the Consumer Price Index in the future. House-passed H.R. 2217 did not include language to increase these user fees, and H.Rept. 113-91 indicates that the committee did not have jurisdiction to allocate fee increases for officer salaries and expenses. The Senate-reported version of H.R. 2217 included language to increase the IUF and COBRA fees. The committee noted in its report that the services that are performed for which the fees are charged exceeds what CBP collects. S.Rept. 133-77 further noted that "this gap in cost recovery has a significant impact since one-third of the OFO's [Office of Field Operation's] budget is dependent on user fees." Senate-reported H.R. 2217 would have made the COBRA fee revenue generated by the elimination of the fee exemption in P.L. 112-42 available to CBP. A provision providing CBP access to the approximately $110 million in COBRA fee revenue generated pursuant to P.L. 112-42 was included as Section 568 of the Homeland Security Appropriations Act, 2014. The CBP Budget Justification also proposed to conduct a study assessing the feasibility of establishing and collecting a land border crossing fee from pedestrians and vehicles entering the United States through land POEs; but Section 561 of House-passed H.R. 2217 —an amendment adopted during full committee markup of the bill—would have prohibited the collection of such a fee, along with the use of DHS funds for any study relating to such a fee. Section 567 of the Senate committee-reported version of H.R. 2217 also would have prohibited the collection or study of a land border crossing fee. The Senate-reported provision is mirrored in Section 566 of the Homeland Security Appropriations Act, 2014. The FY2013 DHS appropriations act (Division D of P.L. 113-6 ) established a pilot program to permit CBP to enter into up to five public-private partnerships (PPPs) to support customs and immigration services at certain ports of entry. In general, PPPs may provide low-cost alternatives to increase POE personnel and/or to add or improve POE infrastructure. Yet CBP has limited authority to receive reimbursement for POE services (i.e., to establish a user-fee-funded POE) or to collect extra fees as compensation for providing services outside normal business hours. These restrictions limit CBP's ability to enter into PPPs. The Administration's FY2014 Budget Justification also included language to permit CBP to enter into up to five PPPs, and the FY2014 justification further proposed to expand CBP's partnership authority by permitting DHS to accept donations of real and personal property (including monetary donations) from private parties and state and local government entities for the purpose of constructing or expanding POE facilities. The House bill did not include the Administration's proposed language with respect to such partnerships and donation authority, however; and the House report indicated that the committee would not allow additional port of entry partnerships until DHS briefed the committee on the results of the initial pilot program. The Senate Appropriations Committee report supported the Administration's PPP language, and Section 566 of the Senate committee-reported version of H.R. 2217 included a modified version of the Administration's proposal to permit CBP to accept property donations to facilitate port construction. Division F of P.L. 113-76 included a provision that establishes a pilot program that enables CBP to receive reimbursement from outside sources for the costs of certain CBP services. The provision also allows CBP to accept donations. The provision, however, does not permit CBP to enter into reimbursable service agreements outside the United States and allows CBP only to enter into such agreements with no more than five air ports of entry for overtime costs only. Immigration and Customs Enforcement (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. 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. For ICE sub-account level detail, including appropriations and funding for FY2013 and FY2014, see Table 9 . For FY2014, the Administration requested $4,997 million in net budget authority, and $5,342 million in gross budget authority for ICE. The budget request included the following changes from the FY2012 baseline: Increase of $10 million for the Office of Principal Legal Advisor (OPLA); Increase of $6 million for commercial trade investigations; Increase of $9 million for human trafficking investigations; Reduction of $44 million in the 287(g) program; Reduction of $120 million in detention bed funding (a decrease of 2,200 beds); and Reduction of $10 million in ICE's international operations. The President's request also included an additional reduction of $482 million to reduce "inefficiencies." The largest part of the reduction ($205 million) would have come from reduced staffing for mission support and frontline positions achieved through attrition. House-Passed H.R. 2217 House-passed H.R. 2217 would have provided $5,384 million in net budget authority for FY2014, an increase of $388 million (7.8%) over the Administration's request. House-passed H.R. 2217 would have provided ICE with total budget authority of $5,729 million, representing an increase of $388 million (7.3%) over the Administration's request. Senate-Reported H.R. 2217 Senate-reported H.R. 2217 would have provided $5,054 million in net budget authority for FY2014, an increase of $58 million (1.1%) over the Administration's request. Senate-reported H.R. 2217 would have provided ICE with total budget authority of $5,399 million, representing an increase of $58 million (1.1%) over the Administration's request. Division F of P.L. 113-76 provided $5,269 million in net budget authority for FY2014, an increase of $272 million (5%) over the Administration's request. The act provided ICE with total budget authority of $5,614 million, representing an increase of $282 million (5%) over the Administration's request. ICE is responsible for many divergent activities due to the breadth of the civil and criminal violations of law that fall under its jurisdiction. As a result, how ICE resources can be allocated so as best to achieve its mission is a continuously debated issue. The FY2014 appropriations process involved discussions about ICE's role in detaining and removing (deporting) aliens and on the role of state and local law enforcement agencies in immigration enforcement. Enforcement and Removal Operations Part of ICE's mission includes locating and removing deportable aliens, which involves determining the appropriate amount of detention space as well as which aliens should be detained. In 2012, an estimated 11.7 million unauthorized aliens were in the United States. In addition, ICE reported in February 2012, that an estimated 1.9 million aliens (authorized and unauthorized) in the United States had been convicted of a crime. According to ICE, it has the capacity to remove 400,000 aliens a year, and accordingly, DHS has developed a system to prioritize certain aliens for removal. In 2011 and 2012, ICE published a number of agency guidance memoranda concerning the agency's enforcement priorities and prosecutorial discretion. In March 2011, John Morton, Director of Immigration and Customs Enforcement, published agency guidelines that define a three-tiered priority scheme that applies to all ICE programs and enforcement activities related to civil immigration enforcement. Under these guidelines, ICE's top three civil immigration enforcement priorities are to (1) apprehend and remove aliens who pose a danger to national security or a risk to public safety, (2) apprehend and remove recent illegal entrants, and (3) apprehend aliens who are fugitives or otherwise obstruct immigration controls. Morton published two memoranda in June 2011 to provide further guidance to ICE officers, agents, and attorneys to target criminal aliens for enforcement, and to consider prosecutorial discretion for certain crime victims. On August 18, 2011, DHS announced that it would review all removal cases that were awaiting hearings in the immigration courts to identify cases that might be amenable to prosecutorial discretion. In December 2012, Morton issued a memorandum providing guidance on the use of detainers —writs authorizing prison officials to continue holding prisoners in custody. DHS also announced, in June 2012, that the department would exercise prosecutorial discretion by deferring enforcement action in the case of certain individuals who were brought to the United States as children and who meet certain other criteria (known as the DACA program). As a result, there has been ongoing debate about how ICE should prioritize the removal of removable aliens. House-passed H.R. 2217 would have prohibited the use of any of the funds provided under the act to finalize, implement, administer or enforce these agency memoranda and policy guidance concerning enforcement priorities, including the DACA memorandum. This prohibition was added by H.Amdt. 136 , which passed the House by a recorded vote of 224-201 on June 6, 2013. In addition, House-passed H.R. 2217 would have required that $1,600 million of the appropriated funds shall be available to identify aliens convicted of a crime who may be removable from the United States and to remove such aliens once ordered removed. House-passed H.R. 2217 would also have required the Secretary of DHS to prioritize the identification and removal of aliens convicted of a crime by the severity of the crime. The Senate-reported bill contained a provision requiring the Secretary of DHS to "ensure enforcement of immigration laws." Division F of P.L. 113-76 contained the same provisions as House-passed H.R. 2217 regarding criminal aliens, and the Senate bill regarding the enforcement of immigration laws. ICE's Office of Enforcement and Removal Operations (ERO) provides custody management of the aliens who are in removal proceedings or who have been ordered removed from the United States. ERO also is responsible for ensuring that aliens ordered removed actually depart from the United States. Some contend that ERO does not have enough detention space to house all those who should be detained. Concerns have been raised that decisions regarding which aliens to release and when to release them may be based on the amount of detention space, not on the merits of individual cases, and that detention conditions may vary by area of the country, leading to inequities. Some policy makers have advocated for the increased use of alternatives to detention (ATD) programs for noncriminal alien detainees, citing these programs as a lower-cost option than detention and a more proportional treatment relative to the violation. The number of detention beds maintained by ICE has been an issue. ICE maintained 34,000 detention bed spaces in FY2013. In the beginning of calendar year 2013, ICE released 2,228 detainees, maintaining that the release was necessary due to the fact that ICE was operating under a continuing resolution (CR) and the upcoming budgetary reductions required by sequestration. At a hearing on the issue, ICE Director John Morton stated that although the CR had funded 34,000 beds, ICE's average daily detention population exceeded 35,000 individuals, including many who were not required to be detained under law. However, critics responded that the release was purely political and a way to pressure Congress to make a deal with the President to avert the sequestration reductions. The President's FY2014 budget requested a reduction in bed space to 31,800 beds. House-passed H.R. 2217 would have maintained 34,000 detention beds for FY2014. H.R. 2217 , as reported by the Senate Appropriations Committee, would have funded a minimum of 31,800 beds. However, Senate-reported H.R. 2217 would have increased ICE detention bed space funding by $41 million above the President's request, because it contended that the requested amount was insufficient to support the requested bed space. Division F of P.L. 113-76 specified that ICE shall maintain 34,000 beds through the end of FY2014. 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. ICE's Alternatives to Detention (ATD) provides less restrictive alternatives to detention, using such tools as electronic monitoring devices (e.g., ankle bracelets), home visits, work visits, and reporting by telephone, to monitor aliens who are out on bond while awaiting hearings during removal proceedings or the appeals process. 91 The Administration requested $72 million for the ATD program. Both House-passed and Senate-reported H.R. 2217 would have provided $96 million for ATD programs, $24 million above the President's request. In addition, the Senate report stated that ICE has failed to effectively maximize the use of the ATD program for custody management. Division F of P.L. 113-76 provided $91 million for ATD, directing ICE to brief the appropriations committees on the results of its electronic monitoring pilot, and directing GAO to provide a report evaluating ICE's implementation of the ATD program. Division F of P.L. 113-76 appropriated $25 million for Secure Communities, an information sharing program between DHS and the Department of Justice to check the fingerprints of arrestees against DHS immigration records. In FY2013, ICE completed the nationwide deployment of Secure Communities, and thus the President's request included a transfer of resources from Secure Communities to the Criminal Alien Program (CAP). The enforcement of immigration laws by state and local law enforcement agents through agreements pursuant to Section 287(g) of the INA (the Section 287(g) program) and through screening for immigration violations in state and local jails through the Section 287(g) program and Secure Communities has sparked debate about the proper role of state and local law enforcement officials in this area. Many have expressed concern over proper training, finite resources at the local level, possible civil rights violations, and the overall impact on communities. 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 used. The Administration requested a reduction of $44 million for 287(g) agreements from the FY2012 level of roughly $68 million. The Administration contends that the Secure Communities screening process is more efficient and cost effective than 287(g) agreements in identifying and removing criminal and other priority aliens. ICE plans to discontinue the least productive 287(g) task force agreements. H.Rept. 113-91 indicated that House-passed H.R. 2217 would have maintained FY2013 funding for the 287(g) program. S.Rept. 113-77 recommended $24 million for 287(g) agreements. The explanatory statement for Division F of P.L. 113-76 stated that the appropriated amount "fully funds the current 287(g) program," and that ICE should consider whether the program can be expanded or improved to more effectively and efficiently enforce immigration laws. The Transportation Security Administration (TSA), created in 2001 by the Aviation and Transportation Security Act (ATSA, P.L. 107-71 ), is charged with protecting air, land, and rail transportation systems within the United States to ensure the freedom of movement for people and goods. In 2002, TSA was transferred from the Department of Transportation 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, including assessing the risk of terrorist attacks to all non-aviation transportation assets, including seaports; issuing regulations to improve security; and enforcing these regulations to ensure the protection of these transportation systems. TSA is further charged with serving as the primary liaison for transportation security to the law enforcement and intelligence communities. The TSA budget is one of the most complex components of the DHS appropriations bill. The graphic above reflects net discretionary appropriations for the TSA, but that represents only a portion of the budgetary resources it has available. Airline security fee collections offset a portion of aviation security costs, including $250 million dedicated to capital investments in screening technology integration. Other fees offset the costs of transportation threat assessment and credentialing. Since these amounts are not set through traditional appropriations provisions, they are not reflected in the above graphic. Table 10 presents a breakdown of the total additional budgetary resources from all non-appropriated sources requested for TSA in the President's budget. The amounts shown in this table are derived from the Administration's budget request documents, and therefore do not exactly mirror the data presented in congressional documents, which are the source for the other data presented in the report. The FY2014 request specified a gross total of $7,398 million for TSA. The budget assumed $2,562 million in offsets, including an additional $122 million estimated from a proposal to modify the airline passenger security fee structure, and direct appropriations of $4,836 million. The Congressional Budget Office differed with the Office of Management and Budget on its estimate of the fees to be collected under the Administration's proposal, calculating that $2,541 million in offsets would be available, requiring $4,857 million in appropriations to fund TSA's proposed activities. Of the gross amount, $4,968 million was specified for Aviation Security, $827 million for the Federal Air Marshal Service, and $250 million in mandatory appropriations for the Aviation Security Capital Fund (ASCF), which provides security funding to airports primarily for integrating baggage screening systems. Additionally, $106 million was specified for Secure Flight, the system for checking airline passenger names against terrorist watchlists. Together, these aviation security-related activities made up roughly 83% of the budget request for TSA. Additionally, the budget requested $165 million for other Transportation Threat Assessment and Credentialing activities besides Secure Flight, $109 million for Surface Transportation Security, and $998 million for Transportation Security Support, including $285 million for Headquarters Administration. House-passed H.R. 2217 specified $7,217 million for TSA, $181 million below the request. The House committee report specified $10 million more than requested for the Screening Partnership Program to expand private screening to at least one additional airport seeking this option. A floor amendment further increased Screening Partnership Program funding by $32 million, using funding taken from aviation security programs unrelated to screening. The House-passed bill as amended would have maintained funding for the Federal Flight Deck Officers (FFDO) program at historic levels of roughly $25 million. The report specified $61 million less than requested for Screener Personnel Compensation and Benefits and $36 million less than requested for Airport Management, Information Technology, and Support. Additionally, the bill specified $96 million less than requested for Transportation Security Support, including $19 million less than requested for Headquarters Administration and $65 million less than requested for Information Technology, as outlined in the House committee report. Senate-reported H.R. 2217 specified $7,344 million for TSA, $54 million less than requested but $130 million more than the House-passed amount. Like the House, the Senate recommended roughly $25 million in funding for the FFDO program. The Senate report specified $51 million less than requested for Screener Personnel Compensation and Benefits and $19 million less than requested for Transportation Security Support, including $9 million less than requested for Headquarters Administration, $5 million less than requested for Information Technology, and $5 million less than requested for Human Capital Services. P.L. 113-76 specified roughly $4,983 million for aviation security, $109 million for surface transportation security, $176 million for transportation threat assessment and credentialing in addition to an anticipated $66 million in credentialing activities offset by credentialing fees, and $819 million for the Federal Air Marshals Service. This, in combination with $250 million in mandatory appropriations toward the Aviation Security Capital Fund, provided a gross total appropriation of roughly $7,365 million for TSA, $33 million less than requested. Appropriations issues regarding the TSA include the proposed change to the airline passenger security fee structure, screener staffing levels, implementation of management efficiencies, and funding for armed pilots and crew member self-defense training. The FY2014 request included a proposal to change the passenger security fee structure. The fee structure when the Administration made its request consisted of a charge of $2.50 per passenger per flight segment, not to exceed $5.00 for a one-way flight. The proposal sought to replace this scheme with a flat fee of $5.00 per passenger per one-way flight in FY2014. The Administration also sought to raise the fee $0.50 annually in FY2015 through FY2019, raising the fee to $7.50 incrementally over five years. The report accompanying the House budget resolution (H.Con.Res. 25) included language appearing generally to support the proposed change to the fee structure as a potential means to offset the costs of aviation security. However, the House report accompanying H.R. 2217 noted that the ability to change the statutory fee was outside the jurisdiction of the appropriations committees. The report went on to note that the request, based on assumptions of additional revenue from the proposed change in the passenger security fee structure, required the committee to make cuts to management and administrative offices across DHS functions, since the additional revenue assumed in the budget request was predicated on changes to existing law which might or might not occur. The Senate Committee on the Budget assumed an increase to aviation security fees consistent with the President's request, but asserted that any security fees levied on transportation passengers should be applied toward TSA transportation security programs (see S.Rept. 113-12 ). However, the Senate Appropriations committee report on H.R. 2217 ( S.Rept. 113-77 ) did not include the fee increases in its estimates, noting that "[w]hile the reasoning behind the proposed increase has merit and is recommended in both the House and Senate budget resolutions, the Senate Appropriations Committee believes this proposal should be channeled through the appropriate authorizing committees." Language in the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) restructured the passenger security fee (paid directly by passengers) to a flat fee of $5.60 per one-way trip effective July 1, 2014. In addition, the act repealed air carrier fees paid directly by the airlines. Until the repeal goes into effect October 1, 2014, TSA has the authority to collect such fees directly from air carriers to offset security costs with an overall limit on fee collections of the aggregate amount paid by airlines in calendar year 2000 for screening passengers and property. Due to its timing, the repeal has no direct effect on the TSA's FY2014 budget. The FY2014 request included a proposal to eliminate exit lane staffing positions, transferring this responsibility to airports, which already have general responsibility for access controls and physical security measures beyond screening checkpoints. The proposal was expected to save TSA $88 million in FY2014, but it was strongly opposed by airports that would assume this responsibility and the associated costs. The House Appropriations Committee raised procedural questions regarding this proposal. The committee also raised potential security concerns, because TSA exit lane staff at several airports check credentials and clear TSA personnel, law enforcement officers traveling armed, and in some instances, airline crews participating in the Known Crew Member program. House report language directed TSA to work in conjunction with airport operators to assess the impact of the change and consider delaying or phasing in the shift of exit lane staffing responsibility. The Senate committee specified $2 million to carry out tests to evaluate the use of various technologies to secure exit lanes at reduced cost. Senate report language would have required TSA to certify that security standards remain at or above current levels and affected airports have available a variety of low-cost technology solutions to carry out exit lane monitoring responsibilities before the proposed transfers at affected airports occur. Language in House-passed H.R. 2217 would have continued the limit on TSA screener staffing of 46,000 full-time equivalents (FTEs), not including newly hired part-time screeners. House report language elaborated on continued committee concerns that improved technologies and recent implementation of risk-based screening strategies, such as the new PreCheck expedited screening lanes for low-risk travelers, have not tempered the growth of screener staffing. While the Senate Appropriations Committee did not include a statutory cap on screeners, and directed TSA to recruit and hire screeners so as to prove appropriate levels of aviation security and ensure that average wait times at security checkpoints do not exceed 10 minutes, the amount specified for screener personnel compensation and benefits was $51 million less than requested. The Senate report indicated that $28 million of this reflected reduced staffing needs for advanced imaging technology (AIT) following the removal of 250 X-ray backscatter units in FY2013 and the decision to rely exclusively on millimeter wave imaging systems with automatic target recognition (ATR) that eliminates the need for human image viewers. The House committee report also included language directing TSA to provide a briefing within 90 days of enactment on the impact of behavior detection officers on aviation security, metrics used to assess this impact, and steps taken to develop a robust risk-based strategy for deploying behavior detection officers. The committee also recommended annual standardized testing at airports where behavior detection methods are being used. Similarly, the Senate committee report directed TSA to brief the committee on its progress in implementing DHS Office of Inspector General recommendations to improve the effectiveness of the Screening of Passengers by Observation Techniques (SPOT) program. P.L. 113-76 maintained the cap of 46,000 FTE screeners. While both the House and Senate bills assumed a reduction of 1,487 FTE screeners as a result of shifting responsibility for exit lane screening to airports, language in the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) required that TSA continue to monitor exit lanes at those airports where it provided such monitoring as of December 1, 2013. The joint explanatory statement accompanying P.L. 113-76 indicated that additional funding of $60 million more than that requested was included in the appropriation for screener staffing in order to staff these exit lanes. Language in the explanatory statement accompanying P.L. 113-76 advised TSA, in coordination with airports, to continue to evaluate cost-effective solutions to secure exit lanes. According to the explanatory statement, the additional funding for exit-lane staffing was partially offset by a reduction of $28 million for staffing reductions associated with whole-body imaging systems following the transition to machines with automated threat recognition capabilities. Roughly $205 million in various efficiency measures was built into the FY2014 request, including $113 million from Aviation Security, $16 million from FAMS, $12 million from Surface Transportation Security, $11 million from TTAC, and $53 million from Transportation Security Support. Projected efficiencies included reducing mission support personnel, moving to electronic media and away from paper prints of training and briefing materials, replacing non-essential travel with alternatives such as teleconferencing and videoconferencing, and improving logistics management to reduce postal and freight transportation costs. TSA also plans to reduce advisory and assistance contracts and procurement of promotional items. The inclusion of these efficiencies in the budget request raised a number of issues for Congress, including possible oversight questions as to why these efficiencies could not have been realized sooner. Looking forward into FY2014 and beyond, discussion of efficiencies may focus on TSA's diminishing ability to make marginal cost reductions despite continued pressures to trim budgets. This may be a particular concern for programs such Airport Management, Information Technology, and Support and Information Technology under Transportation Security Support, where amounts specified in the House bill were set considerably below requested levels. Given that these programs had already budgeted based on projected efficiency gains, identifying additional cost savings might prove difficult without potential impacts on TSA core missions. The Senate committee report made specific note of concerns over inventory management efforts to address recommendations made by the DHS Office of Inspector General regarding logistics management and warehousing. Report language directed TSA to periodically update the committee as further improvements are made to inventory management procedures. The FY2014 budget request included a recommendation to eliminate funding for the Federal Flight Deck Officers (FFDO) program, which trains airline pilots to carry firearms on a voluntary basis for the purpose of defending the aircraft cockpit against possible attacks. Funding for crew member self-defense programs would also be eliminated under the proposal. The TSA congressional justification indicated that these activities could be continued if paid for by "airlines desiring this capability on their flights," through reimbursable agreements with the Federal Law Enforcement Training Center (FLETC). The House Appropriations Committee in its report did not support the proposal to eliminate funding for the FFDO program, noting that "... the presence of armed and trained pilots and flight crew complement[s] other security measures in the aviation security domain and represent[s] a true last-line-of-defense aboard an aircraft." The committee initially recommended roughly $12 million for the program, but an agreed-to floor amendment increased FFDO funding in the bill to $25 million, consistent with historic funding levels since the program was fully implemented in FY2004. The Senate committee report specified $25 million for the FFDO and flight crew training programs, noting that "[t]he proposed cut would prevent dedicated flight crews who volunteer for [the FFDO] program from receiving training that could protect commercial flights and the passengers on them." The joint explanatory statement accompanying P.L. 113-76 specified $25 million for FFDO and flight crew training. The Coast Guard is the lead federal agency for the maritime component of homeland security. As such, it is the lead agency responsible for the security of 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 maintenance of aids to navigation. The Coast Guard was transferred from the Department of Transportation to DHS on March 1, 2003. The President requested $8,050 million for the Coast Guard in discretionary spending. This included $6,755 million for operating expenses and $951 million for acquisition, construction, and improvements (ACI). House-passed H.R. 2217 provided $8,399 million in discretionary funding for the Coast Guard, including $84 million more than the President requested for operations and $272 million more for the ACI account. The Senate Appropriations Committee recommended $8,385 million in discretionary funding for the Coast Guard, including $44 million more than the President requested for operations and $279 million more for the ACI account. P.L. 113-76 provided $8,501 million in discretionary funding for the Coast Guard, $451 million more than the President requested, but this included $227 million for overseas contingency operations (Iraq/Afghanistan) that the President had requested be transferred to the Coast Guard from the Department of Defense budget. The other major differences between the final bill and the President's request concern aircraft and housing, as identified below. The Coast Guard is in the midst of a multi-year effort to replace many of its aging vessels and aircraft. This modernization effort has been a major issue for Congress. The President's request for the ACI account of $951 million represented about a 35% reduction from the $1,472 million funding level reported in the DHS post-sequestration operating plan. The President requested two fast response cutters; the Coast Guard's previous acquisition plan called for ordering between four and six per year. The House bill would have increased the order to four, and the Senate Appropriations Committee would have increased the order to six. P.L. 113-76 provided funding for six fast response cutters. The President requested $616 million for completion of the seventh National Security Cutter but did not request any long lead time materials for the eighth and last National Security Cutter. The House and the Senate Appropriations Committees provided $77 million for long lead-time materials, as did P.L. 113-76 . The Coast Guard was also directed to submit a report on homeporting a National Security Cutter in Alaska as well as an Arctic strategy implementation plan. The Coast Guard's estimated cost of a new icebreaker is between $800 million and $1 billion. The President requested $2 million for preliminary planning, which the House and Senate Appropriations Committees agreed with. The Coast Guard is directed to submit an alternatives analysis for acquisition of a heavy icebreaker. The President requested $16 million for long-range surveillance aircraft, which the Senate Appropriations Committee agreed with. The House would have provided $108 million, with the House Appropriations Committee report stating that the Coast Guard had "decimated" funding for recapitalization of this aircraft in its submitted capital investment plan. The final bill did not include funding for the long-range surveillance aircraft, but provided $129 million for one HC-130J. For the operations account, the President's request would have resulted in a reduction in personnel of 931 positions, which the Coast Guard stated would be achieved through attrition. This included 850 service members and 81 civilians. Some of the projected reductions were due to the replacement of older vessels with newer vessels that require fewer crew. Other personnel reductions would have been achieved by reducing the number of security inspections of ships considered low risk and security inspections of European ports. The House-passed bill would have provided $84 million more than the President requested for operations. This included $43 million to restore cuts to the Coast Guard's training budget and $35 million more than the President requested for intermediate and depot-level maintenance (the repair and maintenance of vessels and aircraft). The President had requested the closure of two air stations: Charleston, SC, and Newport, OR. The estimated annual savings from this closure was $5 million. The House Appropriations Committee denied this request in its report. The Senate committee report was silent on the issue. The explanatory statement accompanying P.L. 113-76 noted that the agreement allowed for the closure of the two air stations. It also noted that an additional $28 million was provided for training and $25 million for depot-level maintenance. The President requested $1.2 million for Interagency Operations Centers (IOCs), which, along with unobligated balances, included funding to release WatchKeeper to the remaining 15 locations. IOCs are designed to monitor harbor operations, share intelligence, and coordinate responses to security incidents among federal and local law enforcement personnel. WatchKeeper is software that tracks vessel movements in harbors. The IOCs are generally co-located with Vessel Traffic Centers that monitor harbor activity and communicate with vessel operators for safe transits. The President also requested $13 million for the Nationwide Automatic Identification System—a system for tracking vessels along the coasts. This system has been installed in phases over several years. In FY2014, the Coast Guard planned to complete roll-out of the system to the remaining sectors. The House and the Senate Appropriations Committee concurred with these requests. The U.S. Secret Service (USSS) has two broad missions, criminal investigations and protection. Criminal investigation activities encompass financial crimes, identity theft, counterfeiting, computer fraud, and computer-based attacks on the nation's financial, banking, and telecommunications infrastructure, among other areas. The protection mission is the most prominent, covering the President, Vice President, their families, and candidates for those offices, along with the White House and Vice President's residence, through the Service's Uniformed Division. Protective duties also extend to foreign missions in the District of Columbia and to designated individuals, such as the DHS Secretary and visiting foreign dignitaries. Aside from these specific mandated assignments, the USSS is responsible for security activities at National Special Security Events (NSSE), which include the major party quadrennial national conventions as well as international conferences and events held in the United States. The NSSE designation by the President gives the USSS authority to organize and coordinate security arrangements involving various law enforcement units from other federal agencies and state and local governments, as well as from the National Guard. For FY2014, the Administration requested an appropriation of $1,546 million for the USSS. The Administration requested approximately $913 million for its protection mission, $347 million for its investigation mission, and total of 6,705 FTE to meet its personnel needs. For FY2014, the House-passed version of the DHS appropriations bill recommended an appropriation of $1,586 million. This amount would have represented a $40 million increase above the Administration's FY2014 request. Some of the increase as compared to the FY2014 request reflected the House's disagreement with the Service's plan to reduce costs associated with USSS agent change of station moves. The House also would have maintained traditional funding for forensic and investigative support related to missing and exploited children. For FY2014, the Senate-reported version of the DHS appropriations bill recommended an appropriation of $1,582 million, $5 million below the House-passed level, but $35 million above the Administration's FY2014 request. The Senate Appropriations Committee rejected proposed personnel cuts and reductions in the budget for permanent change of station costs. Like the House, the Senate committee report recommended traditional funding levels for forensic and investigative support related to missing and exploited children, and rejected the transfer of computer forensic training to FLETC. For FY2014, Congress appropriated $1,585 million for the Secret Service, including $1,533 million for salaries and expenses and $52 million for acquisitions, construction, and improvements. There was a reduction in the amount provided for the protection mission from FY2013 because there was no longer a need to fund the Service's candidate nominee protection activities. One potential ongoing issue for Congress concerning the USSS is the balancing of the investigative and protective missions of the Service, and how executing both missions affect overall USSS operations. USSS's protection mission, as opposed to its investigative mission, employs the majority of the Service's agents and receives a larger share of the agency's resources. Additionally, most of the recent congressional action concerning the USSS has been related to its protection mission and USSS agent misconduct. While Congress has maintained the Service's role in investigating financial crimes, such as combating counterfeiting, congressional action has primarily addressed, and continues to address, the Service's protection mission. Potential terrorist attacks and potential threats to the President have resulted in an increased need for the Service's protection activities. Advocates for expansion of the investigation mission, however, may contend that protection is enhanced through better threat investigation efforts. Both the House and Senate Appropriations Committee identified the requirement to restore personnel funding. Both the House-passed and Senate-reported bills included language that would have allowed the Secret Service more easily to shift funds among the activities that fund personnel costs for the protection and investigation missions to accommodate "unanticipated shifts in funding requirements for protection and investigation activities." A similar provison was included under the Salaries and Expenses appropriation for the Secret Service in P.L. 113-76 . Title III of the DHS appropriations bill contains the appropriations for the National Protection and Programs Directorate (NPPD), the Office of Health Affairs (OHA), and the Federal Emergency Management Agency (FEMA). The Administration requested $5,383 million for these accounts in FY2014. The House-passed bill would have provided $5,928 million, an increase of 10.1% above the requested level. The Senate-reported bill would have provided $5,955 million, an increase of 10.6% above the requested level. Division F of P.L. 113-76 included $5,952 million in Title III, 10.6% above the requested level. In addition, all three versions of this title included a requested $5,626 million for disaster relief that was offset by an adjustment under the Budget Control Act. Table 14 lists the enacted amounts for the individual components of Title III for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . The National Protection and Programs Directorate (NPPD) was created by the Secretary of Homeland Security in response to the Post-Katrina Emergency Management Reform Act of 2006. The Directorate includes the Office of the Under Secretary for NPPD and accompanying administrative support functions (budget, communications, etc.), the Office of Infrastructure Protection, the Office of Cybersecurity and Communications, the Federal Protective Services, and the Office of Biometric Identity Management (formerly the US-VISIT program). This section of the report tracks funding for the administrative functions of the Directorate and the programmatic activities of the Office of Infrastructure Protection and the Office of Cybersecurity and Communications. The administrative functions of the Office of the Under Secretary, the Office of the Assistant Secretary for Infrastructure Protection, and the Office of the Assistant Secretary for Cybersecurity and Communications are supported by the Management and Administration Program, for which the Administration requested $65 million for FY2014. The request included funding for an additional 58 FTEs to provide greater support in the areas of public affairs, budget and finance, human resources, information technology, privacy compliance, etc. The programmatic activities of the Office of Infrastructure Protection and the Office of Cybersercurity and Communications are supported by the Infrastructure Protection and Information Security Program (IPIS). The IPIS program can be further broken down into activities related to infrastructure protection, cybersecurity, and communications. The FY2014 request for IPIS was $1,202 million. The IPIS request included nine programmatic increases, the largest of which were: $166 million to support continuous monitoring of agency networks, $135 million for intrusion prevention, and $44 million for information sharing. The first is funded through the Federal Network Security PPA. The second two are funded through the Network Security Deployment PPA. The IPIS request also included 11 programmatic decreases. The largest reduction was $8 million, eliminating incident planning and exercises as a separately funded project. The functions and personnel associated with incident planning and exercises were absorbed into the budgets of other projects. The request also reduced DHS's activities in support of the National Initiative in Cybersecurity Education (NICE) by $5 million. The House-passed bill would have provided $51 million for Management and Administration, $14 million below the request, essentially maintaining current operations. The House report acknowledged a need for additional resources for NPPD administrative support, but cited shortfalls in other areas of the Administration's budget request as the reason for not providing NPPD the additional funds. The House-passed bill would have provided $1,177 million for the IPIS program. The House-passed bill would have funded Infrastructure Protection at $260 million, less than $1 million below the request. The bill would have funded Infrastructure Analysis and Planning above requested levels and included additional funds ($8 million more than requested) for the Office of Bombing Prevention. The bill would have funded Infrastructure Security Compliance $9 million below the request due to the House's continued concern over implementation of the Chemical Facility Anti-Terrorism Standards and the Ammonium Nitrate Security Program. The House would have provided $916 million for cybersecurity and communications, $25 million below the request. Most of the reduction ($24 million) would have come from the request for Network Security Deployment PPA. The House report cited tight budgets and the availability of unobligated funds from previous appropriations as cause for the reduction. The Senate Appropriations Committee recommended $60 million for the Management and Administration Program, $5 million less than requested, but $9 million more than in House-passed H.R. 2217 . The committee noted a decreasing share of the overall Directorate budget allocated to Management and Administration and concern about the ability to effectively manage and oversee the Directorate's programmatic activities. However, the committee also noted the overall constraints on budgets. The Senate Appropriations Committee recommended $1,209 million for the IPIS Program, $7 million above what the Administration requested. The committee recommended $8 million more for Infrastructure Analysis and Planning than was requested (similar to the House action), and $5 million more than requested for Sector Management and Governance, noting that DHS should do more to coordinate risk analysis and reduction activities across all sector coordinating agencies. The committee also recommended an additional $2 million above the requested level for the Office of Bombing Prevention. The committee recommended $86 million for the Infrastructure Security Compliance activity and required a semi-annual report on the progress being made in inspections of chemical facilities. The committee recommended $936 million for cybersecurity and communications activities, $5 million less than what was requested. The bulk of the reductions ($13 million) would have been made to the Network Security Deployment activity. The committee report noted that program had not been reviewed for a number of years and directed the Government Accountability Office to conduct such a review. The committee recommended not quite $7 million more than what was requested for the Global Cybersecurity Management activity and allocated no less than $16 million to cybersecurity education. The committee also recommended $38 million for the Office of Emergency Communications, $1 million above the requested amount. The act provided $56 million for Management and Administration and $1,187 million for the IPIS program. Division F of P.L. 113-76 and the accompanying explanatory statement generally represented a compromise between the House and the Senate Appropriations Committee's recommendations for Infrastructure Protection. The act provided $5 million less for Infrastructure Security Compliance than what was requested. Also the explanatory statement required NPPD to report on several matters: how the NPPD will improve the process for reviewing facilities; progress in complying with recommendations made in an Inspector General's report on the management of the CFATS program; and progress in implementing the program on a semiannual basis. The explanatory statement also directed the NPPD to conduct a critical review of the Ammonium Nitrate Security Program. The appropriation included increased funding for Infrastructure Analysis and Planning by $5 million (though not the $8 million that the House and Senate Appropriations Committee would have provided), with a portion of the increase directed at ensuring NPPD has data readily accessible for rapid analysis. The explanatory statement directed that no less than $11 million go to the Office of Bombing Prevention and no less than $16 million go to the National Infrastructure Simulation and Analysis Center. Similarly, a compromise was made between the House and the Senate Appropriations Committee positions regarding funds for Cybersecurity and Communications. The explanatory statement supported the House's recommendation for Network Security Deployment and the Senate Appropriations Committee's recommendation for Global Security Management, and endorsed the requested amount for the Office of Emergency Communications. The Chemical Facility Anti-Terrorism Standards program, which is intended to ensure compliance with security regulations for high-risk chemical facilities in the United States, continues to be of congressional concern. In 2011, an internal review of the CFATS program revealed major problems with efforts to approve security plans and inspect facilities. GAO released a study in April 2013 that found the CFATS review process improved, but stated that there were other weaknesses in DHS risk assessment methodologies. GAO estimated that reviews could still take 10 or more years to complete. In addition, the House report criticized the program for "systematic non-compliance with sound Federal Government internal controls," noting that DHS's Inspector General found inappropriate use of Administratively Uncontrolled Overtime for inspectors. Other related concerns of interest to Congress include NPPD establishment of a Personnel Surety Program for chemical facilities, and how this program will be implemented and administered. In regard to funding the CFATS program, the House would have provided $9 million less than what was requested for Infrastructure Security Compliance, whereas the Senate Appropriations Committee recommended only a slight decrease. The explanatory statement noted CFATS received $81 million, or $5 million less than the request. It also modified somewhat the reporting requirements sought by the House and Senate Appropriations Committees. Cybersecurity issues remain a significant interest. Congressional efforts to pass a comprehensive cybersecurity bill—which included an additional federal role to protect the privately owned critical infrastructure networks—were not completed during the 112 th Congress. However, there is renewed interest in the 113 th Congress in revisiting this issue. A large part of the federal cybersecurity funding in the IPIS supports improving network security within the federal government; it is unclear what the potential impact of new legislative initiatives will be on the IPIS program going forward. Regarding funding for the IPIS's cybersecurity and communications activities, the House and the Senate appropriations committees differed slightly. Both recommended less than what was requested for Network Security Deployment. The House would have made a larger reduction, citing the availability of unobligated funds. The Senate Appropriations Committee recommended additional funds for cybersecurity education. The explanatory statement split the differences, in this case, by adopting the House recommendations on Network Security Deployment and the Senate Appropriations Committee recommendation on Global Security Management, which supports, in part, cybersecurity education activities. Section 110 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA, P.L. 104-208, Div. C) required development of an automated entry-exit system that collects records of alien arrivals in and departures from the United States and analyzes such records to identify nonimmigrants who overstay their visas. Subsequent legislation has revised and expanded this entry-exit requirement on several occasions, but the system has never been fully implemented. The entry-exit system's place in the DHS organizational structure has changed several times since it was created. The system was designated the U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) Program in 2003 and initially was coordinated out of DHS' Directorate of Border and Transportation Security (BTS), the directorate responsible at the time for CBP and ICE. Under the "second stage review" reorganization by former DHS Secretary Chertoff, DHS eliminated BTS and proposed placing US-VISIT within a new Screening Coordination Office (SCO) that would have included several DHS screening programs and reported directly to the Secretary. Funding for the SCO was never appropriated, however, and US-VISIT became a stand-alone office within Title II of the DHS appropriation in FY2006. In FY2008, DHS transferred US-VISIT into the new National Protection and Programs Directorate (NPPD). The FY2013 budget request proposed to move US-VISIT from NPPD and to divide its work between CBP and ICE; but P.L. 113-6 replaced the US-VISIT Program in its entirety with a new Office of Biometric Identity Management (OBIM), still located within NPPD. The Administration's FY2014 Budget Request once again proposed to transfer the entry-exit program into CBP and ICE, with CBP's Justification requesting $254 million for "US-VISIT" to support biometric and biographic data collection at ports of entry and data management, and ICE's justification requesting $16 million for analysis of such data to detect visa overstays. House-passed H.R. 2217 and the House Appropriations Committee report recommended $232 million for OBIM, the same amount as provided in FY2013. The House report recommended transferring $12 million from US-VISIT/OBIM to CBP's Inspections, Trade, and Travel Facilitation sub-account to support data collection at POEs, and realigning $4 million from US-VISIT/OBIM to ICE to support overstay analysis. The Senate-reported version of H.R. 2217 recommended $206 million for OBIM. The Senate version also would have transferred $12 million from US-VISIT/OBIM to CBP, and would have provided $5 million to ICE for overstay analysis. In contrast with the House, the Senate Appropriations Committee report proposed transferring responsibility for the Arrival Departure Information System (ADIS, DHS's main biographic entry-exit database) from OBIM to CBP. Division F of P.L. 113-76 included $227 million for OBIM. The explanatory statement noted that no less than $4 million within that appropriation is for database improvements, and endorses the transfer of ADIS to CBP. Some Members of Congress have expressed frustration that the implementation of the entry-exit system has taken longer than originally anticipated. Pursuant to an amendment adopted on the House floor, Section 586 of H.R. 2217 would have prohibited the use of DHS management funds for official reception and representational expenses until the Secretary fully implemented the biometric entry-exit data system. The provision was not included in P.L. 113-76 . The Federal Protective Service (FPS), within DHS's National Protection and Programs Directorate (NPPD), is responsible for the protection and security of federally owned and leased buildings and property and of federal personnel. In general, FPS operations focus on security and law enforcement activities that reduce vulnerability to criminal and terrorist threats. FPS protection and security operations include all-hazards based risk assessments; emplacement of criminal and terrorist countermeasures, such as vehicle barriers and closed-circuit cameras; law enforcement response; assistance to federal agencies through Facility Security Committees; and emergency and safety education programs. FPS also assists other federal agencies with additional security, such as assisting the U.S. Secret Service at National Special Security Events (NSSE). FPS is the lead Government Facilities Sector Agency for the National Infrastructure Protection Plan. Currently, FPS employs approximately 1,007 law enforcement officers, investigators, and administrative personnel, and administers the services of approximately 13,000 contract security guards. The President's FY2014 budget request included 1,371 FTEs and $1,302 million for FPS. This was the same amount that FPS received in FY2013. FPS does not receive a typical appropriation, but instead has a budget wholly offset by security fees charged to GSA building tenants in FPS-protected buildings and facilities. Of the total funding projected in the request, $272 million in fees would have been collected for basic security operations, $509 million for building-specific security operations, and $521 million for Security Work Authorizations. For FY2014, House-passed H.R. 2217 stated that it would fund the Administration's request and provided no additional direction for the service. For FY2014, Senate-reported H.R. 2217 did not propose specific changes to the FPS budget, and would have provided $1,302 million for FPS. The Senate report did, however, note that DHS's Interim Strategic Human Capital plan failed "to determine the need for resources based on risk to Federal employees and the officers that protect them," as required by Congress, instead describing how FPS would maintain a workforce of 1,371 FTEs. The Senate committee report directed FPS to provide a plan, and directed GAO to "review the FPS workforce size and its area of responsibility in comparison to similar law enforcement agencies." The report also encouraged FPS to continue its efforts "to link operations, performance, and cost," thus providing enhanced information for the budget process and addressing issues as identified by GAO. Congress specifically stated in Division F of P.L. 113-6 that "the revenues and collections of security fees credited to this account shall be available until expended for necessary expenses related to the protection of federally owned and leased buildings for the operations of the Federal Protective Service." Congress also required in law that the DHS Secretary and OMB Director certify in writing that FPS operations will be fully funded and that FPS is to maintain not fewer than 1,371 FTEs. Finally, Congress stated in law that the FPS Director will submit a strategic human capital plan aligning fee collections with personnel requirements based on a current threat assessment with the President's FY2015 budget request. Congress continues to express concern over certain aspects of the FPS mission and how FPS is funded. Appropriators have expressed an interest in improving training of contract guards, federalizing contract guards, developing standards for checkpoint detection technologies for explosives and other dangerous items at federal facilities, and coordinating DHS efforts with the Interagency Security Committee for building security standards. The Federal Protective Service Improvement and Accountability Act of 2013 ( H.R. 735 ), introduced in the 113 th Congress, would set staffing levels in the FPS inspector force and create a pilot to expand the use of federal employees in place of contract guards. The Office of Health Affairs (OHA) has operational responsibility for several programs, including the BioWatch program, the National Biosurveillance Integration Center (NBIC), and the department's occupational health and safety programs. OHA also coordinates or consults on DHS programs that have a public health or medical component; these include several of the homeland security grant programs, and medical care provided at ICE detention facilities. OHA received $132 million in FY2013 appropriations. The Administration requested $132 million for OHA for FY2014, roughly the same amount as was provided in the enacted presequester appropriations for FY2013. Due to the reductions in FY2013 appropriations from the funding baseline calculated by OMB, a crediting mechanism in the budget control laws came into play that eliminated the impact of sequestration for OHA. The proposed allocation among OHA's activities was: $91 million for the BioWatch program; $8 million for NBIC; $1 million for the Chemical Defense Program; $5 million for Planning and Coordination (under which numerous leadership and coordination activities are implemented); and $27 million for Salaries and Expenses. House-passed H.R. 2217 would have provided $123 million for OHA for FY2014, $8 million (6.4%) less than requested. The proposed allocation among OHA's activities would have been: $80 million for the BioWatch program ($11 million or 12.2% less than requested); $13 million for NBIC ($5 million or 62.5% more than requested); $1 million for the Chemical Defense Program (as requested); $5 million for Planning and Coordination (as requested); and $25 million for Salaries and Expenses ($2 million or 8.4% less than requested). Additional NBIC funding would have been used for new, competitively funded pilot programs to expand biosurveillance capability. The BioWatch funding proposal is discussed further below. Senate-reported H.R. 2217 would have provided $128 million for OHA for FY2014, $4 million or 3.1% less than requested. The proposed allocation among OHA's activities would have been: $88 million for the BioWatch program ($3 million or 3.3% less than requested); $8 million for NBIC (as requested); $1 million for the Chemical Defense Program (as requested); $5 million for Planning and Coordination (as requested); and $26 million for Salaries and Expenses ($1 million or 4.0% less than requested). The Senate-reported BioWatch funding level is discussed further below. The Homeland Security Appropriations Act, 2014, provided $127 million for OHA for FY2014, $5 million or 3.8% less than requested. The allocation among OHA's activities was $85 million for the BioWatch program (roughly $5 million or 5.9% less than requested); $10 million for NBIC ($2 million or 25% more than requested); $1 million for the Chemical Defense Program (as requested); $5 million for Planning and Coordination (as requested); and $26 million for Salaries and Expenses (roughly $2 million or 6.2% less than requested). The BioWatch program deploys sensors in more than 30 large U.S. cities to detect the possible aerosol release of a bioterrorism pathogen, in order that medications could be distributed before exposed individuals became ill. Operation of BioWatch accounts for the lion's share of OHA's budget. The program has sought for several years to deploy more sophisticated sensors (so-called "Generation-3" or "Gen-3" sensors) that could detect airborne pathogens in a few hours, rather than the day or more that is currently required. However, according to GAO, "BioWatch Gen-3 has a history of technical and management challenges." Gen-3 development and procurement, and BioWatch operations in general, are the subject of an investigation by the House Committee on Energy and Commerce. The House Committee on Appropriations noted that OHA has paused its Gen-3 procurement activities while conducting an Analysis of Alternatives (AoA). The committee's funding recommendation for FY2014 would have sustained BioWatch current services only (i.e., Generations 1 and 2). However, the committee commented that earlier unobligated funds would lapse if OHA waited to complete the AoA before it resumed Gen-3 procurement activities. The committee directed OHA instead to "fund either continued development of autonomous biodetection or other similar technology that would further the Nation's biodetection capability with the available unobligated funds." The Senate Committee on Appropriations also noted the pause in Gen-3 procurement activities, and urged OHA to complete the AoA. In addition, the Senate committee directed that OHA conduct a separate assessment of current BioWatch capability. In the explanatory statement, the committees directed OHA to brief them not later than January 31, 2014 on the results of the AoA, in lieu of the assessment sought by the Senate Committee on current BioWatch capability. The Federal Emergency Management Agency (FEMA) is responsible for leading and supporting the nation's preparedness through a risk-based and comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. This comprehensive emergency management system is intended to reduce the loss of life and property, and protect the nation from all hazards. These hazards include natural and accidental man-made disasters, and acts of terrorism. FEMA executes its mission through a number of activities such as providing assistance through its administration of the Disaster Relief Fund (DRF) and the Pre-Disaster Mitigation Fund. Additionally, FEMA provides assistance to state, local, and tribal governments, and nongovernmental entities through its management and administration of programs such as State and Local Programs, the Assistance to Firefighters Grants, and the Emergency Food and Shelter program. The Administration requested a total discretionary appropriation of $3,984 million in net budget authority for FEMA for FY2014. The Administration also requested an additional $5,626 million for the DRF, paid for by an adjustment to the discretionary budget cap under a mechanism established by the Budget Control Act. For more detail about the mechanism and impact of this adjustment, see the discussion below and earlier in the report. House-passed H.R. 2217 would have provided a total discretionary appropriation of $4,345 million for FEMA for FY2014, an increase of $361 million (9.1%) from the President's request. This would have included $32 million added to FEMA's budget through floor amendments. The House also included the requested additional funding for the DRF, to have been paid for by the allowable adjustment for disaster relief. Among the amendments adopted on the House floor were the following increases to FEMA appropriations: Increase funds for the U.S. Fire Administration account by $1.8 million; Increase funds for Firefighter Assistance Grants by $5 million; Increase funds for the Urban Search and Rescue Response System by $7.7 million; Increase funds for National Predisaster Mitigation Fund by $7.7 million; and Increase the State Homeland Security Grant Program for disaster assistance by $10 million. Senate-reported H.R. 2217 would have provided a total discretionary appropriation of $4,353 million for FEMA for FY2014, an increase of $369 million (9.3%) from the President's request. Like the House, the Senate included the requested additional funding for the DRF, to have been paid for by the allowable adjustment for disaster relief. Division F of P.L. 113-76 included a total discretionary appropriation of $4,354 million for FEMA for FY2014, an increase of $368 million (9.2%) from the President's request, and like the House and Senate bills, the division included the additional $5,626 million for the DRF, to be paid for by the allowable adjustment for disaster relief. State and local governments have primary responsibility for most domestic public safety functions. When facing difficult fiscal conditions, state and local governments may reduce resources allocated to public safety and, consequently, homeland security preparedness, due to increasing pressure to address tight budgetary constraints and fund competing priorities. Since state and local governments fund the largest percentage of public safety expenditures, this may have a significant impact on the national preparedness level. Prior to 9/11, only three federal grant programs were available to state and local governments to address homeland security: the State Domestic Preparedness Program administered by the Department of Justice, the Emergency Management Performance Grant (EMPG) administered by the Federal Emergency Management Agency (FEMA), and the Metropolitan Medical Response System (MMRS) administered by the Department of Health and Human Services. Since that time, several additional homeland security grant programs have been added to ensure state and local preparedness, including the State Homeland Security Grant Program (SHSGP), Citizen Corps Program (CCP), Urban Area Security Initiative (UASI), Driver's License Security Grants Program (REAL ID), Operation Stonegarden grant program (Stonegarden), Regional Catastrophic Preparedness Grant Program (RCPG), Public Transportation Security Assistance and Rail Security Assistance grant program (Transit Security Grants), Port Security Grants (Port Security), Over-the-Road Bus Security Assistance (Over-the-Road), Buffer Zone Protection Program (BZPP), Interoperable Emergency Communications Grant Program (IECGP), and Emergency Operations Center Grant Program (EOC). While state and local governments receive federal assistance for preparedness activities, this federal assistance accounts for only a small percentage of overall state and local spending for public safety. On average, total expenditures for all state and local governments for public safety are $218 billion annually. Public safety expenditures include costs associated with the functions of police protection, fire protection, corrections, and protective inspections and regulations. By comparison, the President requested $2,123 million in federal grants for state and local government homeland security preparedness for FY2014. This amount accounts for a little more than 1% of state and local government public safety expenditures. As has frequently been the case over the recent history of FEMA's grant and training programs, the Administration proposed changes to the structure of the accounts, making a direct comparison to previous years more challenging. Congress has generally funded Emergency Management Performance Grants (EMPG), Fire Grants, and Staffing for Adequate Fire and Emergency Response (SAFER) Act Grants outside the State and Local Programs function, and allowed a portion of the funds for these programs to cover administrative costs by transferring funds to FEMA's management accounts. The Administration's FY2014 budget proposed $2,123 million for State and Local Programs, which included funding for two new accounts: National Preparedness Grant program and First Responder Assistance Programs. The National Preparedness Grant program consolidates current state and local preparedness grant programs (excluding the Emergency Management Performance Grants (EMPG) and the Assistance to Firefighters Grant (AFG) Program). The First Responder Assistance Program combines funding for AFG, EMPG, and the Training Partnership Grants (previously funded as Education, Training, and Exercises under State and Local Programs). Both the House and Senate Appropriations Committees rejected this reorganization in FY2014. The House committee report cited the lack of congressional authorization for the new grant program and the lack of necessary details on how the program would be implemented in denying the Administration's request to consolidate existing preparedness grants into a National Preparedness Grant Program. The Senate Appropriations Committee also recommended denying the Administration's request to restructure the state and local grants based on the Administration's failure to work with committees of jurisdiction to refine the proposal. Further, the Senate-reported bill included a general provision prohibiting implementation of grant reform until there was congressional action on the Administration's proposal. The House Appropriations Committee had originally recommended $1,500 million for State and Local Programs, $1,210 million of which was to be distributed as grants according to threat, vulnerability, and consequence at the discretion of the DHS Secretary through 14 grant-making activities previously funded by Congress Of the $1,500 million total, $55 million was set aside for Operation Stonegarden, and $235 million was for training, exercise, and technical assistance programs. During House floor action, amendments were adopted to H.R. 2217 that established a funding level of $98 million for the Port Security Grant program and $98 million for the Transit Security grant program. In addition, an amendment was adopted, as noted above, that increased funding for the State Homeland Security Grant Program by $10 million. As a result, the House-passed bill would have provided a total of $1,510 million for State and Local Programs, and after taking into account the established funding levels and programmatic set-asides, $1,070 million would have been left for allocation at the Secretary's discretion among the following grant-making activities according to threat, vulnerability, and consequence at the discretion of the DHS Secretary: State Homeland Security Grant Program, Operation Stonegarden, Urban Area Security Initiative, nonprofit organizations as determined by Section 501(c)(3) of the Internal Revenue Code, Public Transportation Security Assistance and Railroad Security Assistance, Port Security Grants, Over-the-Road Bus Security Assistance, Metropolitan Medical Response System grants, Citizen Corps Program, Driver's License Security Grants, Interoperable Emergency Communications Grant program, Emergency Operations Centers grants, Buffer Zone Protection Program grants, and Regional Catastrophic Preparedness Grants. The Senate-reported bill included $1.5 billion for State and Local Programs, with less discretion for the Secretary in allocating those funds. Of this amount, $453 million was for SHSGP (with $46.6 million carved out of the SHSGP appropriations for Operation Stonegarden), $614 million for UASI (with $13 million carved out for non-profit organizations within UASI designated areas), $101 million for Public Transportation Security and Railroad Security grants (with $10 million carved out for Amtrak grants), $101 million for Port Security grants, and $233.5 million for education, training, exercises and technical assistance. Division F of P.L. 113-76 provided $1.5 billion for State and Local Programs. Of this amount, $466 million was provided for the SHSGP (with $55 million carved out of the SHSGP appropriations for Operation Stonegarden), $600 million for UASI (with $13 million carved out for non-profit organizations within UASI designated areas), $100 million for Public Transportation Security Assistance and Railroad Security Assistance grants (with $10 million carved out for Amtrak Security grants), $100 million for Port Security Grants, and $234 million for education, training, exercises, and technical assistance. P.L. 113-76 also included a previous provision that capped the amount of grant funds that can be used by grantees for administration of the grants at 5% of the award amount; and a provision that originated in the Senate-reported bill that authorizes the FEMA Administrator to use funds provided for education, training, and exercises to acquire real property for the purposes of establishing or extending the security buffer zone around FEMA training facilities. The Administration's FY2014 budget proposed $670 million for firefighter assistance, including $335 million for AFG and $335 million for SAFER. Funding for management and administration would be drawn from a separate FEMA account (Salaries and Expenses). As noted above, under the Administration's proposal, the Firefighter Assistance Grants would be categorized under First Responder Assistance Programs (FRAP), one of three activities under FEMA's State and Local Programs (SLP) appropriation. The House Appropriations Committee recommended $675 million for firefighter assistance ($337.5 million for AFG, $337.5 million for SAFER). The committee denied the Administration's request to shift AFG and SAFER into the State and Local Programs account, and adopted an amendment during the committee markup that would have continued waivers to various SAFER restrictions and limitations. During House floor action, an amendment was adopted that would have increased funding for AFG and SAFER in the bill by $2.5 million each, taking its $5 million offset from the Office of the Under Secretary for Management. Thus, the House-passed bill recommended $680 million for the firefighter assistance account ($340 million for AFG, $340 million for SAFER), a 1.5% increase over the Administration's request. The Senate Appropriations Committee recommended $675 million for firefighter assistance ($337.5 million for AFG and $337.5 million for SAFER). Like the House, the Senate Appropriations Committee denied the Administration's request to shift AFG and SAFER into the State and Local Programs account, and included language that would have continued waivers to various SAFER restrictions and limitations. Division D of P.L. 113-76 funded AFG at $340 million and SAFER at $340 million. As was the case in FY2013, administrative costs are to be derived from the FEMA Salaries and Expense account. The act continued to grant DHS waiver authority from SAFER requirements in FY2014. The Disaster Relief Fund (DRF) is the main account used to fund a wide variety of programs, grants, and other forms of emergency and disaster assistance to states, local governments, certain nonprofit entities, and families and individuals affected by disasters. The DRF is a no-year account—unused funds from the previous fiscal year are carried over to the next fiscal year. The Administration's FY2014 budget proposed $6,221 million for the DRF. The Administration requested funding for the DRF based on what FEMA planned to spend on all past declared catastrophic events, plus the 10-year average for non-catastrophic events, and a $500 million reserve to prevent shortfalls. This was adjusted downward by $800 million to account for projected recovery of funds not needed for past disasters. This is the same calculation that was used to develop the initial FY2013 request. The DRF funding request can be broken out into two categories. First, $595 million was requested for activities not directly tied to major disasters under the Stafford Act (including activities such as assistance provided to states for emergencies and fires). This is sometimes referred to as the DRF's "base" funding. The second (and significantly larger) category is for disaster relief costs for major disasters under the Stafford Act, for which the Administration requested $5,626 million. This structure reflects the impact of the Budget Control Act, which allows these costs incurred by major disasters to be paid through an "allowable adjustment" to the discretionary spending caps, rather than having them count against the discretionary spending allocation for the bill. Under the terms of the budget request, as in previous years, $24 million of DRF funds would have been transferred to the DHS Office of the Inspector General for oversight of disaster-related spending. House-passed and Senate-reported H.R. 2217 would have provided the same funding and structure for DRF funding as requested by the Administration. This funding amount and structure was also retained in Division F of P.L. 113-76 . In general, the DRF is funded yearly through regular appropriations; however, if the DRF had to rely solely upon the annual DHS appropriations bill, the DRF would have been depleted most years due to the accumulated demand for its resources. For example, between 2005 and 2011, the average regular appropriation for the DRF was $1,749 million. Yet, the average monthly expenditures for the DRF were $383 million (which would extrapolate to $4,596 million annually). This is due in part to ongoing recovery efforts from past high-cost disaster events such as the Gulf Coast hurricanes of 2005 as well as more recent disasters. To keep the DRF from being depleted, Congress provided additional budget authority for the DRF through a combination of supplemental and continuing appropriations nine times from FY2005 to FY2010. This reliance on emergency supplemental appropriations has been of particular congressional concern. The Budget Control Act (BCA) included a series of provisions that directed the Office of Management and Budget (OMB) to calculate annually an "allowable adjustment" for disaster relief to the BCA's discretionary spending caps. That adjustment, if used, would make additional budget authority available for the federal costs incurred by major disasters declared under the Stafford Act beyond what is allowed in the regular discretionary budget allocation. Without an adjustment to the discretionary budget caps, federal spending over the allocation could trigger a sequestration. It is useful to note that "disaster relief" funding under the BCA and the Disaster Relief Fund are not the same. The BCA defines funding for "disaster relief" as funding for activities carried out pursuant to a major disaster declaration under the Stafford Act. This funding comes not only from FEMA, but also from accounts across the federal government. While a portion of funding for the DRF is eligible for the allowable adjustment under the BCA, the DRF is not wholly "disaster relief" by the BCA definition. The allowable adjustment calculated by OMB may have encouraged higher appropriations to the DRF since the BCA was enacted. The FY2013 request for the DRF—the first such request made with the BCA in place—was more than three times the size of the initial budget request for FY2012. When Hurricane Sandy struck the northeastern United States in October 2012, the DRF contained roughly $7 billion that could be used to meet the immediate demands of the hurricane. In previous years, when a large-scale disaster occurred, the DRF balance was generally low due to smaller regular appropriations to the account. As a result, there may have been more pressure in previous years to pass a supplemental appropriation quickly to meet the needs of the disaster. Higher appropriations for the DRF through regular appropriations may therefore provide Congress with more time to debate disaster needs and target disaster assistance needs more efficiently when large-scale disasters occur. The Administration's proposal for the PDM program again suggested its eventual elimination. No additional funds were requested and it was suggested that the program duplicated the work of the Hazard Mitigation Grant Program (HMGP), which is Section 404 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and other mitigation programs funded by the National Flood Insurance Program. While the HMGP program and the PDM program fund similar projects, PDM is distinguished from HMGP by uniquely making such awards prior to disaster events. In addition, while programs under National Flood Insurance Program (NFIP) address similar projects, they apply only to flood hazards. PDM and HMGP on the other hand, apply to all types of hazards. The Administration noted that the PDM program had more than $174 million in unobligated balances that would permit the program to continue awarding grants for several years as it was phased out. Neither the House-passed bill nor the Senate-reported bill included legislative language ending the program. Instead, the House PDM line was increased through the Tipton/Polis amendment by $7.6 million to just over $30 million, whereas $25 million was included in the Senate bill. The Senate report for FY2014 noted the importance of the program as the only source of funding for many states for both mitigation planning and projects. While the House measure would have increased funding for FY2014, the enacted level in P.L. 113-76 was at the same $25 million amount as in recent years. According to the DHS post-sequester operating plan, the post-sequestration amount available for PDM in FY 2013 was just under $25 million. Funding at this level presents challenges to the administration of the program. For example, state minimum awards become difficult to fund. Also, the reduced award amounts make a full, new round of applications for competitive awards (and assembling peer review panels to judge those applications) impractical. Given these circumstances, FEMA may work from existing, unfunded applications to continue the program funding cycle. For the last few years the Administration has proposed reducing funding for the EFS program, and the FY 2014 request again suggested an amount of $100 million, well below previous levels. The program has historically received increased funding during times of high unemployment. In FY2012, Congress funded the program at $120 million, $20 million over the requested level. Both the House-passed and Senate-reported FY2014 legislation would have funded EFS at $120 million. The final enacted amount for FY2014 was also $120 million. According to the DHS post-sequester operating plan, the post-sequester funding level for FY2013 for the EFS program was just under $114 million. This represented the lowest funding total for the program since FY2000. In addition to reduced funding, there were also some concerns over the program's delayed distribution of funds during FY2012. FEMA and the National Board took nine months to begin distributing the EFS assistance, nearly double the amount of time directed in its authorizing legislation, the McKinney-Vento Homeless Assistance Act. Similarly, funding announcements for the FY2013 awards were not made until the beginning of FY2014. Title IV of the DHS appropriations bill contains the appropriations for U.S. Citizenship and Immigration Services (USCIS), the Federal Law Enforcement Training Center (FLETC), the Science and Technology Directorate (S&T), and the Domestic Nuclear Detection Office. The Administration requested $2,214 million for these accounts in FY2014. The House-passed bill would have provided $1,890 million, a decrease of 14.7% below the requested level. The Senate-reported bill would have provided $1,885 million, a decrease of 15.0% below the requested level. Division F of P.L. 113-76 included $1,878 million in Title IV, 15.2% below the requested level. Table 18 lists the enacted amounts for the individual components of Title IV for FY2013, the Administration's request for these components for FY2014, the House-passed and Senate-reported appropriations for the same, and the annual appropriation enacted through Division F of P.L. 113-76 . Three major activities dominate the work of the U.S. Citizenship and Immigration Services (USCIS): (1) adjudication of all immigration petitions, including nonimmigrant change of status petitions, family-based petitions, employment-based petitions, work authorizations, and travel documents; (2) adjudication of naturalization petitions for legal permanent residents to become citizens; and (3) 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 its fee revenues generated by the Examinations Fee Account. In the last decade, the agency has received annual appropriations from the Treasury that have been directed largely towards specific projects such as reducing petition processing backlogs and the E-Verify program. The agency receives most of its revenue from adjudication fees of immigration benefit applications and petitions. The graphic above shows only the annual appropriations for USCIS. The Administration requested $124 million in appropriations for USCIS, including $114 million for the E-Verify program and $10 million for the Immigrant Integration Initiative. Together with $3,095 in projected fee collections, under the terms of the request, one would have projected $3,219 in new gross budget authority for USCIS. (See Table 19 ) Of this FY2014 amount, $2,575 million was to fund adjudication services, which included $236 million for asylum, refugee, and international operations and $183 million for the digital conversion of immigrant records. Apart from adjudication services, $96 million was to fund information and customer services, $339 was to fund Administration expenses, and $30 million was to fund the Systematic Alien Verification for Entitlements (SAVE) program. House-passed H.R. 2217 would have included $114 million in appropriations for USCIS, $10 million below the amount requested. Together with $3,095 million in projected fee collections, under the terms of the bill and report, USCIS would have had $3,209 million in new gross budget authority in FY2014. The bill would have provided appropriated funds only for the E-Verify Program as described in Section 403(a) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. Though the House recommendation for this account would not have included appropriated funds for immigrant integration grants, language was included in Title V permitting USCIS to expend no more than $10 million in user fees to support these grants. The House-passed bill also would have specified that none of the USCIS appropriations be used by the agency to grant an immigration benefit to an individual unless USCIS had received the results of any legally required criminal background checks, and those results did not preclude granting the benefit. Moreover, the House-passed bill would have specified that none of the funds made available to USCIS for immigrant integration grants could be used to provide services to aliens who had not been lawfully admitted for permanent residence. Senate-reported H.R. 2217 would have included $119 million in appropriations for USCIS, $5 million below the amount requested. Together with $3,100 million in projected fee collections, under the terms of the bill and report, USCIS would have had $3,219 million in total gross budget authority in FY2014. The bill would have provided funds for the E-Verify Program as well as a $5 million appropriation for Immigrant Integration Grants. The Senate Appropriations Committee directed USCIS to make an additional $5 million available for these grants via fees. Like the House, the Senate committee would have specified that no funds could be used by USCIS to grant immigration benefits unless the requisite background checks permitted the granting of such benefit. USCIS was also directed to report to the committee on using E-Verify in agricultural settings; E-B5 visa program statistics; USCIS's revised field office facilities model; and H-1B visa program statistics. Division F of P.L. 113-76 (the Homeland Security Appropriations Act, 2014) provided $114 million in appropriations for USCIS, $10 million below the amount requested by the Administration and $5 million below the amount in Senate-reported H.R. 2217 . Together with $3,103 million in projected fee collections, under the terms of the act and explanatory statement, USCIS will have $3,217 million in total gross budget authority from provisions in this title in FY2014. This was roughly $8 million more than the House-passed H.R. 2217 and $2 million less than the Senate reported H.R. 2217 and the FY2014 request. As in the House-passed bill, the $114 million appropriation was solely to fund the E-Verify Program. The act directed USCIS to make $7.5 million available for immigrant integration grants from fee revenues. The act specified that the grants shall be used to provide services to individuals who have been lawfully admitted into the United States. for permanent residence, and that none of the appropriated funds may be used to administer the program. It also carried the provision described above in the House and Senate bills regarding background checks. The following table outlines the appropriations and projected fee resources available to fund USCIS activities. To provide a clear perspective on the total resources available, it includes the resources described in both Title IV and Title V provisions, and separates illustration of the sources of fee revenue from the activities funded through that revenue. For the FY2014 budget cycle, potential issues for Congress included ongoing concerns about E-Verify operability, fee-generated funding of the agency, immigrant integration grants, USCIS efforts to convert its immigration benefit application and petition process from a paper-based to a computerized online-based system, naturalization, and fraud prevention. Congress continues to be concerned about the operability of the E-Verify program, which is used to ascertain whether employees have the legal status and work authorization needed for employment. The House bill would have extended the authorization of E-Verify for one year, as proposed by the President's budget request. While the House committee report acknowledged improvements in the accuracy of E-Verify, it again directed USCIS to continue to develop a review process for E-Verify final non-confirmations to ensure that no individual is falsely identified as ineligible to work. It also directed USCIS to continue regular briefings on its progress toward implementing a robust compliance review program for E-Verify, including any instances of misuse of the system and actions taken to address those instances. Likewise, the House committee report urged USCIS to update and publish regular E-Verify accuracy and performance audits. In its report, the Senate Appropriations Committee acknowledged USCIS's progress on reducing the mismatch rate. It directed the agency to create mobile applications and use other available smart-phone technology to encourage small employers to use the system as early as possible. It also directed USCIS, in consultation with the Administrator of the Small Business Administration, to make available marketing and other incentives to small business concerns to encourage small employers to use E-Verify. The Senate committee report reflected particular concern about the challenges associated with implementing E-Verify in its current form in the agricultural industry and directed the agency to report to the Senate Committees on Appropriations and the Judiciary on progress in implementing E-Verify in that setting. Following the recommendation of the Senate report, the explanatory statement accompanying Division F of P.L. 113-76 specified that USCIS should create a mobile application and other smartphone technologies for employers using E-Verify and consult with the Small Business Administration about improving marketing to small businesses to encourage the use of E-Verify. Following the recommendation of the House report, the explanatory statement directed USCIS to brief the committees semiannually on a review process for E-Verify. Because USCIS supports itself primarily through fee revenues, it must accurately monitor its fee revenues and obligations against its fee collections to avoid building backlogs or over-budgeting projects. The House committee report directed USCIS to continue quarterly briefings on fee revenues and obligations. Aware that USCIS is completing a study in preparation for an updated fee schedule, the House committee, in its report, directed USCIS to brief Congress on the conclusions and projected date of release of the fee study at least 30 days before the new schedule is made public. As in the past, it urged USCIS to remain sensitive to maintaining affordable naturalization application fees, which some claim have become an obstacle to naturalization for persons of lesser financial means. The Senate report provided no further direction on this issue. Following the recommendation of the House report, the explanatory statement directed USCIS to brief the committees semiannually on fee revenues and obligations. The House report acknowledged the important work and efforts of the Office of Fraud Detection and National Security (FDNS), whose primary mission is to detect and combat immigration benefit fraud. However, it expressed the House Appropriations Committee's ongoing concern about the limited resources dedicated to this function and urged USCIS to devote more resources to FDNS' workforce. The Senate report provided no further direction on this issue. Following the recommendation of the House report, the explanatory statement directed USCIS to brief the committees semiannually on final non-confirmations. In 2012, USCIS launched the first two phases of its electronic immigration application system, known as ELIS. This system was created to modernize the process for filing and adjudicating immigration benefits, which until recently had been entirely paper-based. Historically, USCIS customers have had to apply for most benefits by mail, and USCIS employees have then reviewed paper files and shipped documents between offices to complete their adjudication. Under ELIS, eligible individuals can establish an account and apply online to extend or change their nonimmigrant status for certain visa types. ELIS also enables USCIS officers to review and adjudicate filings online. Apart from improving efficiency, ELIS also includes tools to combat fraud and identify national security concerns. The House report recognized the importance of transformation to USCIS operations and directed USCIS to continue quarterly updates on this program. The Senate report provided no further direction on this issue. Following the recommendation of the House report, the act directed USCIS to brief the committees semiannually on the USCIS transformation. Congress continues to be concerned about the accuracy and effectiveness of the SAVE system, a web-based system for governmental agencies to verify the immigration status of benefit applicants. Without precise information on immigration status, agencies risk granting benefits to unentitled individuals. The House report noted that through the FY2013 appropriations process, DHS's Office of Inspector General (OIG) was asked to review the SAVE program to determine whether systems and processes are adequate to ensure accurate information for validating an individual's immigration status. The House report directed USCIS to brief the Appropriations committees on its response OIG recommendations by October 31, 2013 and the extent to which they have been adopted. The Senate report and explanatory statement accompanying P.L. 113-76 provided no further direction on this issue. The Federal Law Enforcement Training Center (FLETC) provides basic and advanced law enforcement instruction to approximately 90 federal entities with law enforcement responsibilities. FLETC also provides specialized training to state and local law enforcement entities, campus police forces, law enforcement organizations of Native American tribes, and international law enforcement agencies. By training officers in a multi-agency environment, FLETC intends to promote consistency and collaboration across its partner organizations. FLETC administers four training sites throughout the United States, but also uses online training and provides training at other locations when its specialized facilities are not needed. The Center employs approximately 1,100 personnel. The Administration proposed a budget of $271 million for FLETC. The majority of the budget was in Salaries and Expenses (proposed at $241 million), while Acquisition, Construction, Improvements, and Related Expenses (proposed at $31 million) represented a smaller share. House-passed H.R. 2217 would have included $259 million for FLETC, $13 million (4.7%) below the request. The entire reduction was taken from Salaries and Expenses, and was the result of $23 million in anticipated efficiencies from FY2012 levels, and the denial of a proposed transfer of the National Computer Forensics Institute (NCFI) from the Secret Service to FLETC. The appropriation would have included an increase of $4.5 million for active shooter threat training programs. The House report noted that it included funding to train 1,600 new CBP officers. Senate-reported H.R. 2217 also would have included $259 million for FLETC distributed in an identical fashion to the House-passed proposal. The Senate report also noted the denial of the proposed transfer of NCFI to FLETC, and the inclusion of $4.5 million in funding for expansion of active shooter threat training programs. However, the Senate report also noted that the Senate-reported bill included funds to "phase-in $1,850 new CBP officers," as opposed to the 1,600 officers mentioned in the House report. Division F of P.L. 113-76 (the Homeland Security Appropriations Act, 2014) provided $259 million in funding for FLETC, equal to and with the same distribution as the House-passed and Senate-reported appropriations for the center. While FLETC itself has not been the focus of congressional debate, both the House and Senate have raised questions about the training of federal law enforcement officers. The Senate-passed version of comprehensive immigration reform ( S. 744 ) calls for 19,200 additional Border Patrol agents. Fielding this many additional personnel would require an increase in the budget for FLETC's operations. The Directorate of Science and Technology (S&T) is the primary DHS organization for research and development (R&D). Led by the Under Secretary for Science and Technology, the S&T Directorate performs R&D in several laboratories of its own and funds R&D performed by the Department of Energy national laboratories, industry, universities, and others. It also provides technology-related support for acquisition and operations in other DHS components. See Table 20 for a breakdown of S&T Directorate funding. The Administration requested $1.527 billion for the S&T Directorate for FY2014. This is 82% more than the FY2013 total presequester appropriation of $838 million. The increase over recent funding levels resulted largely from the request for $714 million in Laboratory Facilities for construction of the National Bio and Agro-Defense Facility (NBAF). The NBAF is a planned replacement for the current Plum Island Animal Disease Center. According to DHS, the FY2014 request (together with anticipated gift funds from the State of Kansas) would have been sufficient to fully fund NBAF construction, which DHS expects to complete in FY2020. The total estimated cost of the NBAF project, including the Kansas contribution and federal funds already appropriated, is $1.230 billion. The previous estimate in the FY2012 budget was $725 million. In University Programs, the requested $31 million in FY2014 was a decrease of 19% from $38 million in FY2013. This decrease reflected a reduction in funding for university centers of excellence and the elimination of funding for scholarships and fellowships. The latter was part of a government-wide consolidation of science, technology, engineering, and mathematics (STEM) education activities. The House bill would have provided $1.225 billion for S&T. This total included $404 million for NBAF construction. The committee report explained that this was the amount needed to "fully leverage funding contributions by the State of Kansas" (i.e., to provide the 2-to-1 federal matching funds required for $202 million in state bonds). According to the House committee report, the $40 million provided for University Programs would have supported an increase for university centers of excellence. The House committee report did not address the proposed elimination of scholarship and fellowship funding in University Programs. The Senate-reported bill would have provided $1.218 billion for S&T. Like the House bill, it included $404 million for NBAF, which the committee report again explained was sufficient to "fully leverage" state contributions. The Senate committee report stated that the recommendation of $33 million for University Programs "recognizes the requested reduction ... resulting from the consolidation of the Scholars and Fellows program within the National Science Foundation." The enacted appropriation for S&T was $1.220 billion. This total included the same amount as the House and Senate bills for NBAF and $40 million for University Programs. According to the joint explanatory statement, this level of funding for University Programs "will allow S&T to fund all existing centers [of excellence] at an appropriate level and establish a new center." No funds were provided for the S&T scholarships and fellowships program. According to DHS, it will work with NSF to ensure that consolidated STEM education activities align with DHS needs. In September 2012, GAO reported that although the S&T Directorate, the Domestic Nuclear Detection Office, and the Coast Guard are the only DHS components that report R&D activities to the Office of Management and Budget, several other DHS components also fund R&D and activities related to R&D. The GAO report found that DHS lacks department-wide policies to define R&D and guide reporting of R&D activities, and, as a result, DHS does not know the total amount its components invest in R&D. The report recommended that DHS develop policies and guidance for defining, reporting, and coordinating R&D activities across the department, and that DHS establish a mechanism to track R&D projects. In March 2013, the explanatory statement for the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ), directed the Secretary of Homeland Security, through the Under Secretary for Science and Technology, to establish a review process for all R&D and related work within DHS. In April 2013, citing its September 2012 report, GAO listed DHS R&D as an area of concern in its annual report on fragmented, overlapping, or duplicative federal programs. The House-passed bill would have directed DHS to submit a report on reforms to its R&D programs, including a formal process for setting R&D priorities, a formal process for DHS-wide involvement in R&D decision-making and review, metrics for R&D program status and return on investment, and the implementation of GAO's recommendations. The Senate-reported bill included no provision on this topic, but Senate report language directed DHS to implement policies and guidance for defining and overseeing R&D, in accordance with the GAO recommendations. The Senate report also directed DHS to "expeditiously continue" the implementation of R&D portfolio reviews in additional DHS components "to improve the coordinated approach to R&D and related activities within DHS." The joint explanatory statement directed DHS to comply with the language in the House and Senate reports about R&D prioritization and review; to brief the appropriations committees on its schedule and plans for future portfolio reviews; and, in accordance with GAO's recommendations, to implement policies and guidance for defining and overseeing R&D department-wide. The Domestic Nuclear Detection Office is the DHS organization responsible for nuclear detection research, development, testing, evaluation, acquisition, and operational support. See Table 21 for a breakdown of DNDO funding. The Administration requested $291 million for DNDO for FY2014. In the Research, Development, and Operations account, funding for Systems Architecture and Systems Development would have decreased relative to the funding levels outlined in the FY2013 DHS post-sequester operating plan, while funding for Transformational R&D and Assessments would have increased. These shifts appeared to reflect DNDO's ongoing transition from large-scale, government-sponsored technology development initiatives to a commercial-first approach to technology acquisition. In the Systems Acquisition account, the DHS budget justification for Human Portable Radiation Detection Systems (HPRDS) described the $14 million request as an increase relative to the $8 million the program received in FY2012 and would have received if the funding for the program under the FY2013 continuing resolution were annualized. It is unclear how the higher amount the program was appropriated under P.L. 113-6 —more than triple the amount for FY2013 listed in the budget request—will affect its plans for FY2014. The House bill would have provided the requested amount for DNDO. The Senate bill would have provided the requested amount for Management and Administration, the requested amount for Systems Acquisition, and $2 million less than the request for Research, Development, and Operations. The enacted appropriation for DNDO was $285 million. This total included $4 million less than the Administration requested for Transformational R&D, together with other small reductions similar to the Senate bill. Title V of the DHS appropriations bill contains the general provisions for the bill. These typically include a variety of provisions that apply generally to the bill, as opposed to a single appropriation. However, general provisions may carry additional appropriations, rescissions of prior-year appropriations, limitations on the use of funds, or permanent legislative language as well. Broadly speaking, this section of the report limits its discussion to new general provisions not mentioned elsewhere in the report and those with a direct impact on the budgetary scoring of the bill. The Administration's request was made in relation to the general provisions for DHS included in the FY2012 appropriations act (Division D of P.L. 112-74 ), because the FY2013 appropriations process had not been concluded while the FY2014 request was being developed. The Administration proposed dropping 36 general provisions, most of which it had proposed eliminating in FY2013. Eleven of those were already eliminated in the final FY2013 appropriations bill. The Administration also proposed adding 10 provisions and modifying 10 others. While many of those modifications were simple date changes, one represented a significant change from previous practices. The Administration proposed modifying Section 503, which governs reprogramming of funds, to provide transfer authority that would allow funds to be moved among appropriations accounts within DHS to expedite response to a catastrophic event. The Administration generally requests rescissions in the accounts where they are made, rather than in this title, and requested no direct funding through general provisions for FY2014. House-passed H.R. 2217 included $460 million in rescissions in Title V, all of which reduced the net scoring of the bill. Under this title, $34 million would have been appropriated for DHS's data center consolidation effort, which had been funded in the past in the general provisions of the legislation. These were the only provisions in this title that affected the score of the bill; however, fee revenues of $50 million from Section 563 of P.L. 113-6 were reflected in the comparative statement of budget authority at the back of the House report accompanying the bill, further reducing the score of the bill by $50 million. The House concurred with the Administration's request to drop three general provisions beyond the 11 that were dropped from the FY2013 DHS appropriations act. The House Appropriations Committee did not add any of the general provisions requested by the Administration—with the exception of a rescission provision that it deepened —and rejected the expansion of reprogramming authority. The House added 19 general provisions to the bill during floor action, bringing the total number of general provisions to 84. Eighteen of these newly added general provisions would have prohibited the use of funds provided in the bill for specific activities, including the following: Changing the list of sharp objects prohibited from being carried by passengers through passenger screening checkpoints or into airport sterile areas and the cabins of a passenger aircraft; Buying American flags made overseas; Contracting with a firm if it or its principals have been convicted in the past three years of a number of crimes, including fraud or tax evasion, are presently indicted of the same, or have been delinquent on their taxes in the last three years; Buying, operating, or maintaining armed unmanned aerial vehicles; Contravening Section 236(c) of the Immigration and Nationality Act (8 U.S.C. 1226(c)), which outlines the authority of the Attorney General to detain and release criminal aliens; Restricting a government official from sending or receiving information regarding an individual's immigration status to or from the Immigration and Naturalization Service, in violation of current law; Restricting the Secretary's discretion to use federal air marshals on inbound international flights; Implementing, carrying out, administering, or enforcing Section 1308(h) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(h)), which allows for an increase in premiums for the program; Contracting for the purposes of purchasing ammunition before the date a report required from DHS on ammunition procurement and stockpiles is submitted to Congress; Enforcing a section of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ) that prohibits the government from contracting for alternative transportation fuels (other than for research) that do not produce less greenhouse gases over their lifecycle than the equivalent conventional petroleum fuel; Conducting Customs and Border Protection preclearance operations at Abu Dhabi International Airport in the United Arab Emirates; For the DHS Secretary's office, using funds for reception or representational activities until an entry-exit visa system is implemented; and Finalizing, implementing, administering, or enforcing three policy memos issued by the director of ICE that establish priorities for civil immigration enforcement activities. Two amendments were adopted stating funds in the bill could not be used in contravention of the First, Second, Fourth, Fifth, and Fourteenth Amendments to the Constitution of the United States, or in violation of several laws intended to protect individuals' civil rights. The only general provision added as a floor amendment in the House that was not a restriction on funding would have moved $10 million from the Office of the Chief Financial Officer to FEMA's State Homeland Security Grant Program. The Senate-reported version of H.R. 2217 included $241 million in rescissions. It also included $54 million for DHS's data center consolidation effort through a general provision, as well as $43 million for DHS headquarters consolidation at St. Elizabeths. The Senate-reported bill also included legislative language to allow DHS to use fee revenues collected under the Colombia Free Trade Act, which added $110 million to the overall cost of the legislation. These are the only provisions in this title that affected the score of the bill; however, as in the House report, fee revenues of $50 million from Section 563 of P.L. 113-6 were reflected in the comparative statement of budget authority at the back of the Senate report accompanying the bill, further reducing the score of the bill by $50 million. The Senate Appropriations Committee chose to agree with the Administration and drop one general provision that the House retained, regarding restrictions on the appointment of a "Principal Federal Official" in conjunction with a Federal Coordinating Officer to coordinate response to a major disaster declared under the Stafford Act. It also would have kept four general provisions proposed for removal that the House did not—regarding the Civil Engineering Program, Operations Systems Center, and National Vessel Documentation Center of the Coast Guard and the use of U.S.-flagged vessels to move crude oil from the Strategic Petroleum Reserve —and added several others. It added two provisions requested by the Administration—one authorizing the use of reimbursable fee agreements to fund CBP services and a modified provision that would have allowed DHS to receive donations to construct, alter, operate, or maintain land ports of entry. The Senate-reported bill included 72 general provisions in all. Division F of P.L. 113-76 included $693 million in rescsissions in Title V. It also included $3 million for a USCIS immigrant integration grant program, as well as $42 million for data center migration, $35 million for DHS headquarters consolidation, and $30 million for financial systems modernization. The division included the legislative language concerning CBP fees as proposed by the Senate. Division F of P.L. 113-76 included 77 general provisions in all. Seven provisions of the 74 general provisions carried in the FY2013 Homeland Security Appropriations Act were dropped, and 10 were added. The division retained the provision discussed above regarding the appointment of an official to coordinate disaster response, as well as the four provisions listed above that the House had dropped but the Senate-reported bill had retained. Section 559 of the division included a modified version of the Administration's requested authority to enter into reimbursable fee agreements and to receive donations. As in the House and Senate versions of H.R. 2217 , the division did not include the requested expansion of reprogramming authority. Appendix A. Appropriations Terms and Concepts Budget Authority, Obligations, and Outlays Federal government spending involves a multi-step process that begins with the enactment of budget authority by Congress. 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 also be indefinite in amount, as 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. Discretionary and Mandatory Spending Gross budget authority, or the total funds available for spending by a federal agency, may consist of discretionary and 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 funds for 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 Collections 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, consists 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. Other collections offset an agency's mandatory spending. These mandatory spending elements 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 the 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, whereas 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. 302(a) and 302(b) Allocations In general practice, the maximum budget authority for annual appropriations (including DHS) is 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 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. The House or Senate Appropriations Committee may adjust its 302(b) allocations during the year by issuing a report delineating the revised suballocations as the various appropriations bills progress towards final enactment. The FY2012 appropriations bills were the first appropriations bills affected by the Budget Control Act (BCA), which established discretionary spending caps for FY2012 through FY2021. For FY2014, the BCA initially set a separate cap for security spending, defined to include the Departments of Defense and Veterans Affairs, Budget Function 150 for all international affairs programs, the National Nuclear Security Administration, and the Intelligence Community Management Account that funds the offices of the Director of National Intelligence. With the failure of the supercommittee process to produce $1.2 trillion in deficit reduction and amendments made by the American Taxpayer Relief Act, the BCA now expresses its discretionary spending caps in terms of defense ($497 billion for FY2014) and non-defense ($469 billion for FY2014). DHS is included in the latter category. In addition, the BCA allows for adjustments that would raise the statutory caps to cover funding for overseas contingency operations/Global War on Terror, emergency spending, and, to a limited extent, disaster relief and appropriations for continuing disability reviews and for controlling health care fraud and abuse. When no agreement is reached between the House and Senate on a budget resolution to provide a common 302(a), each body generally takes its own approach to developing 302(b) allocations. In the House, 302(b)s were developed based on the House-passed budget resolution ( H.Con.Res. 25 ), while in the Senate, they announced 302(b)s based on the non-sequester-adjusted allocations under the BCA. Table A-1 shows DHS's initial 302(b) allocations for FY2014, and comparable figures for FY2013, the President's request for FY2014, and the enacted net discretionary spending for DHS in P.L. 113-76 . Adjustments to the Caps Under BCA Three of the four justifications outlined in the BCA for adjusting the caps on discretionary budget authority have played a role in DHS's appropriations process. Two of these—emergency spending and overseas contingency operations/Global War on Terror—are not limited. The third justification—disaster relief—is limited. Under the BCA, the allowable adjustment for disaster relief is determined by the Office of Management and Budget (OMB), using the following formula: Limit on disaster relief cap adjustment for the fiscal year = Rolling average of the disaster relief spending over the last ten fiscal years (throwing out the high and low years) + the unused amount of the potential adjustment for disaster relief from the previous fiscal year. For FY2014, OMB determined the upper limit of the allowable adjustment for disaster relief would be $12,143 million. The Administration has requested $5,785 million in disaster relief through DHS and the Small Business Administration (SBA) to be subject to the cap adjustment. P.L. 113-76 included $5,626 million in appropriations through DHS to be paid for by the allowable adjustment, but not the requested disaster relief funding for the SBA. Unlike in FY2013, there was no carryover of unused disaster relief adjustment to be carried forward into FY2014. Appendix B. DHS Appropriations in Context Federal Government-Wide Homeland Security Funding Since the terrorist attacks of September 11, 2001, there has been 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 B-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 account for 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 budget for FY2012 accounted for over 51% of total federal funding for homeland security. The Department of Defense accounted for the next highest proportion at nearly 26% of all federal spending on homeland security. The Department of Health and Human Services and the Department of Justice at 6%, and the Department of State at nearly 4% rounded out the top five agencies in spending on homeland security. These five agencies collectively accounted for approximately 93% 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 enacted FY2012 budget bills and existing law included total homeland security budget authority of $35.1 billion for DHS, the total budget authority for DHS was $52.5 billion. Moreover, the amounts shown in Table B-1 will not be consistent with total amounts shown elsewhere in the report. This same inconsistency between homeland security budget authority and requested total budget authority is also true for the budgets of the other agencies listed in the table. Due to the fact that the Administration's FY2014 budget request was released without an estimate for FY2013 that accounted for P.L. 113-6 or the impact of sequestration, no authoritative data for FY2013 are available as of March 1, 2014.
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This report analyzes the FY2014 appropriations for the Department of Homeland Security (DHS). The Administration requested $39.0 billion in adjusted net discretionary budget authority for DHS for FY2014, as part of an overall budget of $60.0 billion (including fees, trust funds, and other funding that is not appropriated or does not score against the budget caps). Net requested appropriations for major agencies within DHS were as follows: Customs and Border Protection (CBP), $10,833 million; Immigration and Customs Enforcement (ICE), $4,997 million; Transportation Security Administration (TSA), $4,857 million; Coast Guard, $8,051 million; Secret Service, $1,546 million; National Protection and Programs Directorate, $1,267 million; Federal Emergency Management Administration (FEMA), $3,984 million; and Science and Technology, $1,527 million. The Administration also requested an additional $5.6 billion for FEMA in disaster relief funding as defined by the Budget Control Act. H.R. 2217, the House-passed DHS appropriations bill, would have provided $39.0 billion in adjusted net discretionary budget authority. The Senate-reported version of the same bill would have provided $39.1 billion in adjusted net discretionary budget authority. Both bills also would have provided the $5.6 billion in disaster relief requested by the Administration. Congress did not enact annual FY2014 appropriations legislation prior to the beginning of the new fiscal year. From October 1, 2013, through October 16, 2013, the federal government (including DHS) operated under an emergency shutdown furlough due to the expiration of annual appropriations for FY2014. More than 31,000 DHS employees were furloughed. Tens of thousands of others who were excepted from furlough, and those whose salaries were paid through annual appropriations, worked without pay until the lapse was resolved by passage of a short-term continuing resolution. From October 17, 2013, to January 17, 2014, the federal government operated under the terms of two consecutive continuing resolutions: P.L. 113-46, which lasted until its successor was enacted on January 15, 2014; and P.L. 113-73, which lasted until the Omnibus Appropriations Act, 2014 (P.L. 113-76), was enacted on January 17, 2014. The Homeland Security Appropriations Act, 2014, was included as Division F, and provided $39.3 billion in net discretionary budget authority, as well as the requested disaster relief funding. This report will be updated as events warrant.
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During the 108th Congress, the House of Representatives and the Senate Finance Committeeapproved two different versions of a bill that would have reauthorized and revised the TemporaryAssistance for Needy Families (TANF) Block Grant. This legislation, H.R. 4 , alsoincluded many changes to the Child Support Enforcement (CSE) program, a component of thegovernment's social safety net. In 1996, Congress passed significant changes to the CSE programas part of its reform of welfare. H.R. 4 was passed by the House in February 2003. TheSenate Finance Committee reported a substitute version of the bill in September 2003 ( S.Rept.108-162 ). On March 29-April 1, 2004, the Senate debated H.R. 4; disagreement aroseregarding amendments to the bill, a motion to limit debate was overruled, and the Senate did notvote on passage of the bill. The CSE program, Part D of Title IV of the Social Security Act, was enacted in January 1975 ( P.L. 93-647 ). The CSE program is administered by the Office of Child Support Enforcement(OCSE) in the Department of Health and Human Services (HHS), and funded by general revenues. All 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands operate CSEprograms and are entitled to federal matching funds. The following families automatically qualifyfor CSE services (free of charge): families receiving (or who formerly received) TemporaryAssistance to Needy Families (TANF) benefits (Title IV-A), foster care payments, or Medicaidcoverage. Collections on behalf of families receiving TANF benefits are used to reimburse state andfederal governments for TANF payments made to the family. Other families must apply for CSEservices, and states must charge an application fee that cannot exceed $25. Child support collectedon behalf of nonwelfare families goes to the family (usually through the state disbursement unit). Between FY1978 and FY2003, child support payments collected by CSE agencies increased from $1 billion in FY1978 to $21.2 billion in FY2003, and the number of children whose paternitywas established (or acknowledged) increased by 1,274%, from 111,000 to 1.525 million. However,the program still collects only 18% of child support obligations for which it has responsibility andcollects payments for only 50% of its caseload. Moreover, OCSE data indicate that in FY2003,paternity had been established or acknowledged for about 77% of the nearly 10 million children onthe CSE caseload without legally identified fathers. Total expenditures for the CSE program were$5.213 billion in FY2003; of this total, the federal share of state and local administrative costs of theprogram was $3.448 billion and the state share was $1.764 billion. The CSE program is estimated to handle at least 50% of all child support cases; the remaining cases are handled by private attorneys, collection agencies, or through mutual agreements betweenthe parents. The CSE program provides seven major services on behalf of children: (1) parent location, (2) paternity establishment, (3) establishment of child support orders, (4) review and modification ofsupport orders, (5) collection of support payments, (6) distribution of support payments, and (7)establishment and enforcement of medical support. Collection methods used by CSE agencies include income withholding, intercept of federal and state income tax refunds, intercept of unemployment compensation, liens against property, securitybonds, and reporting child support obligations to credit bureaus. All jurisdictions also have civil orcriminal contempt-of-court procedures and criminal nonsupport laws. Building on legislation ( P.L.102-521 ) enacted in 1992, P.L. 105-187 , the Deadbeat Parents Punishment Act of 1998, establishedtwo new federal criminal offenses (subject to a two-year maximum prison term) with respect tononcustodial parents who repeatedly fail to financially support children who reside with custodialparents in another state or who flee across state lines to avoid supporting them. P.L. 104-193 required states to implement expedited procedures that allow them to secure assets to satisfy an arrearage by intercepting or seizing periodic or lump sum payments (such asunemployment and workers' compensation), lottery winnings, awards, judgements, or settlements,and assets of the debtor parent held by public or private retirement funds, and financial institutions. It required states to implement procedures under which the state would have authority to withhold,suspend, or restrict use of driver's licenses, professional and occupational licenses, and recreationaland sporting licenses of persons who owe past-due support or who fail to comply with subpoenasor warrants relating to paternity or child support proceedings. It also required states to conductquarterly data matches with financial institutions in the state in order to identify and seize thefinancial resources of debtor noncustodial parents. P.L. 104-193 authorized the Secretary of Stateto deny, revoke, or restrict passports of debtor parents. P.L. 104-193 also required states to enact andimplement the Uniform Interstate Family Support Act (UIFSA), and expand full faith and creditprocedures. P.L. 104-193 also clarified which court has jurisdiction in cases involving multiple childsupport orders. The federal government currently reimburses each state 66% of the cost of administering its CSE program. It also refunds states 90% of the laboratory costs of establishing paternity. Inaddition, the federal government pays states an incentive payment to encourage them to operateeffective programs. P.L. 104-193 required the HHS Secretary in consultation with the state CSEdirectors to develop a new cost-neutral system of incentive payments to states. P.L. 105-200 , theChild Support Performance and Incentive Act of 1998, established a new cost-neutral incentivepayment system. (1) The statutory limit of CSEincentive payments for FY2004 is $454 million. Over the years, the CSE program has evolved into a multifaceted program. While cost-recovery still remains an important function of the program, other aspects of the program include servicedelivery and promotion of self-sufficiency and parental responsibility, even when one of the parentsis no longer living in the home. The CSE program has helped strengthen families by securing financial support for children from their noncustodial parent on a consistent and continuing basis and by helping some families toremain self-sufficient and off public assistance by providing the requisite CSE services. Childsupport payments now are generally recognized as a very important income source for single-parentfamilies. On average, child support constitutes 17% of family income for households that receiveit (2001 data). Among poor families who receive it, child support constitutes about 30% of familyincome (2001 data). (2) Both versions of H.R. 4 sought to improve the CSE program and raise collections so as to increase the economic independence of former welfare families and provide a stable sourceof income for all single-parent families with a noncustodial parent. Although both versions of thebill shared identical objectives with respect to simplifying CSE assignment and distribution rules andstrengthening the "family-first" policies started in the 1996 welfare reform law, the approaches useddiffered. Both versions of the bill revised some CSE enforcement tools and added others. TheSenate-approved version of H.R. 4 included a larger list of CSE provisions than did theHouse-passed bill. This section of the report does not discuss all of the CSE provisions included in H.R. 4 . For a description of all of the CSE provisions in H.R. 4, as passedby the House and approved by the Senate Finance Committee, see Table 1 in the last section ofthisreport, which provides a side-by-side bill comparison. As a condition of receiving TANF benefits, a family must assign their child support rights to the state. Assignment rules determine who has legal claim on the child support payments owed bythe noncustodial parent. The child support assignment covers any child support that accrues whilethe family receives TANF benefits as well as any child support that accrued before the family startedreceiving TANF benefits. Assigned child support collections are not paid to families, but rather thisrevenue is kept by states and the federal government as partial reimbursement for welfare benefits. Nonwelfare families who apply for CSE services do not assign their child support rights to the stateand thereby receive all of the child support collected on their behalf. An extremely important feature of the assignment process is the date on which an assignment was entered. If the assignment was entered on or before September 30, 1997, then pre-assistanceand during-assistance arrearages are "permanently assigned" to the state. If the assignment wasentered on or after October 1, 1997, then only the arrearages which accumulate while the familyreceives assistance are "permanently assigned." The family's pre-assistance arrearages are"temporarily assigned" and the right to those arrearages goes back to the family when it leavesTANF (unless the arrearages are collected through the federal income tax refund offset program). H.R. 4 as passed by the House did not make any changes regarding the child support assignment rules. In contrast, under H.R. 4 as approved by the Senate FinanceCommittee, the child support assignment would have only covered any child support that accruedwhile the family received TANF benefits. This meant that any child support arrearages that accruedbefore the family started receiving TANF benefits would not have to be assigned to the state (eventemporarily) and thereby any child support collected on behalf of the former-TANF family forpre-assistance arrearages would have gone to the family. Distribution rules determine the order in which child support collections are paid in accordance with the assignment rules. In other words, the distribution rules determine which claim is paid firstwhen a child support collection occurs. The order of payment of the child support collection is oftremendous importance because in many cases past-due child support, i.e., arrearages, are never fullypaid. TANF Families. While the family receives TANF benefits, the state is permitted to retain any current support and any assigned arrearages it collects up to the cumulative amount of TANF benefits which has been paid to the family . The 1996 welfarelaw ( P.L. 104-193 ) repealed the $50 required pass through (3) and gave states the choice to decide howmuch, if any, of the state share (some, all, none) of child support payments collected on behalf ofTANF families to send the family. States also decide whether to treat child support payments asincome to the family. While states have discretion over their share of child support collections, P.L.104-193 required states to pay the federal government the federal government's share of childsupport collections collected on behalf of TANF families. This means that the state, and not thefederal government, bears the entire cost of any child support passed through to (and disregarded by)families. As of August 2004, 21 states were continuing the $50 (or higher in several states)pass-through and disregard policy that had been in effect pre-1996. (4) Both versions of H.R. 4 would have provided incentives (in the form of federal cost sharing) to states to direct more of the child support collected on behalf of TANF families tothe families themselves, as opposed to using such collections to reimburse state and federal coffersfor welfare benefits paid to the families (often referred to as a "family-first" policy). However theapproaches of the bills differed with respect to the limitation on the federal cost-sharing and whetherto help states pay for the current cost of their CSE pass-through and disregard policies or toencourage states to establish such policies or increase the pass-through and disregard already inplace. H.R. 4 as passed by the House would have allowed states to increase the amount of collected child support they pay to families receiving TANF benefits and would not have requiredthe state to pay the federal government the federal share of the increased payments. The subsidizedchild support pass-through payments would have been the amount above any payments the state wasmaking on December 31, 2001. In other words, the House-passed bill intended to increase theamount of child support that was passed through to TANF families (and disregarded) by the state. The House-passed bill would have limited the new payments to the greater of $100 per month or $50per month more than the state previously was sharing with the family. In order for the federalgovernment to share in the cost of an increase in the child support pass-through, the state would havebeen required to disregard (i.e., not count) the child support collection paid to the family indetermining the family's TANF benefit. Unlike the House-passed bill, under the bill approved by the Senate Finance Committee the federal government would have shared in the costs of the entire amount of current pass-through anddisregard policies used by states. H.R. 4 as approved by the Senate Finance Committeewould have allowed states to pay up to $400 per month in child support collected on behalf of aTANF (or foster care) family ($600 per month to a family with two or more children) to the familyand would not have required the state to pay the federal government the federal share of thosepayments. In order for the federal government to share in the cost of the child support pass-through,the state would have been required to disregard (i.e., not count) the child support collection paid tothe family in determining the family's TANF benefit. Former TANF Families. Pursuant to the 1996 welfare reform law ( P.L. 104-193 ), beginning on October 1, 2000, states must distribute to formerTANF families the following child support collections first before the state and the federalgovernment are reimbursed (this is often referred to as the "family-first" policy): (1) all current childsupport, (2) any child support arrearages that accrue after the family leaves TANF (these arrearagesare called never-assigned arrearages), plus (3) any arrearages that accrued before the family beganreceiving TANF benefits. (5) (Any child supportarrearages that accrue during the time the family ison TANF belong to the state and federal government.) One of the goals of the 1996 welfare reform law with regard to CSE distribution provisions was to create a distribution priority that favored families once they leave the TANF rolls. Thus, generallyspeaking, under current law, child support that accrues before and after a family receives TANF goesto the family, whereas child support that accrues while the family is receiving TANF goes to thestate. This additional family income is expected to reduce dependence on public assistance by bothpromoting exit from TANF and preventing entry and re-entry to TANF. H.R. 4 as passed by the House would have given states the option of distributing to former TANF families the full amount of child support collected on their behalf (i.e., both currentsupport and all child support arrearages -- including arrearages collected through the federal incometax refund offset program). Under the House-passed bill, the federal government would have sharedwith the states the costs of paying child support arrearages accrued while the family received TANFas well as costs associated with passing through to the family child support collected through thefederal income tax refund offset program, if the state chose the "family-first" option. Similarly, H.R. 4 as approved by the Senate Finance Committee also would have given states the option of distributing to former TANF families the full amount of child supportcollected on their behalf. Further, the Senate Finance Committee version of the bill would havesimplified the CSE distribution process and eliminated the special treatment of child supportarrearages collected through the federal income tax refund offset program. Like the House-passedbill, the federal government would have shared with the states the costs of paying child supportarrearages to the family first. Both versions of H.R. 4 included identical or similar provisions with respect to (1) allowing states to access information in the national new hires database to help detect fraud in theunemployment compensation program; (2) lowering the threshold amount for denial of a passportto a noncustodial parent who owes past-due child support; (3) facilitating the collection of childsupport from Social Security benefits; (4) easing the collection of child support from veterans'benefits; and (5) allowing states to use the federal income tax refund offset program to collectpast-due child support for persons not on TANF who are no longer minors. Additional provisions that would have expanded and/or enhanced the ability of states to collect child support payments were contained in the Senate Finance Committee-approved version of H.R. 4 . They included (1) authorizing the HHS Secretary to act on behalf of states toseize financial assets (held by a multi-state financial institution) of noncustodial parents who owechild support; (2) authorizing the HHS Secretary to compare information of noncustodial parentswho owe past-due child support with information maintained by insurers concerning insurancepayments and to furnish any information resulting from a match to CSE agencies so they can pursuechild support arrearages; and (3) authorizing the HHS Secretary to compare information obtainedfrom gambling establishments with information on noncustodial parents who owe past-due childsupport and direct the gambling establishment to withhold from the customer's net winnings anychild support that is owed. Both versions of the bill included provisions that would have (1) required states to review and if appropriate adjust child support orders of TANF families every three years; (2) required the HHSSecretary to submit a report to Congress on the procedures states use to locate custodial parents forwhom child support has been collected but not yet distributed; (3) established a minimum fundinglevel for technical assistance; and (4) established a minimum funding level for the Federal ParentLocator Service. The House-passed version of H.R. 4 included a provision that would have established a $25 annual fee for individuals who had never been on TANF but received CSE servicesand who received at least $500 in any given year. The Senate Finance Committee-approved version of H.R. 4 included provisions that would have (1) increased funding for the CSE access and visitation program; (2) designatedIndian tribes and tribal organizations as persons authorized to have access to information in theFederal Parent Locator Service; and (3) required states to adopt a later version of the UniformInterstate Family Support Act (UIFSA) so as to facilitate the collection of child support paymentsin interstate cases. Table 1 provides a detailed and comprehensive comparison of the CSE provisions of theHouse-passed and Senate Finance Committee reported versions of H.R. 4 (the welfarereauthorization bill) with current law. The table specifies the section number in each of the bills inwhich the provision is found. As noted earlier, H.R. 4 passed the House but not the Senate during the 108th Congress. There is some concern that the widely favored CSE provisions that were in H.R.4 were not debated as a separate stand-alone bill. Nevertheless, it seems likely that the109th Congress will consider the substantive and numerous CSE changes that were included in H.R.4 as part of any new TANF reauthorization bill. Table 1. Comparison of Current Law with H.R.4, "Personal Responsibility, Work, and Family PromotionAct of 2003" as Passed by the House and "Personal Responsibility and Individual Development for Everyone Act(PRIDE)" as Reported by the SenateFinance Committee: Child Support Provisions Source: Congressional Research Service.
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During the 108th Congress, the House of Representatives and the Senate Finance Committee approved two different versions of a bill that would have reauthorized and revised the TemporaryAssistance for Needy Families (TANF) Block Grant. This legislation, H.R. 4 , alsoincluded many changes to the Child Support Enforcement (CSE) program. H.R. 4 waspassed by the House in February 2003. The Senate Finance Committee reported a substitute versionof the bill in September 2003 ( S.Rept. 108-162 ). On March 29-April 1, 2004, the Senate debatedH.R. 4; disagreement arose regarding amendments to the bill, and Republicans failed topass a motion to limit debate. H.R. 4 was not passed by the Senate. Although not identical, both versions of H.R. 4 were similar in focus, direction, and content with respect to the CSE provisions. Both versions of H.R. 4 includedprovisions that sought to improve the CSE program and raise collections so as to increase theeconomic independence of former welfare families and provide a stable source of income for allsingle-parent families with a noncustodial parent. Both versions of the bill provided incentives (inthe form of federal cost sharing) to states to direct more of the child support collected on behalf offamilies to the families themselves, thereby reducing the amount that state and federal governmentsretain (often referred to as a family-first policy). Under both bills, families currently receiving TANFbenefits as well as former TANF recipients would have potentially received a larger share of childsupport that was collected on their behalf. The approach used by the bills differed significantly, however, with regard to how states would help TANF families receive more child support. Under the House-passed bill, states would havebeen given federal cost sharing incentives to encourage states to increase (or establish) the amountof child support payments they pass through to TANF families (and disregard in determining TANFbenefits). The Senate Finance Committee version of the bill provided federal cost-sharing for theentire amount that the state disregards and passes through to families. Moreover, the House-passedbill provided a more limited amount of federal cost sharing for state pass-through and disregardpolicies than the Senate Finance Committee bill. Both versions of the bill would have revised some CSE enforcement tools and added others; increased funding for the Federal Parent Locator Service (FPLS); increased funding for federaltechnical assistance to the states; required states to review child support orders of TANF familiesevery three years; and required that a report be submitted to Congress on undistributed child supportcollections. The House-passed bill included a provision that would have established a $25 annualuser fee for individuals who had never been on TANF but received CSE services and who receivedat least $500 in any given year. The Senate Finance Committee-approved bill included provisionsthat would have increased funding for the CSE access and visitation program; and required statesto adopt a later version of the Uniform Interstate Family Support Act (UIFSA) so as to facilitate thecollection of child support payments in interstate cases. This report will not be updated.
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The United States is the largest single financial contributor to the United Nations (U.N.) system. Congress plays a key role in shaping U.S. policy at the United Nations through funding and oversight. Each fiscal year (FY), Congress authorizes and appropriates U.S. contributions to a range of U.N. entities. In FY2017, the United States provided more than $8.5 billion to the U.N. regular budget, specialized agencies, peacekeeping operations, and funds and programs. Over the decades, congressional debates on U.N. funding have generally focused on three key issues: the appropriate level of U.S. contributions to the U.N. system; whether U.S. funds are being used effectively; and how changes in U.S. funding might further U.S. policy priorities in the U.N. system. Congress is currently considering President Trump's FY2019 budget request which, if enacted, would significantly reduce U.S. funding to U.N. bodies. This report provides an overview of the processes and mechanisms for U.N. funding. It discusses how the United States funds the United Nations and outlines selected U.S. contributions to U.N. bodies. The final section presents selected policy issues for Congress, including debates over U.S. assessment levels, the possible impacts of U.S. withholdings, U.S. arrears to the United Nations, and the relationship between U.S. funding and U.N. reform. The United States is one of the founding members of the United Nations and continues to play a lead role in the organization today. U.S. participation in and funding of the United Nations is authorized through the U.N. Participation Act of 1945, as amended (22 U.S.C. 287 et seq.). Both Congress and the executive branch shape U.S. policy toward the organization. Congress authorizes, appropriates, and oversees U.S. funding to the United Nations, while the executive branch represents the United States in U.N. bodies through the State Department and the U.S. Mission to the United Nations (USUN). The President nominates Ambassadors for U.N. posts, and the Senate provides advice and consent for executive branch nominees. USUN is led by Ambassador Nikki Haley, the current U.S. Permanent Representative to the United Nations. The United States is a member of several key U.N. bodies. It serves as one of five permanent members of the Security Council (with veto power over Council resolutions), along with China, France, Russia, and the United Kingdom. It is also a member of the General Assembly and 12 specialized agencies. The United States is often elected to leadership positions on U.N. boards, councils, and other entities. Members of Congress hold varied perspectives on the appropriate level and extent of U.S. funding to the United Nations. Generally, Congress supports the United Nations and its overall mission; it provides funding to U.N. bodies each year, and often uses U.N. mechanisms to further U.S. foreign policy objectives. In FY2017, the last year in which comprehensive information is available, U.S. funding included $1 billion in assessed contributions to the U.N. regular budget and specialized agencies; $1.9 billion in assessed contributions to U.N. peacekeeping operations; $295 million in voluntary contributions to U.N. funds and programs; and $5.6 billion in voluntary contributions to U.N. humanitarian-related entities ( Figure 1 ). At the same time, some policymakers have been critical of the United Nations, especially when they believe U.N. actions may not align with U.S. policy priorities. Many Members have also expressed frustration with U.N. bodies or activities that, in their view, are not operating efficiently or lack effective accountability mechanisms. Over the years, Congress has sought to address the aforementioned concerns by raising or lowering U.N. funding levels and placing financial conditions or limits on U.S. contributions to U.N. entities. Some Members have also proposed eliminating all U.S. funding to the organization or providing only voluntary, and not assessed, contributions. In addition, Congress conducts oversight of U.N. funding by holding committee hearings, enacting reporting requirements, or consulting with executive branch agencies. It also queries executive branch nominees for U.N.-related posts, and can investigate U.N. entities or activities funded by the United States. The U.N. system is made up of interconnected components that include specialized agencies, voluntary funds and programs, peacekeeping operations, and the U.N. organization itself. Article 17 of the U.N. Charter requires each U.N. member to contribute to the expenses of the organization. U.N. entities are financed largely by contributions from members, which are made through two main channels: assessed and voluntary contributions. Members of U.N. entities are assessed a percentage of the organization's total budget. These assessments, which are determined by the members of each organization, provide U.N. entities with a regular source of income to staff and implement authorized programs. Payment of such contributions is a treaty obligation accepted by a country when it becomes a member. The U.N. regular budget, U.N. peacekeeping operations, and U.N. specialized agencies are funded mainly by assessed contributions, although some of these entities also receive voluntary funding. U.N. members pay assessed contributions to the U.N. regular budget, which funds the core administrative costs of the organization. The regular budget is negotiated and adopted by the General Assembly for a two-year period, or biennium, and is usually revised mid-budget period to reflect new programs or other changes. As outlined in the U.N. Charter, budget decisions are made by a two-thirds majority of members present and voting in the Assembly, with each country having one vote. Since the late 1980s, however, decisions related to the budget have, with few exceptions, been adopted by consensus. The approved U.N. regular budget for the 2018-2019 biennium is $5.39 billion (about $2.7 billion per year). The U.N. General Assembly negotiates a scale of assessments for the regular budget every three years based on a country's "capacity to pay." The Assembly's Committee on Contributions recommends assessment levels based on gross national income and other economic data, with a minimum assessment of 0.001% and a maximum assessment of 22%. The United States is currently assessed at 22% of the regular budget, the highest of any U.N. member state. Other top contributors include Japan, China, Germany, and France; the largest 12 contributors account for nearly 75% of the total regular budget ( Figure 2 ). The Assembly is expected to adopt new assessment rates for 2019 through 2021 in December 2018. There are currently 15 specialized agencies in the U.N. system, including the International Atomic Energy Agency (IAEA) and the World Bank Group ( Figure 3 ). Each of these entities is a legally independent intergovernmental organization with its own constitution, rules, membership, organs, and financial resources, including scale of assessments. Some agencies follow the assessment levels for the U.N. regular budget, while others use their own formulas. The United States is a member of all specialized agencies except for the U.N. Industrial Development Organization (UNIDO) and U.N. World Tourism Organization (WTO); it is currently in the process of withdrawing from the U.N. Educational, Scientific, and Cultural Organization (UNESCO). U.N. members provide assessed contributions to U.N. peacekeeping operations. These operations undertake activities related to cessation of armed conflict and postconflict assistance. As of early 2018, there are 14 U.N. peacekeeping missions worldwide with more than 100,000 military, police, and civilian personnel from over 120 countries. The United States, as a permanent member of the Security Council, plays a key role in establishing, renewing, and authorizing funding for such operations. U.N. Security Council resolutions establishing peacekeeping operations specify how each operation will be funded. In most instances, the Security Council authorizes the General Assembly to create a separate special assessed account for each operation that is funded by contributions from U.N. members. The total approved budget for U.N. peacekeeping operations for the current year (July 1, 2017, to June 30, 2018) is $6.8 billion. The General Assembly adopts the peacekeeping scale of assessments every three years. The scale is based on a modification of the U.N. regular budget scale, with the five permanent U.N. Security Council members assessed at a higher level than they are for the U.N. regular budget ( Figure 4 ). The U.S. peacekeeping assessment of 28.43% is the highest of any U.N. member. (Since the mid-1990s, Congress has capped the U.S. assessment at 25%.) Other key contributors to U.N. peacekeeping include Japan, the United Kingdom, and Germany; the top 10 contributors account for about 80% of total peacekeeping assessments. Voluntary contributions finance special funds, programs, offices, and other entities of the U.N. system ( Figure 5 ). No member is required to provide such funding; governments may decide what, if any, contributions will be made during each budget cycle. Many U.N. entities such as the U.N. Development Program (UNDP), U.N. Children's Fund (UNICEF), and U.N. Environment Program (UNEP) depend on voluntary funding; consequently, their budgets may fluctuate from year to year. Depending on donor preferences, contributions might be used to fund the core budgets of these bodies or may be earmarked for specific activities. Congress has generally authorized the majority of assessed and voluntary contributions to the U.N. system as part of Foreign Relations Authorization Acts, with appropriations provided to the Department of State and U.S. Agency for International Development (USAID) to meet obligations. When authorization bills are not enacted, Congress has waived the authorization requirements and appropriated funds through U.N. and U.N.-related accounts in annual Department of State, Foreign Operations, and Related Programs (SFOPS) appropriations acts. In some cases, U.S. contributions to U.N. bodies might be funded through other appropriations acts. A number of congressional committees are responsible for overseeing different aspects of U.N. funding. Authorizing committees include the Senate Committee on Foreign Relations and House Committee on Foreign Affairs. Most U.N.-related appropriations fall under the jurisdiction of the State-Foreign Operations Subcommittees of the House and Senate Committees on Appropriations. Some U.N. activities—particularly those related to global health, labor, defense, or the environment—might fall under the jurisdiction of other authorizing and appropriations committees such as Labor-Health and Human Services, Interior and the Environment, or Defense. Most U.S. funding to the United Nations is authorized and appropriated to the State Department or USAID through annual SFOPS appropriations acts. Some U.N. entities are funded through more than one account, and organizations with assessed budgets might also receive U.S. voluntary contributions. SFOPS funding can generally be divided into four categories. A ssessed contributions to the U.N. regular budget and specialized agencies are funded primarily through the State Department's Contributions to International Organizations (CIO) account. Congress generally appropriates a lump sum to CIO based on estimates of U.S. assessments. A ssessed contributions to U.N. peacekeeping are funded mainly through the State Department's Contributions for International Peacekeeping Activities (CIPA) account. Congress usually appropriates a lump sum to CIPA based on projected peacekeeping operations budgets and U.S. assessments. V oluntary contributions to U.N. funds and program s are funded through the International Organizations and Programs (IO&P) account. Congress usually specifies funding levels for each U.N. organization in enacted SFOPS bills or in accompanying reports or explanatory statements. V oluntary contributions to U.N. humanitarian-related entities are funded through the global humanitarian accounts, including the State Department's Migration and Refugee Assistance (MRA) and Emergency Refugee and Migration Assistance (ERMA) accounts, and USAID's International D isaster Assistance (IDA), and Food for Peace ( P.L. 480, Title II ) accounts. Congress generally appropriates overall funding for each of these accounts, while the executive branch determines how funds are allocated based on humanitarian needs and U.S. policy priorities. The process for authorizing and appropriating funding to the United Nations is sometimes complicated by several factors. Perhaps the most significant of these is the difference between the U.S. and U.N. fiscal years. The U.S. fiscal year (October 1 to September 30) does not align with the U.N. regular budget fiscal year (January 1 to December 31) or the U.N. peacekeeping fiscal year (July 1 to June 30). As a result, U.S. payments are often behind, and funding levels reported by the United States and U.N. system may not match. Other factors include modifications to U.N. budgets due to the practice of "recosting," periodic changes to U.S. assessment levels, unforeseen circumstances (such as the establishment of a new peacekeeping mission), and U.S. withholdings—each of which can cause funding shortfalls or overruns in U.N. or U.N.-related accounts. Additionally, since the 1980s the State Department has paid nearly all of its assessments on a deferred basis, causing some U.S. payments to be delayed by a year. For example, calendar year 2018 U.S. assessments will likely be paid with funds from U.S. FY2019. Over the years, Congress and the executive branch have sought to address these issues through a range of methods. To increase budget flexibility, policymakers have requested and allowed for multiyear funding for certain U.N.-related accounts. In some instances, they have also permitted the application of U.N. credits to outstanding balances, transferred funding to or from other accounts, or, when available, applied carryover funding from previous fiscal years. In other cases, Congress or the executive branch has declined to cover funding shortfalls, causing the United States to fall behind in payments and, in some cases, accumulate arrears to U.N. entities. An ongoing challenge facing U.S. policymakers is tracking and determining the full scope of U.S. funding to the U.N. system across all U.S. government agencies and accounts. There is no "one number" that represents total U.S. funding to the U.N. system at any given point in time. This is due to the complicated nature of U.S. and U.N. budget processes, the decentralized structure of the United Nations, and the range of U.S. government agencies, departments, and offices that, either directly or indirectly, fund various U.N. entities and activities. Over the decades, Congress has enacted several U.N. funding-related reporting requirements to help address this issue. While some have provided useful snapshots of U.S. funding during particular time periods or to select U.N. bodies, for a variety of reasons few have consistently or comprehensively captured the full scope of U.S. contributions to the entire U.N. system. Consequently, the U.S. funding described in this report represents the majority, but not all, of U.S. contributions to the U.N. system. This section outlines selected U.S. contributions to the U.N. system through annual State, Foreign Operation, and Related Programs (SFOPS) appropriations acts since FY2015, including the President's FY2019 budget request. In some cases, FY2017 funding levels are used as the main point of comparison because U.N.-specific FY2018 appropriations have not been finalized. In general, Congress appropriates lump sums to the U.N.-related accounts and does not direct U.S. contributions to specific U.N. entities, although it could opt to do so through line item appropriations or other enacted legislation. The Trump Administration has expressed general support for the overall mission of the United Nations. At the same time, President Trump has criticized the organization for its lack of effectiveness and argued that the United States contributes a disproportionate amount of funding to U.N. bodies. The Administration's FY2019 budget request appears to reflect these concerns. Specifically, it proposes a 25% reduction from enacted FY2018 funding for assessed contributions to the entire CIO account based on the expectation that U.N. organizations will "rein in costs, enhance their accountability and transparency, improve efficiency and effectiveness, and that the funding burden be shared more equitably"; a 13% reduction from enacted FY2018 funding for U.N. peacekeeping operations, based on the Administration's commitment to seeking reduced costs by "reevaluating the mandates, design, and implementation" of missions, and sharing the financial burden "more fairly" with other U.N. members; zeroing out voluntary contributions to U.N. funds and programs typically funded through the IO&P account, such as UNICEF and UNDP; and a 32% decrease in humanitarian assistance from FY2018 funding levels and the elimination of the Food for Peace (P.L. 480, Title II) and ERMA accounts, which could impact humanitarian-related funding to some U.N. entities. If enacted, the proposed funding levels for U.S. contributions to assessed U.N. budgets would fall short of actual U.S. assessments, causing the United States to fall behind in its payments and possibly accumulate arrears to U.N. bodies. The State Department's Contributions to International Organizations (CIO) account funds assessed contributions to 45 international and regional organizations, including the U.N. regular budget and U.N. specialized agencies. The United States is assessed 22% of the U.N. regular budget, while U.S. assessments to the U.N. specialized agencies vary by organization. For FY2019, the President requested $1.095 billion for the entire CIO account, a $372 million (25%) decrease from the enacted FY2018 funding of $1.467 billion. Of the FY2019 CIO request, $863.39 million is designated for U.N. entities. This represents a $193 million (or 18%) decrease from actual FY2017 U.N. CIO funding of $1.056 billion ( Table 1 ). If the President's FY2019 CIO request were to be enacted, the United States would likely pay less than what it owes to many U.N. entities, creating a funding shortfall in the CIO account and possibly leading to the accumulation of U.S. arrears in some U.N. bodies. For a breakdown of CIO account funding by U.N. entity, including U.S. assessment levels, see Appendix B . U.S. assessed contributions to U.N. peacekeeping operations are funded primarily through the State Department's Contributions for International Peacekeeping (CIPA) account, which includes most U.N. peacekeeping operations, the U.N. international criminal tribunals, and mission monitoring and effectiveness support funds. One peacekeeping mission, the U.N. Support Office in Somalia (UNSOS), is funded through the Peacekeeping Operations (PKO) account, which funds most non-U.N. multilateral peacekeeping and regional stability operations. Two others, UNTSO (Middle East) and UNMOGIP (India and Pakistan), are funded through the U.N. regular budget in the CIO account. For FY2019, the Trump Administration has proposed $1.19 billion for the CIPA account, a $186 million (13%) decrease from FY2018 enacted funding of $1.382 billion, and a $711 million (37%) decrease from the actual FY2017 contributions of $1.9 billion. In FY2017, CIPA funding declined by $553 million (22%) from FY2016 levels ( Table 2 ). According to the Administration, the FY2019 request is based on the expectation that the unfunded portion of U.S. assessed expenses "will be met through a combination of a reduction in the U.S. assessed rate of contributions, and significant reductions in the number of U.N. peacekeeping missions." Several policy changes account for recent declines in U.S. contributions to U.N. peacekeeping operations. The U.S. assessment for U.N. peacekeeping operations is 28.43%; however, since the mid-1990s Congress has capped the U.S. assessment at 25%—at times leading to funding shortfalls. Over the years, the State Department and Congress covered these shortfalls by raising the cap for limited periods and allowing for the application of U.N. peacekeeping credits (excess U.N. funds from previous peacekeeping missions) to be applied to U.S. outstanding balances. For several years, these actions resulted in full U.S. payments to U.N. peacekeeping; however, in FY2017 and FY2018 Congress declined to raise the cap, and since mid-2017 the Trump Administration has allowed for the application of peacekeeping credits up to, and not beyond, the 25% cap. The State Department estimates that the United States will accumulate arrears ($274.6 million in FY2017 and $251.6 million in FY2018) mainly because of these changes. For a breakdown of CIPA funding by U.N. peacekeeping operation, see Appendix C . Some U.S. voluntary contributions to U.N. entities and other international organizations are funded through the International Organizations and Programs (IO&P) account; examples include UNDP and UNICEF among others. Similar to its FY2018 budget proposal, the Trump Administration's FY2019 request eliminates the IO&P account and suggests that some unspecified activities currently funded through the account could receive contributions through a proposed Economic Support and Development Fund ( Table 3 ). For FY2018, Congress provided $339 million for the entire IO&P account, of which $296.2 million was for U.N. entities. Organizations that received the most funding include UNICEF ($137.5 million), UNDP ($80 million), and the U.N. Population Fund (UNFPA), if eligible ($32.5 million). Appendix D provides a breakdown of IO&P funding by U.N. entity. The majority of U.S. humanitarian assistance is provided to U.N. entities through the global humanitarian accounts, which fund voluntary contributions to U.N. entities. These contributions, which represent the bulk of U.S. funding to the United Nations, are sometimes viewed through a different lens because they do not fall under the umbrella of U.N. assessed contributions. Yet total U.S. funding to U.N. humanitarian-related activities is often equal to or greater than U.S. contributions to peacekeeping, the regular budget, and specialized agencies combined. Because the contributions are voluntary, funding to these organizations tends to fluctuate from year to year depending on U.S. priorities and global humanitarian needs ( Table 4 ). In FY2017, the last year for which comprehensive information is available, contributions to U.N. entities through these accounts totaled nearly $5.6 billion, compared to about $4.16 billion in FY2016 and $3.39 billion in FY2015. (FY2018 funding for U.N. entities has not yet been finalized.) Similar to previous Administrations, the FY2019 budget proposal does not outline how humanitarian funding might be distributed among U.N. entities or if it intends to reduce or expand U.S. contributions to such organizations. A detailed breakdown of global humanitarian-related funding by U.N. entity is provided in Appendix F . Members of Congress have debated the level and extent of U.S. funding to the United Nations since the United States first joined the organization in 1945. Over the decades, a number of recurring policy tools and issues have emerged, many of which may continue to be discussed in the 115 th Congress. For several decades, many U.S. policymakers, including some Members of Congress, have maintained that the U.S. assessments for the U.N. regular budget and U.N. peacekeeping operations are too high. In particular, some contend that current assessment levels for the regular budget result in a limited number of countries, particularly the United States, providing the bulk of funding while having what they view as minimal influence in the U.N. budget process. Some policymakers have expressed similar concerns about the U.S. peacekeeping assessment, which Congress has capped at 25%. They maintain that a cap on U.S. assessments plays an important role in keeping the current U.S. assessments from rising. On the other hand, some argue that the current assessment levels allow the United States to share peacekeeping, development, and humanitarian funding with other governments (often referred to as burden sharing) at a lower cost than if it were to act unilaterally. More broadly, they contend that current assessment levels reflect the U.S. commitment to the United Nations and allow the United States to pursue its policy priorities and maintain its influence in U.N. bodies. Some suggest that if the United States were to decrease its contributions to the United Nations, other countries with priorities at odds with the United States could step in and undermine U.S. interests. With these issues in mind, some Members of Congress may wish to monitor ongoing U.N. member states negotiations regarding the scale of assessments for the years 2019 through 2021. It is expected that the Assembly will adopt new regular budget and peacekeeping assessments in December 2018. The Trump Administration has stated that it will seek to reduce the U.S. peacekeeping assessment to the statutory cap of 25%. The last time there were significant changes to the U.N. scales of assessments was in 2000, when the U.S. regular budget assessment decreased from 25% to 22%, and the peacekeeping assessment decreased from over 30% to about 26% (it has since risen to 28.43%). Withholding funding from U.N. entities is one of the most common mechanisms by which Congress asserts or seeks to influence U.S. policy at the United Nations. In general, congressional withholdings fall into three categories: C aps on payment of U.S. assessments . Congress has at times limited U.S. payments to assessed budgets due to concerns that U.S. assessments were too high. In 1990s, for example, Congress capped the U.S. contribution to the U.N. regular budget at 22% and the U.N. peacekeeping assessment at 25%. F ull or partial withholdings from specific U.N. entities or activities . Over the years, and for a range of reasons, Congress has withheld or placed conditions on funding to selected U.N. entities or activities—some of which have required executive branch waivers or certifications to release funds ( Table 5 ). Co ngressional holds . Members of Congress have sometimes placed holds on U.N. funding through foreign affairs appropriations for policy reasons. Holds are generally requested by members of appropriations committees and, in many cases, little information is publicly available on the details of the hold. An additional category of withholding involves the executive branch. If Congress does not enact legislation that authorizes or appropriates funding to a specific U.N. entity, the Administration can unilaterally decide to withhold partial or full funding to such organizations, in some instances without being required to notify or consult with Congress. Congressional views on the role and effectiveness of U.S. withholdings vary. Some maintain that placing limitations or conditions on U.S. funding may weaken U.S. influence and standing within the organization, thereby undercutting the United States' ability to conduct diplomacy and make foreign policy decisions both in and out of the U.N. system. Some also argue that withholding U.S. assessed payments to the United Nations infringes on U.S. treaty obligations. On the other hand, some suggest that the United States should use its position as the largest U.N. financial contributor to push for the implementation of policies that are in the best interests of the United States. They contend that despite continued U.S. diplomatic and political pressures, U.S. foreign policy priorities are not adequately reflected in many U.N. bodies. The overall impact of U.S. withholdings on U.N. budget and operations depends on the origin of the program or entity's funding. For example, if an activity is funded by the U.N. regular budget and the United States withholds a proportionate share of its normal contributions, the cost of the program will most likely be covered, at least temporarily, by surplus regular budget funds. In such cases, a U.S. withholding would be largely symbolic and have little or no immediate impact on the program's operation or funding levels. On the other hand, if the United States withholds all or part of its assessed funding—or its voluntary contributions—from an entity funded primarily by member contributions, the impact of the U.S. withholding on the operations and budgets of such organizations could be significant—particularly for U.N. bodies for which the United States accounts for almost one-quarter of total funding. Some Members of Congress have demonstrated an ongoing interest in the accumulation of U.S. arrears to U.N. entities. Each U.N. body has its own payment timeline and system for defining and tracking arrears, which are generally outlined in the organization's constitution, statutes, or financial regulations. For instance, assessed contributions to the U.N. regular budget and U.N. peacekeeping operations are due and payable within 30 days of the receipt of notice from the U.N. Secretary-General. As of January 1 of the following calendar year, unpaid balances of such contributions are considered to be arrears. A consequence of accumulating arrears to the United Nations is the loss of voting rights in the General Assembly. Under Article 19 of the U.N. Charter, members who are in arrears "shall have no vote in the General Assembly if the amount of its arrears equals or exceeds the amount of the contributions due from it for the preceding two full years." In practice, the "amount of the contributions" refers to both assessed contributions to the U.N. regular budget and to U.N peacekeeping operations. Each U.N. specialized agency has its own rules and guidelines for nonpayment of arrears and the possible effects on membership. The causes of U.S. arrears often vary by U.N. entity, with total amounts fluctuating depending on the time of year. Congressional actions such as caps on assessments and withholdings from specific U.N. entities can play key roles in accumulating arrears. The aforementioned practice of deferred payments, which began under the Reagan Administration, also contributes. In the 1990s, the United States came close to losing its vote in the General Assembly under Article 19 due to substantial outstanding balances for the U.N. regular budget and U.N. peacekeeping. To prevent the loss of a vote, Congress and the Clinton Administration negotiated the "Helms-Biden Agreement" in 1999 that established conditions under which some U.S. arrears were paid. As of September 2017, the State Department reports that total estimated U.S. arrears to the U.N. regular budget are $347 million, while estimated arrears to U.N. peacekeeping budgets are $536 million. These arrears are the result of a combination of U.S. withholdings, deferred payments, and the U.N. peacekeeping cap. In some cases, the State Department plans to pay these arrears, but in other cases it does not. Congressional views on the payment of U.S. arrears are mixed. Some Members argue that they should be fully paid, while others do not recognize U.S. outstanding balances as arrears and claim the United States is under no obligation to pay them. Recognizing the complexity of tracking U.N. funding, over the years Congress has enacted several executive branch reporting requirements to help determine the full level and extent of U.S. contributions. The first of these reports, United States Contributions to International Organizations, has been published annually since 1952; in FY2016 Congress expanded its requirements to include information on the source of funds—including federal agency and account—and a description of the purpose of such funds disbursed in the previous year to international organizations in which the United States is a participant. During the past decade, Congress has periodically enacted additional reporting requirements. From FY2007 to FY2010, defense authorization legislation required that the Office of Management and Budget (OMB) submit an annual report to Congress listing all assessed and voluntary contributions to the United Nations and its related bodies. More recently, the Department of State Authorities Act, FY2017 ( P.L. 114-323 ) directed that OMB annually submit to Congress a report on all U.S. assessed and voluntary contributions to the United Nations with a value greater than $100,000, including in-kind services, during the previous fiscal year. Some of these more recent reporting requirements are similar to, and overlap with, previously enacted requirements. In certain cases, the executive branch has combined multiple requirements into one report. A key challenge to compiling U.N. funding-related data is one of self-reporting. According to the State Department, each participating agency is responsible for the completeness and accuracy of the information provided in the reports, and not all executive branch agencies provide the requested data. The agencies charged with compiling the reports, such as the State Department or OMB, often lack the authority to require other agencies to respond accurately or within a given timeframe, if at all. Consequently, some reporting requirements are incomplete and may not illustrate the full scope of U.S contributions. Since its establishment, the United Nations has evolved as various international stakeholders seek ways to improve the efficiency and effectiveness of the U.N. system through reform. Some Members of Congress have demonstrated a continued interest in U.N. reform and over the years have sought to link U.S. funding to specific reform benchmarks. In the 1980s and 1990s, for example, Congress enacted legislation tying U.S. funding to U.N. reform and U.N. regular budget policies that favored the United States, including caps on the U.S. assessments rates, changes to U.N. budget processes, and strengthening U.N. internal oversight. More recently, Congress has enacted legislation conditioning U.S. funding on the implementation of management reforms that aim to improve transparency and accountability (see text box ) and withholding funding to specific U.N. entities, such as the Human Rights Council. Congress has also demonstrated an increased interest in U.N. reforms related to sexual exploitation and abuse (SEA) by U.N. peacekeepers; legislation in the 115 th Congress requires that the United States withhold assistance from "any unit of the security forces of a foreign country" if the Secretary of State determines such unit has engaged in SEA while serving in a U.N. peacekeeping operation. More broadly, some Members have introduced legislation requiring a government-wide review of U.S. multilateral aid. The explanatory statement to the Consolidated Appropriations Act, 2018, requires the Secretary of State to provide Congress with a report that includes a description of current tools, methods, and resources to assess the value of, and prioritize contributions to, international organizations and other multilateral entities, as well as to provide related recommendations. Supporters of linking U.S. funding to U.N. reform contend that the United States should use its position as the largest U.N. financial contributor to push for the implementation of policies that lead to comprehensive reform. They note that despite diplomatic and political pressures from many countries, the United Nations has been slow to implement substantive reform. They believe that tying U.S. funding to reform may motivate countries to find common ground on otherwise divisive issues. On the other hand, opponents argue that linking U.S. funding to U.N. reform might not be effective and could ultimately weaken U.S. influence at the United Nations. In particular, some maintain that U.N. reform legislation proposals may be unrealistic because the scope and depth of reforms required by the legislation cannot be adequately achieved in the proposed timeframes. Some also contend that the United States can obtain its U.N. reform objectives through other means, including collaborating with like-minded members and working with the U.N. Secretary-General on common reform priorities. Policymakers have observed that countries that receive U.S. foreign aid sometimes vote against U.S. foreign policy or national security interests in U.N. bodies such as the Security Council and General Assembly. On occasion, the United States has periodically debated linking U.S. foreign assistance to the U.N. voting records of potential aid recipients. Supporters maintain that doing so could increase member support for U.S. policy priorities in U.N. bodies. The Reagan Administration strongly supported such a policy; then-U.N. Ambassador Jeanne Kirkpatrick stated in a 1983 congressional hearing that the United States must "communicate to nations that their votes, their attitudes and their actions inside the U.N. system inevitably must have consequences for their relations with the United States outside the U.N. system." Recognizing these concerns, in 1984 Congress required the State Department to submit an annual report to Congress, Voting Practices in the United Nations, which tracks member voting records on U.N. resolutions important to the United States. Over the years, some Members of Congress have also periodically introduced, but not enacted, legislation requiring reductions in foreign aid to countries that do not consistently vote with the United States. Opponents of these efforts contend that reducing funding to countries based on U.N. voting records could undermine the overall effectiveness of U.S. foreign assistance and, depending on the issue being considered in U.N. bodies, ultimately have little impact on how countries vote. Some have also questioned the criteria the State Department would use to eliminate or decrease aid, noting that many U.S. foreign aid priorities are based on a combination of need and political considerations that may not always align with how countries vote in the United Nations. They further contend that withholding aid in this manner might punish the citizens of countries who often have the greatest need and no control over the foreign policy decisions of their leaders. In the past year, President Trump and Ambassador Haley have expressed support for linking U.S. foreign aid to U.N. votes; prospects for implementation, however, are unclear. Congress is ultimately responsible for appropriating foreign assistance to specific countries, and the Trump Administration's FY2019 budget did not propose foreign aid reductions based on U.N. votes. Many congressional debates regarding U.N. funding occur against the backdrop of competing foreign and domestic funding priorities and broad questions about the role of the United Nations in U.S. national security and foreign policy. The emergence of President Trump's "America First" position raises questions about the future of U.S. participation in and funding of the United Nations. In the near term, Members of the 115 th Congress might consider the following issues: How, if at all, the President's FY2019 budget proposal aligns with congressional perspectives on U.N. funding. What role and actions, if any, Congress might take in the absence of Administration support for some U.N. activities. The possible impacts of current and potential U.S. financial withholding on (1) U.S. influence in U.N. bodies, and (2) the operations and effectiveness of U.N. activities—particularly in light of continued accumulation of U.S. peacekeeping arrears and the Administration's proposed funding reductions for certain U.N. bodies. In the longer term, some Members might consider the following U.N. funding issues in the context of the changing multilateral and global landscape. The benefits and drawbacks of U.S. funding of the United Nations—including areas where the United States can (1) reduce funding while increasing efficiency and accountability or (2) achieve the most "bang for its buck." Steps Congress can take to ensure that U.S. contributions to the U.N. system are used as effectively as possible. The domestic and foreign policy implications, if any, of reduced U.S. participation in and funding of the United Nations, including the possible impact of other countries stepping into the funding and leadership role traditionally held by the United States. How the United States can further its U.N. reform agenda, and to what extent, if any, such efforts could be linked to U.S. funding. The advantages and disadvantages of multilateral and bilateral U.S. assistance, including the comparative advantage, if any, the United Nations might have over other multilateral organizations, and how the United States might maximize this advantage. Appendix A. Organizational Chart of the U.N. System Appendix B. Contributions to International Organizations (CIO) Account by U.N. Entity The following table lists CIO account funding by U.N. and U.N.-affiliated entities since FY2015, including amounts appropriated by Congress and U.S. assessment levels. FY2018 funding levels for individual U.N. bodies are not yet available. Appendix C. Contributions for International Peacekeeping Activities (CIPA) Account by U.N. Peacekeeping Operation The following table lists CIPA account funding by peacekeeping operation since FY2015, including amounts appropriated by Congress. FY2018 funding levels for individual peacekeeping missions have not yet been finalized. Appendix D. International Organizations and Programs (IO&P) Account by U.N. Entity The following table lists U.S. contributions to U.N. entities through the IO&P account since FY2015. Appendix E. Timeline of U.S. Peacekeeping Assessment Cap The following table outlines changes to the U.S. peacekeeping assessment and enacted U.S. peacekeeping cap since FY1994, including related legislation. Appendix F. Global Humanitarian Accounts by U.N. Entity Table F-1 provides an overview of top U.S. voluntary contributions to U.N. humanitarian-related activities through the global humanitarian accounts since FY2015. Contributions for each account are appropriated by Congress, with the executive branch allocating funding to specific U.N. entities and activities based on humanitarian needs and U.S. foreign policy priorities. Some U.N. entities are funded through both State and USAID accounts, while others are only funded through specific agencies or agency accounts. Funding for U.N. entities in FY2018 has not been finalized. Appendix G. Selected Legislation: U.S. Funding and U.N. Reform The following sections highlight selected reform legislation from 1986 to the present that ties U.S. funding to U.N. reform and notes any subsequent changes to internal U.N. policy. Kassebaum-Solomon Amendment (1986-1987) In the mid-1980s, some Members of Congress expressed concern that U.S. influence over the U.N. budget was not proportionate to its rate of assessment. In 1986 Congress passed legislation, popularly known as the "Kassebaum-Solomon amendment," which required that the U.S. assessed contribution to the U.N. regular budget be reduced to 20% unless the United Nations gave major U.N. financial contributors a greater say in the budget process. Subsequently, in 1986 the General Assembly adopted a new budget and planning process that incorporated consensus-based budgeting as a decisionmaking mechanism, thus giving U.N. members with higher assessment levels a potentially greater voice in the budget process. U.N. Office of Internal Oversight Services (1993) In the early 1990s, some Members of Congress and the Administration were concerned with the apparent lack of oversight and accountability within the U.N. system. In 1993, as part of the FY1994 State Department Appropriations Act, Congress directed that 10% of U.S. assessed contributions to the U.N. regular budget be withheld until the Secretary of State certified to Congress that "the United Nations has established an independent office with responsibilities and powers substantially similar to offices of Inspectors General Act of 1978. On July 29, 1994, the U.N. General Assembly established the Office of Internal Oversight Services (OIOS) which reports directly to the Secretary-General and provides "internal auditing, investigation, inspection, programme monitoring, evaluation and consulting services to all U.N. activities under the Secretary-General's authority." Helms-Biden Agreement (1999) In the late 1990s, Congress and the Administration negotiated and agreed to legislation that would further U.S. reform policy at the United Nations. The Helms-Biden bill authorized payment of some U.S. arrears if specific reform benchmarks were met and certified to Congress by the Secretary of State. Under the terms of Helms-Biden, the United States agreed to (1) pay $819 million in arrearages over fiscal years 1998, 1999, and 2000; and (2) forgive $107 million owed to the United States by the United Nations in peacekeeping costs if the United Nations applied the $107 million to U.S. peacekeeping arrears. For arrearage payments to occur Congress required that the U.S. assessment for contributions to the U.N. regular budget be reduced from 25% to 22% and that the peacekeeping contribution be reduced from 30% to 25%. In December 2000, the U.N. General Assembly reduced the regular budget assessment level from 25% to 22%, and the peacekeeping share from approximately 30.4% to 28%. In subsequent years, the U.S. peacekeeping assessment continued to fluctuate and is currently 28.43%.
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Members of Congress are responsible for authorizing and appropriating U.S. funding to the United Nations (U.N.) system. Over the years, congressional interest in U.N. funding has largely focused on three key questions: What are appropriate levels of U.S. funding to U.N. entities? Are U.S. contributions used as efficiently and effectively as possible? How, if at all, should the United States leverage U.S. contributions to achieve its policy priorities in U.N. bodies? U.N. System Funding The U.N. system is made up of interconnected entities including specialized agencies, funds and programs, peacekeeping operations, and the U.N. organization itself. The U.N. Charter requires each U.N. member to contribute to the expenses of the organization. U.N. bodies are funded by a combination of assessed and voluntary contributions. Assessed contributions are required dues shared among U.N. member states to pay for the expenses of the organization. The U.N. regular budget, peacekeeping operations, and specialized agencies are funded mainly by assessed contributions. Voluntary contributions fund U.N. funds, programs, and offices. The budgets for many of these bodies may fluctuate annually depending on contribution levels. Organizations such as the U.N. Children's Fund (UNICEF) and U.N. Development Program (UNDP) are financed mainly by voluntary contributions. U.S. Contributions The United States is the largest financial contributor to the U.N. system, providing 22% of the U.N. regular budget and 28.43% of U.N. peacekeeping budgets. In FY2017, it contributed more than $8.5 billion to U.N. entities through the State, Foreign Operations, and Related Programs (SFOPS) appropriations act. Congress usually authorizes the majority of U.S. contributions to the U.N. system as part of Foreign Relations Authorization Acts, with appropriations provided to the Department of State and U.S. Agency for International Development (USAID) to meet obligations. When authorization bills are not enacted, Congress has waived the authorization requirements and appropriated funds through annual SFOPS appropriations acts. The Trump Administration's FY2018 and FY2019 budgets proposed significant reductions in U.N. funding. Selected Policy Issues Since the United Nations was established in 1945, Members of Congress have considered a number of ongoing issues related to U.N. funding: U.S. assessment levels. Some policymakers are concerned that current assessment levels result in the United States providing the bulk of funding to U.N. entities, particularly the U.N. regular budget, while having minimal influence on the organization's budget processes. Some are concerned that the U.S. peacekeeping assessment of 28.43%, which Congress capped at 25%, is too high. Others argue that the U.S. assessment reflects its commitment to the United Nations, affirms U.S. global leadership, and encourages other countries to fund the organization. U.S. withholdings. Over the years, Congress has withheld full or partial funding from selected U.N. bodies and activities. Some Members of Congress have debated the effectiveness of such withholdings in furthering U.S. interests in U.N. bodies, as well as the potential impact on U.N. operations. U.S. arrears. For the past several decades, the United States has accumulated arrears for some U.N. entities and activities, including U.N. peacekeeping. Some Members continue to discuss the impact of these arrears and whether they should be paid. U.S. funding and U.N. reform. Congress has enacted legislation linking U.S. funding to specific U.N. reform benchmarks. Some policymakers oppose such actions due to concerns that they may interfere with U.S. influence and ability to conduct diplomacy in U.N. bodies. Others suggest that the United States should use its position as the largest financial contributor to push for certain U.N. reforms. Tracking U.S. contributions. The manner in which the United States provides funding to the U.N. system is complex and often difficult to track in a timely and accurate manner. Congress has enacted several U.N. funding reporting requirements over the years. While some of these efforts have provided useful snapshots of U.S. funding during particular time periods or to select U.N. bodies, for a number of reasons few have comprehensively captured the full scope of U.S. funding to the U.N. system. This report will be updated as events warrant. For a brief overview of U.N. funding, see CRS In Focus IF10354, United Nations Issues: U.S. Funding to the U.N. System.
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Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare covered benefits (except hospice) to beneficiaries who enroll in their plan. Eligible individuals may enroll in an MA plan, if one is available in their area. As of January 2009, all Medicare beneficiaries had access to an MA plan and 23% of beneficiaries enrolled in one. Private plans may use different techniques to influence the medical care used by enrollees. Some plans, such as health maintenance organizations (HMOs) may require enrollees to receive care from a restricted network of medical providers; enrollees may be required to see a primary care physician who will coordinate their care and refer them to specialists as necessary. Other types of private plans, such as private fee-for-service (PFFS) plans, may look more like original Medicare, with fewer restrictions on the providers an enrollee can see and minimal coordination of care. In general, Medicare Advantage plans offer additional benefits or require smaller co-payments or deductibles than original Medicare. Sometimes beneficiaries pay for these additional benefits through a higher monthly premium, but sometimes they are financed through plan savings. The extent of extra benefits and reduced cost sharing vary by plan type and geography, creating an inequity that can frustrate some beneficiaries. However, Medicare Advantage plans are seen by some as an attractive alternative to more expensive supplemental insurance policies found in the private market. The 111 th Congress may examine several aspects of the MA program. First, Medicare is projected to pay MA plans more per beneficiary than it does for beneficiaries in original Medicare—an effect of a payment formula designed to encourage plan participation. Though a portion of the higher expenditure results in extra benefits and reduced cost sharing for some enrollees, some argue that private plans should not be paid more than the cost of original Medicare. Second, starting in 2010, the Comparative Cost Adjustment (CCA) Program will test direct competition between MA and original Medicare in selected areas. As such, the Part B premiums of beneficiaries in original Medicare may be increased or decreased depending on the efficiency of original Medicare relative to MA plans in the area. Third, recent studies show that profits in 2005 and 2006 for MA plans were, on average, higher than estimated because of underestimates in medical spending. If plans had more accurately estimated medical spending, they could have offered more generous benefit packages without reducing their profits, though some variability in the accuracy of estimates may be expected. Finally, marketing behaviors of MA plans and their agents or brokers were a concern in the 110 th Congress; it is unclear whether they will continue to be an issue in the 111 th . All of these issues are discussed in more detail in the " Issues for Congress " section at the end of this report. The Congressional Budget Office (CBO) March 2008 projection of Medicare payments under Part C is $112.8 billion in 2009 for coverage of 11.0 million enrollees, increasing to $221.2 billion in 2018 for 16.6 billion enrollees. Medicare has a long-standing history of offering its beneficiaries health insurance coverage through private plans. Beginning in the 1970s, private health plans were allowed to contract with Medicare on a cost-reimbursement basis. Under a cost contract, plans are reimbursed for the actual costs of delivering health care services. In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA, P.L. 97-248 ), which created the first Medicare risk contracting program. Under a risk contract, participating health plans are paid a fixed monthly payment per enrollee to furnish all Part A and B Medicare-covered services (except hospice) to beneficiaries. This is in contrast to the original fee-for-service (FFS) Medicare, where Medicare pays providers directly for each item or service delivered. With the passage of TEFRA, payments to private health plans were set at 95% of the cost of providing Medicare benefits in the original FFS program. FFS costs were measured by units called Average Adjusted Per Capita Costs (AAPCCs). By 1997, 15 years after the start of the risk contract program, Medicare private plans covered more than 5 million beneficiaries, or about 14% of beneficiaries. However, despite its lengthy tenure as the basis for private plan payment, the calculation of AAPCCs was criticized for a number of reasons. Principal among these was that payments fluctuated from year to year and varied widely across the country. In an attempt to remedy this problem, Congress, in the Balanced Budget Act of 1997 (BBA, P.L. 105-33 ), replaced Medicare's risk contract program with the Medicare+Choice (M+C) program. The BBA substantially restructured the system for setting Medicare payment rates to private plans. By establishing a new payment methodology, Congress hoped to reduce Medicare spending, expand access to managed care options, and decrease variation in payment rates across the country. Under the M+C program, the per capita rate for a payment area was set at the highest of three amounts calculated for each county : a blended rate, which was a blend of an area-specific (local) rate and a national rate; a minimum payment (or floor) rate; or a rate reflecting a minimum increase from the previous year's rate. The blended per capita rate was intended to shift payment amounts away from local (generally county) rates, which reflect the wide variations in fee-for-service costs, toward a national average rate. The floor rate was designed to raise payments in certain counties more quickly than would occur through the blend alone; the minimum increase percentage was to protect counties that would otherwise receive only a small increase (if any). This formula was subject to a budget neutrality provision to keep expenditures from exceeding expected expenditures in the absence of the new formula. Although the intent of the BBA was to increase access to private plans, particularly in markets where availability was limited or non-existent, the program did not work as well as intended. The goal of controlling Medicare spending may have dampened the interest of private plans to develop new markets and add plan options. Their cautious behavior may have been a reaction to a slowdown in the rate of increase in payments. Among plans, there was also a great deal of uncertainty about the future of the M+C program and the stability of payments to sustain the program. Between 1999 and 2003, private plans left the program or reduced their service areas, affecting thousands of enrollees each year. Some enrollees were able to switch to other private Medicare plans, while others had no M+C plans available to them. Despite a small surge in enrollment initially, the percentage of beneficiaries enrolled in M+C dropped from 17% in 1999 to approximately 12% in 2003. To address the decreased plan participation, the 106 th Congress inserted provisions in the Balanced Budget Refinement Act of 1999 (BBRA, P.L. 106-113 ) and the Medicare, Medicaid, and SCHIP Benefits, Improvements, and Protection Act of 2000 (BIPA, P.L. 106-554 ) to increase reimbursement to M+C plans. In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173 ), which made substantial changes to Medicare's private plan option. In creating Medicare Advantage (MA) to replace the M+C program, the MMA established an entirely new payment methodology to pay private plans. Under the new payment system, Medicare continues to pay plans a fixed monthly amount per enrollee, but these monthly payments are determined, at least in part, by competitive bidding. In addition, Congress increased payments to plans and introduced regional Preferred Provider Organizations—a popular option in the private health insurance market. Finally, the MMA created a new benefit package for Medicare enrollees: beginning in 2006, beneficiaries have been able to enroll in a Medicare Part D prescription drug plan whether they are in original Medicare or Medicare Advantage. In general, a beneficiary who wants to enroll in an MA plan and receive Part D prescription drug coverage must enroll in an MA-PD plan—an MA plan that includes the Part D coverage. A beneficiary who wants to remain in original Medicare may only enroll in Part D through a Prescription Drug Plan (PDP). Today Medicare beneficiaries can choose to enroll in several different types of private plans. These include coordinated care plans, also known as managed care plans, such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and provider sponsored organizations (PSOs) as well as plans that do not manage or coordinate the health care of enrollees, such as private fee-for-service organizations (PFFS) and medical savings accounts (MSA). Certain other plan types operate under exceptions or demonstration authority and may or may not manage care. Not all types are available in all locations. Prior to the passage of MMA, enrollment in private plans fluctuated. Since the passage of the MMA, overall enrollment in private plans has been steadily increasing. In 2009, approximately 10.4 million, or 23%, of Medicare beneficiaries are enrolled in a MA plan, and all Medicare beneficiaries have access to at least one private plan. Despite these successes, reforming the payment methodology for private plans remains a key issue among policymakers. According to the Medicare Payment Advisory Commission (MEDPAC), Medicare is expected to pay private plans an average of 14% more per beneficiary in 2009 than it does for beneficiaries enrolled in the original Medicare program. A comparable analysis for 2008 showed that Medicare was expected to pay private plans an average of 13% more per beneficiary in 2008 than it did for beneficiaries enrolled in original Medicare. Based on the 2008 analysis, the greater expected payments to plans relative to spending in original Medicare varies by plan type; payments to HMOs are approximately 112% of original Medicare, while payments to PFFS plans are 117% of original Medicare. Since MA payments are based, in part, on historical payment rates, this 13% difference is linked to the 1997 BBA legislation, which created payment floors to attract private plans to certain counties, particularly rural counties. These floors, which exceeded FFS spending levels in many areas, continue to be used in the calculation of MA payment rates today. MA plans use these payments to provide extra benefits to enrollees, but the value of these benefits vary across plan types and across counties. In addition, these higher payments have attracted private plans to areas previously underserved by Medicare private plans, and beneficiaries today have more private plans to choose from than they did 10 years ago. Beginning in 2006, the Secretary began determining MA payment rates by comparing plan bids to a benchmark. By the first week of June each year, plans are required to submit their bids for all MA plans they intend to offer in the upcoming year. Each bid represents the plan's estimated revenue requirement for providing required Parts A and B Medicare services to an average Medicare beneficiary. The revenue requirement includes the estimated cost of providing required health care, plus administrative costs and a return on investment. After plans submit their bids, the Secretary has, with one exception, the authority to negotiate the bid amount, similar to the authority of the Director of the Office of Personnel Management (OPM) with respect to the Federal Employees Health Benefits program. The Secretary's authority to negotiate bids does not extend to bids submitted by Private Fee for Service (PFFS) organizations. The Secretary then compares each plan's bid to a benchmark. The benchmark amounts represent the maximum amount the federal government will pay a plan for providing required Medicare benefits. If a plan's bid is less than the benchmark, its payment equals its bid plus a rebate of 75% of the difference between the benchmark and the bid. The rebate must be used to provide additional benefits to enrollees, reduce Medicare cost sharing expenses, or reduce a beneficiary's monthly Part B, prescription drug, or supplemental premium (for services beyond required Medicare benefits). The remaining 25% of the difference is retained by the federal government. If a plan's bid is equal to or above the benchmark, its payment is equal to the benchmark amount, and each enrollee in that plan will pay an additional premium equal to the amount by which the bid exceeds the benchmark. Any MA plan that provides Part D prescription drug coverage receives reimbursement for premiums and cost-sharing reductions for its qualifying low-income enrollees. Additional payments may be available to certain types of plans in specific areas, or for enrollment of certain beneficiaries. The MMA increased payments to MA regional plans in three ways. First, the MMA established a regional plan stabilization fund to encourage plans to serve at least one entire region or even all regions, and to encourage plans to stay in regions they might otherwise leave. Originally, $10 billion was to be made available to this fund for years 2007 through 2013, with additional money entering the fund from savings in the regional plan bidding process. However, subsequent legislation reduced the initial $10 billion to one dollar. Money from the regional plan bidding process continues to flow into the fund and will be available for distribution in 2014. Second, the MMA allows the Secretary to provide an increased payment in special circumstances for certain hospitals that provide inpatient hospital services to MA regional plan enrollees. Third, Medicare shared risk with MA regional plans in 2006 and 2007. If a plan's costs fell outside of a specified range or "risk corridor," plans assumed only a portion of the risk for unexpectedly high costs and plans were required to return a portion of the savings to Medicare for unexpectedly low costs. In general, the MA benchmarks in each local area (county) are updated annually by a minimum increase over the previous year's rate. The minimum increase is set at the larger of either 2% or the overall growth in Medicare expenditures, otherwise known as the National MA Growth Percentage, subject to a budget neutrality adjustment. In certain years (known as rebasing years ), plan payments are updated by the greater of the minimum increase or 100% of fee-for-service (FFS) costs, with adjustments. Statutorily required adjustments to the 100% of FFS amount include (1) exclusion of the direct cost of medical education, (2) phase-out of the indirect cost of medical education, and (3) adjustment to reflect the additional per capita payments that would have been made in the area if individuals entitled to benefits under Medicare had not received services from the Department of Defense or the Department of Veterans Affairs. (As of CY2009, CMS had been unable to make the third of these adjustments.) According to statute, the Secretary is required to rebase FFS costs at least once every three years. However, CMS has chosen to rebase more frequently. The Secretary opted to rebase FFS rates for 2007 and 2009, but not 2008. In rebasing years, all benchmarks are either equal to or greater than the estimated adjusted average spending in original Medicare in that county. In a non-rebasing year, it is possible for spending in original Medicare in a county to exceed the benchmark amount. But in general, benchmarks are set at or above spending in original Medicare. According to MEDPAC, benchmarks are, on average, 18% greater than expected spending in original Medicare. The National MA Growth Percentage rate (prior to the budget neutrality adjustment discussed below) is 5.7% in 2008 and 4.2% in 2009. The benchmark is calculated differently for local MA plans than for regional MA plans. The local benchmark is based solely on statutorily or administratively defined increases. The regional benchmark is competitive in that the benchmark consists of two components: a statutorily determined increase and a weighted average of plan bids. The latter component introduces a new form of competition among regional plans, by basing a portion of the benchmark amount on bids submitted by the plans. After determining the annual update, the Secretary adjusts payments for the health status of enrollees and for budget neutrality. To adjust for health status, the Secretary calculates a risk score for each enrollee based on the beneficiary's previous health care utilization. (This is known as risk adjustment .) Previously, payments to managed care plans were adjusted for a combination of demographic factors such as age, gender, and institutional status. In 1999, Congress urged the Secretary to implement a more clinically based risk adjustment methodology to supplement the existing demographic adjustment factors. It was fully phased in by 2007. The methodology was to be implemented without reducing overall payments to managed care plans. Typically, risk adjustment would have the effect of lowering payments to plans enrolling healthier beneficiaries and raising payments to plans enrolling sicker beneficiaries. To prevent overall payments to managed care plans from going down, the Secretary applied a budget neutrality adjustment. Under budget neutrality, total payments to managed care plans using 100% risk adjusted rates must be equal to total payments to plans using 100% demographic rates. When Congress passed the Deficit Reduction Act of 2005, it included a provision mandating the phaseout of this budget neutrality adjustment by 2011. As a result, the MA benchmark update for 2008 was, on average, 3.5%. The update for 2009 is an average of 3.6% for all areas that did not receive a rebased amount. MA plans offering prescription drug coverage receive a separate benchmark payment for Part D prescription drug benefits. The benchmark for Part D benefits is based on an adjusted average of all plan bids for the area and is therefore competitively determined. Over time, the number of contracts under MA and its predecessors has fluctuated. From 1987 to the early 1990s, many risk plans terminated existing contracts, decreasing the number of available contracts from 161 in 1987 to 93 in 1991. The number of Medicare risk plans began increasing again in 1992, more than tripling from 110 in 1993 to 346 in 1998. With the implementation of the M+C program in 1999, M+C organizations withdrew from the Medicare program or reduced the size of their service area. As shown in Figure 1 , the number of contracts dropped from a high of 346 in 1998 to a low of 146 in March 2003. With the passage of the MMA in 2003, the trend began to reverse. The number of MA contracts more than doubled between 2005 and 2006. This increase coincides with the start of the Part D prescription drug program and may reflect an overall increased interest in private plan participation in Medicare at that time. There were 600 MA coordinated care and PFFS contracts in 2008, increasing to 623 in 2009. Organizations withdrawing from the program or reducing their service area between 1998 and 2004 cited several reasons for leaving the program: inadequate payments, increasing regulatory burden, and difficulty developing or maintaining provider networks. The withdrawals may have reflected strategic business decisions that transcended payment issues. Other factors may have contributed to withdrawals, such as low enrollment and market competition. For each year between January 1999 and January 2003, from 4% to 15% of M+C enrollees either had to change plans or leave the program because of plan withdrawals and service area reductions. Some beneficiaries were required to switch plans multiple times between 1999 and 2003. Of those beneficiaries that lost their plans, between 7% and 24% lost access to any M+C plan each year. Enrollment in Medicare private plans has fluctuated over time. As shown in Figure 2 , in 1990 about 3% of Medicare beneficiaries were enrolled in the program, but by 1998 this figure had increased to 15% of Medicare beneficiaries, covering just over 6 million enrollees. With the implementation of the M+C program, enrollment increased through 1999, but declined steadily to a low of 11% (4.7 million enrollees) in 2003 and 2004. Enrollment has since increased each year, reaching a recent high of 23% in 2009. The 2008 Annual Report of the Board of Trustees projects further enrollment increases reaching about 27% of all beneficiaries in 2017, covering about 15 million enrollees. Though a variety of plan types are authorized under Medicare, national enrollment in MA is concentrated in two types: health maintenance organizations (HMOs), with 67% of enrollment, and private fee-for-service (PFFS) plans, with 21% of enrollment ( Figure 3 ). All other remaining plan types make up 13% of enrollment. Characteristics of the different plan types and enrollment specifics follow. Coordinated Care Plans (CCPs) are those plans that have a network of medical providers under contract to provide approved health care benefits to plan enrollees. CCPs may use mechanisms to coordinate care or control health care utilization, such as primary care "gatekeepers," and financial incentives with plan providers to encourage cost-effective health care. CCPs include the following specific types of plans: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Provider Sponsored Organizations (PSOs). Three-quarters of all MA enrollees are in a coordinated care plan. Health Maintenance Organizations (HMOs) offer services to plan members in designated areas. Beneficiaries are generally required to obtain services from hospitals and doctors in the plan's network. Some plans offer a point-of-service option under which an individual may elect to obtain services from a non-network provider; in such cases, the individual generally pays a greater out of pocket cost for out-of-network care. In 2008, approximately 6 million Medicare beneficiaries (67%) were enrolled in an MA HMO. A Preferred Provider Organization (PPO) is a plan that has a network of providers; however, enrollees are not restricted to the providers in the PPO network. Generally, enrollees are required to pay greater cost sharing when receiving care outside of the PPO network. Two types of PPO plans are authorized under Medicare: local PPO plans and regional PPO plans. Local PPO plans may choose their service area, while regional PPO plans must agree to serve one or more regions designated by the Secretary. There are 26 PPO regions consisting of states or groups of states. In addition to the service area requirements, the benefit packages for regional PPO plans are required to have a unified Part A and B deductible and a catastrophic out-of-pocket limit, which are not required of local PPO plans. In 2008, 5% of all MA enrollees were in a local PPO plan (approximately 470,000) and 3% of MA enrollees were in a regional PPO plan (approximately 230,000). A Provider Sponsored Organization (PSO) is a coordinated care plan established or organized by a group of medical providers in which the providers furnish the majority of the health care and share in the financial risk of providing the health care to plan enrollees. In 2008, 1% of MA enrollees were in an MA PSO plan (approximately 54,000). A Specialized Plan for Special Needs Individuals (SNPs) is any MA coordinated care plan that exclusively enrolls or enrolls a disproportionate percentage of special needs individuals. Special needs individuals are any MA eligible individuals who are either institutionalized as defined by the Secretary, eligible for both Medicare and Medicaid, or have a severe or disabling chronic condition and would benefit from enrollment in a specialized MA plan. Since SNP plans may be any type of CCP, SNP enrollees are included in the enrollment estimates above. In 2008, 1.1 million Medicare beneficiaries were enrolled in a SNP: 70% were enrolled in a SNP for beneficiaries eligible for both Medicare and Medicaid, 17% were enrolled in a SNP for beneficiaries with chronic conditions, and 13% were enrolled in a SNP for institutionalized Medicare beneficiaries. Private Fee for Service plans (PFFS) are plans that (1) reimburse hospitals, physicians, and other providers on a fee-for-service basis without placing providers at risk; (2) do not vary rates for a provider based on the utilization relating to that provider; and (3) do not restrict the selection of providers among those who are lawfully authorized to provide services and agree to accept the terms and conditions of payment established by the plan. In 2008, 21% of MA participants were enrolled in a PFFS plan (approximately 1.9 million). PFFS contracts and enrollment have seen a steeper increase over recent years. First authorized in the BBA, the first contract was offered in 2000, the second following in 2002. However, between 2004 and 2008, MA PFFS contracts grew from 4 contracts in 2004 to 77 contracts in 2008. Enrollment in PFFS grew from 31,550 in 2004 to 1.9 million in 2008. Several factors may have contributed to the recent growth. First, prior to 2011, PFFS contracts are not required to establish provider networks and are therefore less expensive to establish in non-urban areas. Starting in 2011, PFFS plans sponsored by employers or unions will be required to have contracted provider networks. All other PFFS plans will be required to establish provider networks in areas where at least two other network-based plans operate. Second, enrollees can choose to see any provider willing to accept the terms and conditions specified by the PFFS plan—an attractive feature for beneficiaries. Third, PFFS plans tend to be paid more than coordinated care plans. Medicare pays 13% more per beneficiary in MA than in original Medicare. This varies by type of MA plan, with a 12% increase for HMOs and 17% for PFFS. Fourth, PFFS contracts have fewer statutory requirements, resulting in reduced operation costs. And fifth, employer and union groups have historically found MA PFFS plans an attractive option for providing retiree coverage, though this may change with the new network requirements. Reasonable Cost Plans (COST) are private MA plans that are paid on the basis of the reasonable costs actually incurred to provide Medicare covered benefits to enrollees. Unlike other types of private plans that participate in Medicare, Cost plans are not "at risk" for the actual cost of providing care to their enrollees. In 2008, 266,000 beneficiaries were enrolled in a cost plan, representing 3% of total MA enrollment. A Medical Savings Account (MSA) under MA is a combination of a health insurance policy with a high deductible and a savings account for health care expenses. CMS pays premiums for the insurance policy and makes contributions to the savings account. Beneficiaries use money from the savings account to pay for their health care before the high deductible of the insurance policy is met. The maximum deductible is set by law. For 2008, the deductible may not exceed $10,050. In 2008, slightly more than 1,000 people were enrolled in an MA MSA. They represented less than 0.01% of MA enrollees. A Health Care Prepayment Plan (HCPP) is a private plan that covers only physician services. In 2008, 1% of MA enrollees were in an HCPP in 2008. Enrollment in a plan is open only to eligible beneficiaries living in the plan's service area. Plans define a service area as a set of counties and county parts, identified at the zip code level. In 2009, an MA plan is available to every beneficiary in the United States. However, this widespread availability is a recent event. In the early part of the M+C program, a Medicare private plan was not available in the majority of counties ( Table 1 ). In 1997, approximately a quarter of counties had an M+C plan available, increasing to 29% by 1999. (In 1997, 76% of counties were without a plan, decreasing to 71% in 1999.) In 2000, the first PFFS plan focused primarily on rural and suburban areas that were less often served by managed care; this greatly increased the proportion of counties with access to a private plan. Between 2001 and 2003, approximately half of counties had access to a PFFS plan, but for over 40% of counties, PFFS was the only private option available. The proportion of counties served by managed care decreased over this period, from 20% of counties in 2001 to 17% of counties in 2003. (In 2001, 10% of all counties were served by only a coordinated care plan, while 10% of all counties were served by both a managed care and a PFFS plan, summing to 20%. In 2003, 9% of all counties were served by only a coordinated care plan, while an additional 8% of counties were served by both a CCP and a PFFS plan, summing to 17%.) Access to private plans through Medicare has increased substantially since 2004, and now nearly all counties are served by at least one type of private plan, though for half of all counties, PFFS is the only plan type available as of 2008. Medicare beneficiaries, however, are not equally distributed by counties. This occurs because the population and plans are not distributed equally across counties, but rather they are concentrated in the more urban counties. In 2007, while half of all counties were served by only PFFS plan options, the beneficiaries in those counties represented only 17% of all Medicare beneficiaries ( Table 1 ). The proportion of beneficiaries with access limited to PFFS plan options has remained stable since 2001 (prior to the MMA) at between 17% and 20%. Availability can further be examined taking into account the MA plans set up by employers for their retirees. Though only the retirees of the sponsoring company are eligible to join the plan, their increased popularity in recent years has provided additional options for this subset of Medicare beneficiaries. In 2007, taking into account employer sponsored plans, 96% of all beneficiaries had access to both a coordinated care plan and a private fee for service plan, and 4% of all beneficiaries had access to only a PFFS plan, though again, not all beneficiaries would be eligible to enroll in an employer sponsored plan. Patterns of Medicare Part C enrollment are not uniform across urban and rural locales, and have varied over time as shown in Figure 4 . The geographic areas are defined as follows: Central urban—central counties of metropolitan areas of at least 1 million population. Other urban—either fringe counties of metropolitan areas of at least 1 million population or counties of metropolitan areas up to 1 million population. Urban/rural fringe—urban population of at least 2,500 adjacent to a metropolitan area. Other rural—includes urban population of at least 2,500, not adjacent to a metropolitan area, and rural areas (defined as places with a population of less than 2,500). In 2003, most M+C enrollees resided in central urban areas; about 69% of the M+C population lived in a central urban area in 2003. This percentage decreased to 51% in 2007. However, a smaller proportion, only 39% of all Medicare beneficiaries reside in the central urban areas. (The urban and rural pattern of beneficiary residence as defined above remained the same from 2003 to 2007.) In all geographic areas, except central urban areas, the percentages enrolled in private plans are less than the percentage of Medicare beneficiaries overall. (For example, 13% of Medicare beneficiaries live in the urban/rural fringe areas, but MA enrollees in those areas made up only 8% of total private plan enrollment in 2007, up from 2% of private plan enrollment in 2003.) This means that a larger proportion of the Medicare population in the central urban areas choose to enroll in Medicare private plans relative to other geographic areas; conversely, a lower proportion of beneficiaries choose to enroll in private plans in non-central urban areas, though that trend is decreasing. Historically, the high enrollment trend in central urban areas occurred because of a combination of interrelated factors, such as historic patterns of managed care enrollment in the non-Medicare market, availability of different plans, and plan benefits. More recently, with greater availability of private plans in suburban and rural areas, more beneficiaries living in those areas are enrolling in MA plans; the urban concentration of MA enrollment is decreasing. In addition to rural and urban variations, enrollment patterns also vary on a regional basis, though not by as much as in previous years. MA enrollment is slightly higher in western and southwestern states, as shown in Figure 5 . Approximately 36% of the beneficiaries in Arizona, 34% of the beneficiaries in California, and 38% of the beneficiaries in Oregon are in MA plans. The highest levels of enrollment in the eastern states are in Rhode Island (35%), Florida (26%), Pennsylvania (33%), and New York (25%). Only one state, Alaska, has less than 1% of beneficiaries enrolled in MA. Seventeen states have enrollment of 10% or less. A total of 34 states have enrollment of less than the national average of 21%. MA enrollees are more concentrated geographically than Medicare beneficiaries as a whole, though this trend has decreased from 2003 to 2008. In 2003, the four states with the highest percentage of beneficiaries enrolled in Medicare Part C accounted for over half of all enrollment: California, Florida, Pennsylvania, and New York. These four states accounted for 59% of all enrollees in 2003, but they are home to only 30 % of all Medicare beneficiaries. In 2007, enrollment has become slightly less concentrated, with enrollment in those four states accounting for 41% of all MA enrollment. Table 2 compares the percent of Medicare Part C enrollment to the percent of the total Medicare population for each of these four states. The MA program includes specific rules regarding eligibility to enroll in a private plan, and when enrollment can take place. The following is a description of those requirements. Medicare beneficiaries are eligible to enroll in any MA plan that serves their area, with the following restrictions: (1) beneficiaries must be entitled to benefits under Part A of Medicare and enrolled in Part B of Medicare and (2) beneficiaries who qualify for Medicare solely on the basis of end-stage renal disease (ESRD) may not enroll in an MA plan. Three exceptions apply to individuals with ESRD: (1) a beneficiary enrolled in an MA plan who later develops ESRD may continue to remain enrolled in that plan; (2) if a plan terminates its contract or reduces its service area (for an enrollee this is referred to as an involuntary termination), ESRD enrollees may enroll in another MA plan; and (3) an individual with ESRD may elect to enroll in an MA SNP as long as the plan has opted to enroll ESRD individuals. Members of an Employer Group Health Plan (EGHP) may also elect their employer's MA plan even if the individual resides outside the MA plan service area provided the plan meets certain access requirements. An MA eligible individual may only enroll in an MA plan that serves the geographic area in which the individual resides, with two exceptions: (1) a plan may allow an individual to remain in a local plan, even if he or she no longer resides in the service area, so long as the plan provides reasonable access within that geographic area to the full range of basic benefits, with reasonable cost sharing, and (2) a local MA organization that eliminates a payment area previously within its service area may choose to offer enrollees in all or part of the affected area continued enrollment in the plan, under certain conditions. Local HMOs may determine their own service area, consisting of counties or equivalent areas. Nothing prevents a local plan from being offered in more than one MA area. In general, MA organizations can enroll Medicare eligible individuals during four enrollment periods: (1) initial coverage election period, (2) annual election period, (3) open enrollment period, and (4) special election periods. The initial coverage election period applies to newly eligible Medicare beneficiaries, who are allowed to enroll in an MA plan up to three months prior to their Medicare entitlement date. During the annual coordinated election period (November 15-December 31), all MA eligible beneficiaries can enroll or disenroll from any MA plan, or switch from original Medicare to MA, or MA to original Medicare. Changes in elections are made during the open enrollment period. The open enrollment period allows individuals to make one change during the first three months of the year. Beneficiaries in original Medicare can enroll in an MA plan, and individuals enrolled in an MA plan can either switch to a different MA plan or return to original Medicare. However, during the three-month open enrollment period, beneficiaries cannot change their drug coverage. For example, an individual enrolled in a MA-PD plan can elect only to enroll in another MA-PD plan. Similarly, an individual enrolled in original Medicare and a stand-alone PDP can change only to an MA-PD plan. The reverse is true as well. Individuals enrolled in original Medicare without drug coverage can enroll only in MA plans that do not offer drug coverage. Eligible beneficiaries who are institutionalized may change their election any time during the year. Outside the annual coordinated election period and open election period, beneficiaries can change their enrollment status only under special circumstances, called Special Election Periods (SEPs). The Secretary has created SEPs for the following instances: (1) when the organization has terminated its contract or discontinued offering its plan in the resident's service area, (2) the resident moves to a new service area, (3) the beneficiary can demonstrate that the plan has violated the terms of its contract (i.e., fails to provide medically necessary care or misrepresents the plan in its marketing materials), or (4) the individual meets other exceptional circumstances provided by CMS. Nearly all plans offer some benefits to enrollees beyond those in original Medicare. All supplemental benefits are paid for either with (1) a rebate earned by the plan through the bidding process, (2) directly by the enrollee through a supplemental premium, or (3) some combination of a plan rebate and supplemental premium. A Government Accountability Office (GAO) analysis of MA plan supplemental benefits (as projected by the plans in their 2007 bid documents) indicated that, overall, rebates paid for 77% of supplemental benefits, and additional premiums paid for the remaining 23%. However, the proportions varied by plan. Other analyses have examined supplemental benefits offered to enrollees in the lowest premium package offered by each participating organization; benefits in these packages would be more likely to be paid for through savings rather than a supplemental premium. These analyses found that in 2005, most MA enrollees were offered vision care (92%) and hearing coverage (99%), while all were offered routine physicals (100%) ( Figure 6 ). Prescription drug coverage was a popular supplemental benefit prior to the start of the new Medicare Part D prescription drug program; with the Part D program, some type of prescription drug coverage is available to all enrollees who choose to join an MA plan that covers drugs. Figure 6 shows that the percentage of enrollees offered these benefits has fluctuated for all services between 1999 and 2005. However, the figure does not show how the extent of benefits or the level of cost sharing may have changed over the time period. All MA enrollees are required to pay the Part B premium, although plans may pay this for their enrollees as a supplemental benefit. Plans are permitted to charge enrollees additional out-of-pocket fees, such as premiums and coinsurance, depending on which plan the individual elects. Any supplemental premium charged to plan enrollees is a consolidation of any of the following three charges: (1) a premium to cover basic Part A and B benefits if a plan bid was above the benchmark, (2) a premium to cover supplemental benefits not paid for through a plan rebate, and (3) a premium for Part D prescription drug coverage. However, plans have an incentive to minimize supplemental premiums in order to remain competitive in local markets. Between 1999 and 2003, the percentage of beneficiaries nationally with access to a zero premium coordinated care plan declined. As shown in Table 3 , the availability of these plans dropped by half, from over 60% to just under 30%. Between 2003 and 2006, access to a zero premium plan doubled, again achieving the previous high of 61%. The percentage of beneficiaries enrolled in a zero premium coordinated care plan has fluctuated as well, but changes in the methodology make a comparison of this measure over time difficult. In 2006, just over half of MA coordinated care plan enrollees were in a plan with a zero combined premium for Part C and Part D benefits. Prior to 2006, one of the advantages of Medicare private plans over original Medicare was that most plans included some outpatient prescription drug coverage. The MMA added the Medicare Part D prescription drug program, making some type of drug coverage available to all beneficiaries. With one exception, every MA organization in an area is required to offer at least one Medicare Advantage-Prescription Drug (MA-PD) plan, one that offers qualified Part D prescription drug coverage. PFFS plans are not required to offer a plan with qualified prescription drug benefits. If a beneficiary enrolls in a PFFS plan that does not provide prescription drug coverage, he or she can enroll in a stand-alone Part D prescription drug plan in addition to the PFFS plan. Beneficiaries who choose any other MA plan without drug coverage can not enroll in a stand alone Part D plan. MA organizations offering prescription drug coverage receive a direct subsidy for each enrollee in an MA-PD plan equal to the plan's adjusted standardized bid amount for its prescription drug benefit (reduced by the base beneficiary Part D premium). The plan also receives the reinsurance payment amount of 80% of the costs for drugs exceeding the annual out-of-pocket threshold for an enrollee ($4,050 in 2008). Finally, MA-PD plans receive reimbursement for premium cost-sharing reductions for their qualifying low-income enrollees. Beneficiaries who enroll in an MA plan offering Part D must pay the plan the standard Part D premium. However, MA-PD plans that receive a rebate in the bidding process may use all or part of that rebate as a credit toward the MA monthly prescription drug premium. The MA program includes requirements designed to limit beneficiaries' financial liability and to assure beneficiaries of certain rights. Among these beneficiary protections are standards to ensure access to Medicare benefits and providers, beneficiary liability standards, health care quality standards, consumer disclosure and plan marketing requirements, and a grievance and appeals process. In general, MA organizations cannot deny enrollment on the basis of health status-related factors. These factors include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), and disability. However, an organization may deny enrollment if it has reached the limits of its capacity. Organizations may terminate an enrollee's election only for failure to pay premiums on a timely basis, disruptive behavior, or because the plan ends for all MA enrollees. Coordinated care plans such as HMOs and PPOs are required to form provider networks to meet Medicare access requirements. In accordance with network requirements, each provider has a written contract or agreement to furnish services to plan enrollees. Care is generally not covered or is partially covered if received from a provider who is not in the plan's network. Regional PPOs, despite being coordinated care plans, can use methods other than written agreements to meet access requirements with the Secretary's approval. Prior to 2011, however, PFFS plans are not required to establish networks of providers. PFFS plans must permit enrollees to obtain services from any Medicare participating provider that agrees to the plans' terms and conditions. PFFS plans meet access requirements by (1) establishing payment rates that are not less than those under original FFS Medicare or (2) having signed (direct) contracts with a sufficient number and range of providers in a particular category. Most PFFS plans are meeting access requirements by paying providers the same rates as original Medicare. Starting in 2011, PFFS plans sponsored by employers or unions are required to establish contracted networks of providers to meet access requirements. Non-employer-sponsored MA PFFS plans are required to establish contracted networks of providers in network areas defined as areas having at least two plans with networks (such as HMOs, PSOs, or local PPOs). In areas without at least two network based plans, the non-employer PFFS plans retain the ability to establish access requirements through establishing payment rates that are not less than those under original Medicare. Enrollees in PFFS plans may obtain covered services from any Medicare eligible provider who is willing to furnish services and accepts the plan's terms and conditions of participation. However, the lack of a written agreement between the plan and provider (in areas where PFFS plans do not have a contracted network of providers) means that the providers are not required to treat plan enrollees. Providers may determine on a case-by-case or visit-by-visit basis whether to serve a plan's enrollees. Other access requirements include developing written standards to ensure that access to care is timely; developing policies and procedures in the areas of coverage, payment, and utilization; and establishing written requirements for ensuring beneficiary input in a treatment plan. Plans must also ensure that services are available 24 hours a day 7 days a week and provide access to ambulance and emergency services. CMS reviews and approves MA plan benefit offerings, including mandatory and optional supplemental benefits, to ensure that plans are providing all Part A and B covered services (except hospice), do not discriminate against beneficiaries, do not discourage enrollment or encourage disenrollment, do not steer subsets of Medicare beneficiaries to certain MA plans, or inhibit access to services. CMS also reviews mandatory supplemental benefits (i.e., benefits not covered under original Medicare, reduced Medicare premiums, or cost-sharing amounts) to ensure that they are designed in accordance with CMS's guidelines and requirements. Enrollees in MA-coordinated care plans (i.e., HMOs and PPOs) are likely to experience the least amount of out-of-pocket costs (compared to other MA plans). Cost sharing per enrollee (excluding premiums) for covered services cannot be more than the actuarial value of the deductibles, coinsurance, and co-payments under traditional Medicare. However, while the aggregate amount of cost sharing in an MA plan must be equal to the aggregate amount of cost sharing in original Medicare, the plan may set different amounts for specific services, such as a lower (or higher) deductible for hospital inpatient services or skilled nursing facility services. Balance billing under Medicare generally refers to an amount billed by a provider in excess of Medicare's recognized payment amount (which includes beneficiary cost sharing). Original Medicare prohibits balance billing by Medicare-"participating physicians" but allows non-participating physicians to balance bill up to 115% of the non-participating Medicare fee-schedule amount, which is 9.25% above the recognized amount for participating providers. Providers participating in coordinated care MA plans, such as HMOs, are prohibited from balance billing. However, providers participating in PFFS plans are allowed to balance bill enrollees up to 115% of the plan's fee schedule, subject to the terms and conditions of the plan. This means that if a PFFS plan allows providers to balance bill, the beneficiary would be responsible for any balance billing charges in addition to any cost-sharing required by the plan. If the PFFS plan does not allow balance billing, the beneficiary is not responsible for balance billing charges, but would be responsible for any cost-sharing requirements under the plan. Balance billing rules under PFFS plans may apply to all types of Medicare providers. PFFS plans are obliged to inform beneficiaries of these balance billing amounts, and hospitals are required to provide PFFS enrollees advanced notice of balance billing charges. All MA organizations are required to have a quality improvement program. As part of the quality improvement program, plans must collect, analyze, and report data to measure health outcomes and other indices. Specific requirements include designing a chronic care improvement program, conducting quality improvement projects, and encouraging providers to participate in CMS and HHS quality initiatives. Plans are required to annually assess the impact and effectiveness of their quality improvement programs and take timely action to correct any systemic problems that come to their attention. CMS requires that MA plans collect and report on a subset of performance measures from the National Committee for Quality Assurance's (NCQA's) Health Plan Employer Data and Information Set (HEDIS), the Consumer Assessment of Health Plans Study (CAHPS), and the Medicare Health Outcomes Survey (HOS). MA organizations must disclose to each enrollee (at the time of enrollment and at least annually) information on their service area, benefits, the number, mix, and distribution of providers, out-of-area coverage, emergency coverage, supplemental benefits, prior authorization rules, plan grievance and appeals procedures, the quality improvement program, disenrollment rights and responsibilities, and cost-sharing obligations. MA organizations must make a good faith effort to provide enrollees with written notice of a provider's termination from the plan's network at least 30 days prior to the termination date. Medicare-eligible enrollees are also allowed to request from the plan information on procedures used by the organization to control utilization, the number of grievances and appeals, a description of physician compensation practices, and descriptions of the plan's financial performance. When an MA organization terminates its contract with CMS, it must provide and pay for advance written notice to each of its enrollees, along with a description of alternatives for obtaining benefits. MA organizations are required to submit marketing brochures and enrollment forms to CMS for review and approval at least 45 days before distribution. If using CMS model materials, the approval time is reduced from 45 to 10 days. As part of the review process, CMS must ensure that the information provided to beneficiaries is not inaccurate or misleading. MA organizations are also required to develop marketing materials that provide an adequate description of plan benefits, providers, and fees; an explanation of the grievance and appeals process; notification of the open enrollment period; and a statement indicating that either the plan or CMS can terminate the contract, thereby resulting in the beneficiary's disenrollment from the plan. CMS has also developed standards for regulating the marketing conduct of MA organizations. These standards include prohibitions against door-to-door soliciting, providing cash or other monetary rebates to induce enrollment, and conducting misleading or confusing activities, such as claiming that the MA organization has been endorsed by CMS or Medicare. Further, providers cannot distribute information to beneficiaries comparing benefits across plans or allow beneficiaries to complete enrollment applications in provider offices. CMS issued a proposed rule in May 2008 changing some marketing standards into regulations. Prior to the issuance of a final rule, MIPPA established the following new prohibitions on the marketing activities of MA plans. Except in instances where the beneficiary initiates contact, plans will be prohibited from soliciting beneficiaries door-to-door or on the phone. Cross-selling of non-health products, providing meals to prospective enrollees, marketing or selling plans at educational events or in areas where health care is delivered (i.e., physician offices or pharmacies), and using sales agents that are not state licensed are also prohibited. MIPPA required that by November 15, 2008, the Secretary establish limitations on other plan marketing activities such as co-branding, the scope of marketing appointments with prospective enrollees, and agent compensation and training. MA plans will be required to provide states with information on (1) agent and broker terminations and (2) at state request, performance and licensing of agents, brokers, and any third party representing the plan. After January 1, 2010, MA plans will be required to include the plan type in all plan names. Some provisions included in the CMS proposed rule were not included in MIPPA but may be addressed in the final rule, including (1) a requirement that, upon CMS's request, MA plans would be required to provide any information necessary to conduct oversight of marketing activities, and (2) development of a memorandum of understanding between states and CMS to share compliance and oversight information. An MA organization must have procedures for hearing and resolving grievances between the organization and enrollees. It also must maintain a process for making timely organization determinations, which are plan decisions related to enrollees' benefits and payment. Beneficiaries have 60 days from the date of service to file a grievance with their MA plan. Beneficiaries have the right to a timely resolution to their grievance (no later than 30 days) as well as the right to request an appeal or reconsideration of an organization determination. In certain circumstances, beneficiaries may also request an expedited determination, which requires a decision be rendered in 72 hours. All MA organizations are required to provide written information to enrollees about these processes. They are also required to inform beneficiaries about how to initiate quality of care complaints to their local Quality Improvement Organization (QIO). The QIO complaint process is distinct from the MA organization's grievance procedure, and beneficiaries have the right to file a complaint with the MA organization and QIO simultaneously. All quality-of-care complaints and adverse organization determinations must be responded to in writing. The MA program requires the private health plans that participate to meet minimum program standards and contracting requirements. These requirements include minimum enrollment standards, organizational and financial requirements as specified by states, provider protections, and prompt payment requirements. The Secretary is required to conduct audits of at least one-third of MA participating organizations each year. In the event that organizations violate the standards and requirements, the Secretary had the authority to terminate the contract or impose sanctions. Contracts between MA organizations and CMS are made for at least one year and are automatically renewable, unless either party gives notice to terminate the contract. MA organizations must enroll at least 5,000 individuals (1,500 in the case of a PSO) or at least 1,500 individuals (500 in the case of a PSO) if the organization serves individuals residing outside of urbanized areas. These minimum requirements may be waived during the first three years of the contract, if the organization can demonstrate to CMS that it can administer and manage an MA contract and also manage the level of risk required under the contract. In general, an MA organization must be licensed under state law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each state in which it offers an MA plan. An MA organization must assume full risk for Medicare benefits on a prospective basis. However, this does not preclude an organization from obtaining insurance or making other arrangements to cover certain costs, such as medically necessary services provided by non-network providers and part of the costs exceeding its income. The organization also may make arrangements with providers to assume some or all of the financial risk for covered benefits they provide; however, PFFS organizations cannot put providers at risk. Each MA organization (other than a PFFS) must establish physician participation procedures that provide (1) notice of the participation rules, (2) written notice of adverse participation decisions, and (3) a process for appealing adverse decisions. The organization must consult with contracting physicians regarding the organization's medical policy, quality, and medical management procedures. Although plans may include providers only to the extent necessary to meet the needs of their enrollees, they cannot discriminate with respect to providers who are acting within the scope of their license or certification under applicable state law, solely on the basis of such license or certification. Restricting communications between providers and their patients (a gag clause) is prohibited. The use of physician financial incentive plans, (compensation arrangements between organizations and individual or groups of physicians that may reduce or limit services) is also limited. The Secretary is required to conduct annual audits of the financial records of at least one-third of the MA participating organizations (including data relating to utilization, costs, and computation of the plan's bid). The Secretary also has the right to inspect and audit the quality, appropriateness, and timeliness of the services provided to enrollees, as well as any records pertaining to the organization's ability to bear risk. In addition, HHS, GAO, or their designee has the right to audit and evaluate an MA organization's records and those of its subcontractors that pertain to the services provided under the contract. This right extends for 10 years from the termination date of the final contract. If CMS suspects potential fraud, the agency may conduct an inspection or audit of the MA organization at any time. MA PFFS plans are required to pay 95% of "clean claims" within 30 days of receipt. This 30-day rule also applies to claims submitted to any MA organization by a provider who does not have a written contact with the plan. MA organizations are required to pay interest on "clean claims" that are not paid within 30 days. All other claims from non-contracted providers must be paid within 60 days. MA organizations that do contract with providers (i.e., HMOs and PPOs) must include a prompt payment provision in their contracts. CMS defines a clean claim as a claim that has no defect or impropriety, and is submitted with all the required documentation. The Secretary has the authority to terminate an annual contract with an MA plan if the MA organization fails substantially to carry out the terms of its contract. Reasons for termination can be severe financial difficulties, failing to comply with required grievance and appeals procedures, failing to implement an acceptable quality assessment and performance improvement program, failing to comply with CMS marketing requirements, and committing fraud. Except in instances where the MA organization is experiencing severe financial hardship, CMS is required to provide the organization with an opportunity to develop a corrective action plan (CAP) to correct any deficiencies before terminating the contract. MA organizations have the right to appeal a termination. MA organizations also have the right to terminate their contract with CMS if CMS fails to substantially carry out the terms of its contract. The Secretary has the authority to impose sanctions, including civil monetary penalties, on MA organizations in the following eight instances: (1) failing to provide medically necessary services, which result in an adverse outcome for the patient; (2) charging excess beneficiary premiums; (3) expelling or refusing to reenroll individuals in violation of stated requirements; (4) denying or discouraging enrollment of individuals whose medical condition requires future services; (5) misrepresenting or falsifying information to the Secretary or others; (6) interfering with practitioners advice to enrollees; (7) failing to comply with rules regarding physician participation and balance billing; and (8) contracting with excluded providers. In addition to civil monetary penalties, the Secretary can temporarily suspend enrollment in the plan, stop payment, and restrict the MA organization's marketing activities. The civil monetary penalties may range from $10,000 to $100,000, depending on the nature of the violation. The 111 th Congress may examine several aspects of the Medicare Advantage program, including the difference in expenditures per beneficiary between MA and original Medicare, profits reported by MA plans, the Comparative Cost Adjustment Program mandated under the MMA, and marketing issues. Medicare-managed care plans may have the potential to provide better quality care at less cost than original Medicare. In fact, prior to the BBA, private plans were paid 95% of the cost of Medicare, in part because of this presumed greater efficiency. However, the current payment mechanism does not encourage plans to be more efficient than original Medicare, because it pays plans at least as much as the cost of Medicare, and on average, more. According to the Medicare Payment Advisory Commission (MedPac), Medicare is expected to pay private plans an average of 14% more per beneficiary in 2009 than it does for beneficiaries enrolled in the original Medicare program. In 2008, the maximum amount Medicare was willing to pay MA plans to provide Medicare covered benefits was, on average, 18% higher than the estimated cost of providing those same benefits under original Medicare. MA health maintenance organizations were the only plan type that, on average, estimated their cost of providing Medicare-covered benefits at below the cost of original Medicare; this suggests MA health maintenance organizations can be more cost effective than original Medicare. MA plans use at least part of the payments (above the cost of original Medicare) to provide extra benefits and reduced cost sharing to enrollees. In addition, these higher payments have attracted private plans to areas previously underserved by Medicare private plans, and beneficiaries today have more private plans to choose from than they did 10 years ago. However, the higher payments (1) allow inefficient plans to continue participating in Medicare, (2) contribute to the financial instability of the program in the long-run, and (3) increase Part B premium costs for all beneficiaries in the Medicare program. Moreover, the reported quality data for MA plans are limited and variable. Both MA payments and quality measures are to be addressed in upcoming MedPac reports to Congress. Specifically, MedPac is to study how comparable measures of performance and patient experience can be collected and reported by 2011 for MA and original Medicare. The second study requires MedPac to study the relationship between plan bids and per capita spending in original Medicare, alternatives to county level payments, and the accuracy and completeness of county-level spending estimates. Congress may choose to reexamine MA payments and whether the amount paid to MA plans above the cost of original Medicare should remain part of the MA payment, or whether that money should be used for other priorities. If Congress chooses to reduce spending in the MA program, there are many different ways of achieving these savings. Reducing payments, regardless of the method, may result in reduced supplemental benefits or reduced access to plans. However, each individual option would have different pros and cons. One provision included in the House-passed H.R. 3162 , the Children's Health and Medicare Protection (CHAMP) Act of 2007, would have phased in MA benchmarks equal to per capita fee-for-service (FFS) spending in each county, effectively decreasing MA benchmarks in all areas where it exceeded average Medicare spending. MA plans would need to be as efficient as original Medicare in order to continue serving Medicare beneficiaries. This provision was not taken up by the Senate. The Congressional Budget Office (CBO) estimated that setting benchmarks equal to spending in original Medicare could save $55 billion over 5 years and $157 billion over 10 years. Though this method would eliminate the unequal expenditures between MA and original Medicare—sometimes referred to as "creating a level playing field"—it could result in decreased access to MA plans in rural and some urban areas, thus increasing a geographic difference that was prevalent through all but the most recent years of the program. Other options would reduce payments while allowing for some differences between MA and original Medicare. Some argue that certain costs faced by private plans, such as administrative costs and payments to health care providers, are not the same as those of original Medicare, and therefore, the maximum amount Medicare pays private plans should not be as low as original Medicare in some areas. In such case, benchmarks could take into account the estimated costs of MA plans, much like the Regional MA plans. The CBO estimated that basing benchmarks on plan bids could save $35 billion over 5 years and $158 billion over 10 years. This option would not create a level playing field between MA and original Medicare. However, it would still achieve some savings and might not have as severe an effect on access to plans, as the cost to plans of serving a particular area would be used to calculate the benchmark for the area. Another option would be an across-the-board percentage cut in benchmarks. In higher benchmark areas where the benchmark is more likely based on per capita FFS spending, the reduction may resemble the payment policy prior to the BBA when plans were paid a percentage of spending in original Medicare. Depending on the size of the reduction, it is possible that benchmarks for many rural and some urban areas would remain above spending in original Medicare. Again, this option would not create a level playing field between MA and original Medicare. Another disadvantage is that it does not incorporate information from the plans to gauge the cost of doing business in a particular market. However, the largest reductions would occur in high payment rate areas where some of the tools of managed care, such as establishing provider networks and coordinating patient care, may be easier to employ. Other issues have arisen with respect to MA plan payments. Recent congressional attention has focused on the profits earned by MA plans. Two analyses by the Government Accountability Office found that MA organizations generally spent less on providing medical services than the plans had estimated they would. As a result, the profit margins for these plans was higher, on average, than plans had predicted. These findings held for 2005 and 2006, resulting in over $1 billion in additional profits to MA plans each year. The 111 th Congress may opt to consider whether to limit MA plan profits in an effort to either reduce overall Medicare spending, or to increase the extra benefits and reduced cost sharing these plans offer to enrollees. The House-passed CHAMP Act of 2007 included a provision that would have required the Secretary to publish the percentage of plan revenues that were spent on clinical services, as distinct from administration and profit. This amount is often referred to as the Medical Loss Ratio (MLR). The bill also required plans with MLRs below a specified level to face reduced benchmarks, limited enrollment, and possible termination. These provisions in CHAMP were not taken up in the Senate. Beginning in 2010, the Secretary will establish a program for the application of comparative cost adjustment (CCA) in CCA areas. The six-year program will begin January 1, 2010, and end December 31, 2015. The program is designed to test direct competition among local MA plans, as well as competition between local MA plans and fee-for-service Medicare. This program will occur only in a limited number of statutorily qualifying areas in the country. The benchmark for MA local plans in a CCA area will be calculated using a formula that weights (1) the projected FFS spending in an area (with certain adjustments for demographics and health status) and (2) a weighted average of plan bids. For Medicare beneficiaries in traditional Medicare, Part B premiums in CCA areas will be adjusted either up or down, depending on whether the FFS amount is more or less than the CCA area benchmark. If the FFS amount is greater than the benchmark, beneficiaries in traditional Medicare FFS will pay a higher Part B premium than other FFS beneficiaries in non-CCA areas. If the FFS amount is less than the benchmark, the Part B premium for FFS beneficiaries will be reduced by 75% of the difference. These increases and decreases are subject to a 5% limit; that is, adjustments to Part B premiums in CCA areas cannot exceed 5% of the national part B premium. Beneficiaries in traditional Medicare FFS with incomes below 150% of poverty, who qualify for low-income subsidies under the Medicare prescription drug program, will not have their Part B premium increased. In the 110 th Congress, the House passed legislation to repeal the CCA demonstration, but that provision was not taken up by the Senate. Historically, potential cost saving programs have generated opposition resulting in delays or cancellations. Generally, Members have not supported demonstrations or programs that have the potential to adversely affect companies or beneficiaries in their districts. The Secretary has not announced the locations of the CCA demonstrations. Questionable marketing practices by MA plans, their agents, or brokers has attracted congressional attention. During the 110 th Congress, several committees held hearings identifying the allegedly deceptive and aggressive sales practices of some MA plans, such as door-to-door solicitations, misleading beneficiaries about plan coverage, and signing beneficiaries up for a plan without their knowledge. Hearings also investigated factors that may have encouraged aggressive marketing practices, such as the structure of agent and broker compensation. Though many of the behaviors identified in the hearings were prohibited by CMS guidance, they were not explicitly prohibited by statutes or regulations. On May 16, 2008, CMS issued a proposed rule to codify into regulations some of the marketing policies already in the marketing guidance. Following the proposed rule, Congress passed the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275 ), which codified into statutes some of the provisions in the proposed rule, including (1) prohibiting door-to-door solicitations and other agent-initiated contact; (2) clarifying that sales activities are only permitted in common areas of health care settings and prohibited in areas primarily used for patient care; (3) prohibiting sales activities (such as distribution of applications) at educational events; and (4) requiring that MA and Part D plans only use state-licensed, certified, or registered marketing representatives in states that require using such agents. MIPPA also directed the Secretary to establish guidelines on agent commissions to ensure that commissions encouraged agents to enroll beneficiaries in plans that best met their health care needs. A revised interim final rule established compensation levels for agents and brokers based on historical compensation levels in the same market, adjusted for whether or not this was the first year the beneficiary had enrolled in a particular plan type. Compensation would be decreased if the beneficiary disenrolled from the plan within the first year. It is unclear whether marketing issues for Medicare private plans will garner congressional attention going in the 111 th congress. While it appears that the legislation resolved many of the issues, Congress will have to wait and see whether or not those conducting the abusive practices are able to circumvent the changes to the law. This section summarizes major legislation enacted into law that modifies Medicare Part C, beginning in 1997. The summary highlights major provisions; it is not a comprehensive list of all Medicare amendments. Included are provisions that had a significant budget impact, changed program benefits, modified beneficiary cost sharing, or involved major program reforms. Provisions involving policy changes are mentioned the first time they are incorporated in legislation, but not necessarily every time a modification is made. The descriptions include either the initial effective date of the provision or, in the case of budget savings provisions, the fiscal years for which cuts were specified. Balanced Budget Act of 1997 (BBA, P.L. 105-33 ) The BBA established a new part C of Medicare called Medicare+Choice (M+C). It was built on the existing Medicare Risk Contract Program, which enabled beneficiaries to enroll, where available, in health maintenance organizations (HMOs) that contracted with the Medicare Program. It expanded, beginning in 1999, the private plan options that could contract with Medicare to other types of private health care organizations (e.g., PPOs and PSOs), PFFS, and, on a limited demonstration basis, high deductible plans (called MSA plans) offered in conjunction with savings accounts. Prior to BBA, the payment for private plans was based on 95% of the average adjusted per capita cost (AAPCC) of beneficiaries in original Medicare in each county. BBA replaced that payment methodology with a formula that calculated the highest of three amounts calculated for each county : (1) a blended rate, which was blend of an area-specific (local) rate and a national rate; (2) a minimum payment (or floor) rate; or (3) a rate reflecting a minimum increase from the previous year's rate. Payment rates under this formula were subject to a budget neutrality provision such that the total amount of payments under the formula methodology could not be greater or less than the payments in the absence of the formula. The blended per capita rate was intended to shift payment amounts away from local (generally county) rates, which reflected the wide variations in fee-for-service costs, toward a national average rate. The floor rate was designed to raise payments in certain counties more quickly than would occur through the blend alone, and the minimum increase percentage was to protect counties that would otherwise receive only a small (if any) increase. BBA established an M+C Competitive Pricing Demonstration Project in seven payment areas. Under the demonstration, payments to M+C organizations would be determined competitively, as determined by the Secretary in consultation with an advisory committee. Balanced Budget Refinement Act of 1999 (BBRA, P.L. 106-113 ) BBRA contained several provisions designed to facilitate the implementation of M+C. It changed the phase-in of the new risk adjustment payment methodology based on health status to a blend of 10% new health status method/90% old demographic method in 2000 and 2001, and not more than 20% health status in 2002. It provided for payment of a new entry bonus of 5% of the monthly M+C payment rate in the first 12 months and 3% in the subsequent 12 months to organizations that offer a plan in a payment area without an M+C plan since 1997, or in an area where all organizations announced withdrawal as of January 1, 2000. The BBRA reduced the exclusion period from five years to two years for organizations seeking to reenter the M+C Program after withdrawing. It allowed organizations to vary premiums, benefits, and cost sharing across individuals enrolled in the plan so long as these are uniform within segments comprising one or more M+C payment areas. BBRA provided for submission of adjusted community rates by July 1 instead of May 1. It provided that the aggregate amount of user fees collected would be based on the number of M+C beneficiaries in plans compared to the total number of beneficiaries. It also delayed implementation of the Medicare+Choice Competitive Bidding Demonstration Project, until 2002 at the earliest. Medicare, Medicaid, and SCHIP Benefits Improvements, and Protection Act of 2000 (BIPA, P.L. 106-554 ) BIPA established multiple floor rates, based on population and location. It applied a 3% minimum update in 2001, which returned to the existing law minimum update of 2% thereafter. BIPA increased the M+C payment rates for enrollees with ESRD to reflect the demonstration rate of social health maintenance organizations' ESRD capitation demonstrations. BIPA extended the current risk adjustment methodology until 2003 and, starting in 2004, began to phase-in a new risk adjustment methodology based on data from inpatient hospitals and ambulatory settings. It permitted M+C plans to offer reduced Medicare Part B premiums to their enrollees as part of providing any required additional benefits or reduced cost-sharing. It extended the application of the new entry bonus for M+C plans to include areas for which notification had been provided, as of October 3, 2000, that no plans would be available January 1, 2001. It required payment adjustments to M+C plans if a legislative change resulted in significant increased costs. It precluded the Secretary from implementing, other than at the beginning of a calendar year, regulations that imposed new, significant regulatory requirements on M+C organizations. BIPA required the Secretary to make decisions, within 10 days, approving or modifying marketing material used by M+C organizations, provided that the organization used model language specified by the Secretary. A provision allowed an M+C organization offering a plan in an area with more than one local coverage policy to use the local coverage policy for the part of the area that was most beneficial to M+C enrollees (as identified by the Secretary) for all M+C enrollees enrolled in the plan. BIPA expanded the M+C quality assurance programs for M+C plans to include a separate focus on racial and ethnic minorities. The Secretary was given authority to waive or modify requirements that hindered the design of, offering of, or enrollment in certain M+C plans, such as M+C plans under contract between M+C organizations and employers, labor organizations, or trustees of a fund established by employers and/or labor organizations. BIPA extended the period for Medigap enrollment for certain M+C enrollees affected by termination of coverage. It allowed individuals who enrolled in an M+C plan after the 10 th day of the month to receive coverage beginning on the first day of the next calendar month. It permitted ESRD beneficiaries to enroll in another M+C plan if they lost coverage when their plan terminated its contract or reduced its service area. It required an M+C plan to cover post-hospitalization skilled nursing care through an enrollee's "home skilled nursing facility" in certain situations. BIPA mandated review of ACR submissions by the HCFA (now CMS) Chief Actuary. Public Health Security and Bioterrorism Preparedness and Response Act ( P.L. 107-188 ) P.L. 107-188 moved CMS's annual announcement of M+C payment rates from no later than March 1 to no later than the second Monday in May, effective only in 2003 and 2004. It temporarily moved the deadline for plans to submit information about ACRs, M+C premiums, cost sharing, and additional benefits (if any) from no later than July 1 to no later than the second Monday in September in 2002, 2003, and 2004. It changed the annual coordinated election period from the month of November to November 15 through December 31 in 2002, 2003, and 2004. It allowed Medicare beneficiaries to make and change elections to an M+C plan on an ongoing basis through 2004. Then beginning in 2005, individuals would be able to make changes only on the more limited basis, originally scheduled to be phased in beginning in 2002. Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173 ) In 2003, Congress passed the MMA, which made significant changes to Medicare's private plan option. For 2004, the MMA modified payment rates to plans. First, a fourth payment mechanism was added so that plans were paid the highest of the floor, minimum percentage increase, the blend or a new amount equal to 100% per capita fee-for-service for a beneficiary in original Medicare (including the value of indirect medical education.) Second, the blend payment type was not subject a budget neutrality provision. Third, beginning in 2004, the minimum percentage increase is the greater of either 2% or the growth in overall Medicare for the previous year. Beginning in 2005, the floor and blend payment types are eliminated; only the minimum percent increase amount, and in certain years, 100% of per capita FFS would be used to update payments. Beginning in 2006, the MMA established a new payment methodology to pay private plans. Under the new payment system, Medicare continues to pay plans a fixed monthly amount per enrollee, but these monthly payments are determined, at least in part, by competitive bidding. The Secretary determines MA payments by comparing plan's estimated cost of providing covered Part A and B benefits (the bid) to the maximum amount Medicare is willing to pay a plan to provide covered Part A and B benefits (the benchmark). The benchmark amounts are the former per capita payment rates, and a revised update methodology applies. For plans that bid below the benchmark, the payment equals the bid amount plus 75% of the difference between the bid and the benchmark. The amount above the plan's bid may be used to provide additional benefits, reduce cost sharing, or may be applied towards the monthly Part B premium, or prescription drug premium. The remaining 25% is retained by the government. For plans that bid above the benchmark, the payment is the benchmark and enrollees must pay an additional premium equal to the amount by which the bid exceeds the benchmark. Also beginning in 2006, MA regional plans are allowed to participate in the program. MA regional plans are coordinated care plans that cover both in- and out-of-network required services. Unlike local MA plans, regional MA plans are required to serve at least one entire region established by the Secretary. (The Secretary established 26 regions made up of states or multiple states.) Each regional plan is required to offer a maximum limit on out-of-pocket expenses and a unified Part A and B deductible. Payments for regional plans are also based on a competitive system described above, but for the regional program, the benchmark for each region is calculated using a statutory formula that includes a weighted average of plan bids for the region. The MMA established several incentives for private plans to participate in the regional program. Initially, $10 billion was provided in a stabilization fund, and additional amounts were to be added to the fund when regional plans bid below the benchmark. (Half of the 25% retained by the government when a regional plan bids below the benchmark is transferred to the MA regional plan stabilization fund.) During 2006 and 2007, Medicare was to share risk with MA regional plans if plan costs fall above or below a statutorily-specified risk corridor. Beginning in 2006, the Secretary was allowed to provide for an increased payment for certain hospitals that that contract with MA regional plans. Beginning in 2006, beneficiaries can enroll in a Medicare Part D prescription drug plan whether they were in fee-for-service Medicare or enrolled in Medicare managed care. MA enrollees (except those in PFFS and MSAs) are required to get Part D benefits through their MA plan, if they want the Part D benefit. MMA established the Medicare Special Needs Plan (SNP) option, which was intended to improve care coordination and service delivery for certain groups of Medicare beneficiaries. Under the SNP option, Medicare managed care plans are allowed to limit enrollment to certain types of beneficiaries such as dual eligibles. SNP plans may choose to better coordinate the care of dual eligibles by contracting with the state Medicaid agency to also provide Medicaid services, but SNP plans are not required to do so. Starting in 2010, the MMA requires the Secretary to establish a program for the application of comparative cost adjustment (CCA) in CCA areas. The six-year program will begin January 1, 2010, and end December 31, 2015. The program is designed to test direct competition among local MA plans, as well as competition between local MA plans and original Medicare. The program will only occur in a limited number of statutorily qualifying areas. Deficit Reduction Act (DRA, P.L. 109-171 ) Starting in 2007, the DRA changed the way MA benchmarks are calculated to (1) exclude national adjustments for coding intensity, (2) exclude the budget neutral implementation of risk adjustment, (3) omit any adjustments accounting for errors in previous years' projections of the national per capita MA growth percentage, and (4) increase rates based on the MA growth percentage, as under current law. In the report language to the BBRA, Congress urged the Secretary to implement a more clinically based risk adjustment methodology (to supplement the demographic factors) without reducing overall payments to plans. To keep payments from being reduced overall, the Secretary applied a budget neutrality adjustment to risk adjusted rates. However, Administration studies show a difference in the reported health status of MA enrollees compared to the reported health status of beneficiaries in original Medicare. The exclusion of the budget neutral implementation of risk adjustment is being phased-in over four years (2007-2010). Tax Relief and Health Care Act of 2006 (TRHCA, P.L. 109-432 ) TRHCA created a special continuous open enrollment period for beneficiaries in original Medicare to join certain MA plans during 2007 and 2008 outside of the normal enrollment periods. It delayed the initial availability of funds from the MA Regional Plan Stabilization Fund until January 1, 2012, and reduced the amount of funds available to $3.5 billion. P.L. 110-48 (An Act to Provide for the Extension of Transitional Medical Assistance, and Other Provisions) P.L. 110-48 eliminated the special continuous open enrollment period added by TRHCA. It reduced the MA Regional Plan Stabilization Fund, to about $3.4 billion, and restricted the amount that could be spent in 2012 to $1.6 billion. Medicare, Medicaid, and SCHIP Extensions Act of 2007 (MMSEA, P.L. 110-173 ) The MMSEA extended the authority of Specialized Medicare Advantage Plans for Special Needs Individuals (SNPs) to restrict enrollment to special needs beneficiaries (defined as eligible enrollees who are institutionalized, are entitled to Medicaid, or would benefit from enrollment in a SNP) until January 1, 2010. Beginning January 1, 2008, it restricts the Secretary from designating other MA plans as SNPs and imposes a moratorium on new SNP plans until January 1, 2010. It extends for one year (to January 1, 2009) the length of time cost-based plans can continue to operate in an area with either two local or two regional MA plans in the same area. MMSEA eliminated $1.6 billion from the MA Regional Plan Stabilization Fund for 2012. It provided additional funding for State Health Insurance Assistance Programs, Area Agencies on Aging, and Aging and Disabled Resource Centers to provide information and counseling, and assistance to Medicare eligible individuals related to obtaining adequate and appropriate health coverage. Medicare Improvements for Patients and Providers Act of 2008 (MIPPA, P.L. 110-275 ) MIPPA requires the value of indirect medical education (IME) to be phased out of all benchmarks starting in 2010. The amount phased-out each year will be based on a ratio of (1) a specified percentage (0.60% in the first year), relative to (2) the proportion of per capita costs in original Medicare in the county that IME costs represent. The effect of the ratio is to phase out a higher proportion of IME costs in areas where IME makes up a smaller percentage of per capita spending in original Medicare. After 2010, the numerator phase-out percentage will be increased by 0.60 percentage points each year. This provision will not apply to PACE plans (Programs of All-Inclusive Care for the Elderly). Starting in 2011, PFFS plans sponsored by employers or unions are required to establish contracted networks of providers to meet access requirements. Non-employer-sponsored MA PFFS plans are required to establish contracted networks of providers in network areas defined as areas having at least two plans with networks (such as health maintenance organizations [HMOs]). In areas without at least two network-based plans, the non-employer PFFS plans retain the ability to establish access requirements through establishing payment rates that are not less than those under original Medicare. Beginning in January 1, 2010, PFFS and Medical Savings Account (MSA) plans are required to have a quality improvement program similar to other MA plans. Starting in 2011, data collection, reporting, and analysis requirements for PFFS and MSA plans may not exceed the requirements for local PPO plans, which are limited to those data from providers in the plan's contracted network, but not from out-of-network providers. In 2010, the data requirements for PFFS and MSA plans are limited to administrative data, but must be collected from both in-network and out-of-network providers. MIPPA extends the time current Special Needs Plans (SNPs) may restrict enrollment to special needs individuals and extends the moratorium on the Secretary's authority to designate new SNPs until January 1, 2011. Starting January 1, 2010, all new enrollees in a SNP will be required to meet the definition of a special needs individual. For institutional SNPs, individuals living in the community who may need an institutional level of care are not eligible to enroll in the SNP unless it is determined by an entity other than the SNP using a state assessment tool that the individual needs an institutional level of care. Medicaid SNPs are required to have a contract with the state to provide Medicaid benefits, or arrange for benefits to be provided; Medicaid SNPs that do not comply with the contracting requirement will be permitted to participate in 2010, but will not be allowed to expand their service area. Further, Medicaid SNPs are required to provide prospective enrollees with descriptions of benefits and cost sharing under the Medicaid program and which are to be covered by the SNP. Chronic Care SNPs are required to comply with a revised definition of a Chronic Care SNP; the Secretary is also required to convene a panel of clinical advisors to determine which conditions meet the definition of a severe and disabling chronic condition. MIPPA requires all SNPs to comply with certain care management requirements, such as having an appropriate network of providers, performing enrollee health assessments, and arranging for interdisciplinary teams to manage care for enrollees. By no later than January 1, 2010, SNPs are required to collect and report data related to the care management requirements; the Secretary is required to conduct a review of SNPs in conjunction with its periodic financial audit of MA plans. Effective January 1, 2010, Medicaid Special Needs Plans (SNPs) serving dual eligible beneficiaries are prohibited from charging cost-sharing in excess of what would be permitted under Medicaid. The MA Regional Plan Stabilization Fund is reduced to $1.00. A portion of the savings from the regional plan bidding process continues to flow into the Fund and is available for expenditures in 2014. MIPPA extends for one year—from January 1, 2009, to January 1, 2010—the length of time reasonable cost plans may continue operating regardless of any other MA plans serving the area. It specifies that to prohibit the cost plan from participating after January 1, 2010, the two plans in the service area must be offered by different organizations. Finally, MIPPA modifies the minimum enrollment requirements for local or regional plans operating within the cost plan's service area. GAO is required to submit a report to Congress on the reasons why cost-based plans may be unable to become MA plans. MIPPA establishes new prohibitions on the marketing activities of MA plans and PDPs and their agents, brokers, or any third-party representatives. Except in instances when the beneficiary initiates contact, plans will be prohibited from soliciting beneficiaries door-to-door or on the phone. Cross-selling of non-health-related products, providing meals to prospective enrollees, marketing in areas where health care is delivered (i.e., physician offices or pharmacies), and using sales agents that are not state licensed are also prohibited. The provision requires that by November 15, 2008, the Secretary establish limitations on other plan marketing activities such as co-branding, marketing appointments with prospective enrollees, and agent compensation. American Recovery and Reinvestment Act of 2009 (ARRA,P.L.111-5) ARRA established bonus payments for selected Medicare Advantage HMO-affiliated eligible professionals and hospitals that were meaningful users of electronic health records.
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Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. Eligible individuals may enroll in an MA plan, if one is available in their area. As of January 2009, all Medicare beneficiaries had access to an MA plan and 23% of beneficiaries enrolled in one. Private plans may use different techniques to influence the medical care used by enrollees. Some plans, such as health maintenance organizations (HMOs) may require enrollees to receive care from a restricted network of medical providers; enrollees may be required to see a primary care physician who will coordinate their care and refer them to specialists as necessary. Other types of private plans, such as private fee-for-service (PFFS) plans, may look more like original Medicare, with fewer restrictions on the providers an enrollee can see and minimal coordination of care. In general, Medicare Advantage plans offer additional benefits or require smaller co-payments or deductibles than original Medicare. Sometimes beneficiaries pay for these additional benefits through a higher monthly premium, but sometimes they are financed through plan savings. The extent of extra benefits and reduced cost sharing vary by plan type and geography, creating an inequity that can frustrate some beneficiaries. However, Medicare Advantage plans are seen by some as an attractive alternative to more expensive supplemental insurance policies found in the private market. Though plans that manage their enrollees' care have the potential to be less expensive than original Medicare, recent analyses by the Medicare Payment Advisory Commission (MEDPAC) find that Medicare is projected to pay private plans an average of 14% more per beneficiary in 2009 than it does for beneficiaries in the original Medicare program. While some support the higher Medicare expenditures for MA enrollees because funds are used to provide reduced cost sharing or additional benefits, others support paying private plans no more than the cost of covered benefits under the original Medicare program, which may result in less generous MA benefit packages, or reduced access to MA plans. With competing health expenditure priorities, Congress is likely to examine the MA program. Congress may consider additional issues. First, the Comparative Cost Adjustment (CCA) Program is slated to start in 2010. CCA is designed to test direct competition between MA and original Medicare. As such, the Part B premiums of beneficiaries in original Medicare may be increased or decreased depending on the efficiency of original Medicare relative to MA plans in the area. Second, recent studies show that profits in 2005 and 2006 for MA plans were, on average, higher than estimated because of underestimates in medical spending. If plans had more accurately estimated future medical spending, they could have offered more generous benefit packages without reducing their profits, though some variability in the accuracy of estimates may be expected. Third, marketing behaviors of MA plans and their agents or brokers were a concern in the 110th Congress; it is unclear whether they will continue to be an issue in the 111th Congress. The Congressional Budget Office (CBO) March 2008 projection of Medicare payments under Medicare Advantage is $112.8 billion in 2009 for coverage of 11.0 million enrollees, increasing to $221.2 billion in 2018 for 16.6 billion enrollees. This report is an overview of the Medicare Advantage program, and includes legislative history and analysis of recent trends. It will be updated to reflect significant changes to the program.
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The Soldiers' and Sailors' Civil Relief Act of 1940 (S SCRA) provided civil protections and rights to individuals based on their service in the U.S. armed forces. On December 19, 2003, Congress enacted P.L. 108-189 , the Servicemembers Civil Relief Act (SCRA), in response to the increased utilization of Reserve and National Guard military units in the Global War on Terrorism, and as a modernization and restatement of the protections and rights previously available to servicemembers under the SSCRA. Much like with the SSCRA, the SCRA has been amended since its initial passage and proposed changes continue to be introduced in Congress. Congress has long recognized the need for protective legislation for servicemembers whose service to the nation compromises their ability to meet obligations and protect their legal interests. During the Civil War, Congress enacted an absolute moratorium on civil actions brought against soldiers and sailors. During World War I, Congress passed the Soldiers' and Sailors' Civil Relief Act of 1918, which did not create a moratorium on legal actions against servicemembers, but instead directed trial courts to apply principles of equity to determine the appropriate action to take whenever a servicemember's rights were involved in a controversy. During World War II, Congress essentially reenacted the expired 1918 statute as the Soldiers' and Sailors' Civil Relief Act of 1940, and then amended it substantially in 1942 to take into account the new economic and legal landscape that had developed between the wars. Congress enacted amendments on several occasions during subsequent conflicts, including 2002 when the benefits of the SSCRA were extended to certain members of the National Guard. In 2003, Congress enacted the SCRA as a modernization and restatement of the SSCRA and its protections. The SCRA is an exercise of Congress's power to raise and support armies (U.S. Const. Art. I, Section 8, cl. 12) and to declare war (Art. I, Section 8, cl. 11). The purpose of the act is to provide for, strengthen, and expedite the national defense by protecting servicemembers, enabling them to "devote their entire energy to the defense needs of the Nation." The SCRA protects servicemembers by temporarily suspending certain judicial and administrative proceedings and transactions that may adversely affect their legal rights during military service. Forgiveness of all debts or the extinguishment of contractual obligations on behalf of servicemembers, who have been called up for active duty, is not provided, nor is absolute immunity from civil lawsuits granted. Instead, it provides for the suspension of claims and protection from default judgments. In this way, it seeks to balance the interests of servicemembers and their creditors, spreading the burden of national military service to a broader portion of the citizenry. Many of the SCRA provisions are especially beneficial for Reservists activated to respond to a national crisis, but many provisions are also useful for career military personnel. One measure that affects many who are called to active duty is the cap on interest at an annual rate of 6% on debts incurred prior to a person's entry into active duty military service (Section 207). Other measures protect military families from being evicted from rental or mortgaged property (§§301 and 303); from cancellation of life insurance (§§402 through 409); from taxation in multiple jurisdictions (§§510 and 511); from foreclosure of property to pay taxes that are due (§§501 and 511); and from losing certain rights to public land (§§501 through 508). This report provides a section-by-section summary of the SCRA, codified in 50 U.S.C. §3901 et seq. For the purposes of the SCRA, the following definitions apply: 'Servicemember' —Persons covered by the SCRA include members of the "uniformed services" found in 10 U.S.C. §101(a)(5), which includes the Army, Navy, Air Force, Marine Corps, Coast Guard, and the commissioned corps of the National Oceanic and Atmospheric Administration and the Public Health Service. 'Military Service' —"Military service" includes "active duty" as defined in 10 U.S.C. §101(d)(1); National Guard service as service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under 32 U.S.C. §502(f) for purposes of responding to a national emergency declared by the President and supported by federal funds; for officers of the Public Health Service or the National Oceanic and Atmospheric Administration, "active service" (not further defined); and any period during which a servicemember is absent from duty on account of sickness, wounds, leave, or other lawful case. "Active duty" for armed services is defined in 10 U.S.C. §101(d)(1) as "full-time duty in the active military service of the United States ... [including] full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned." "Active military service" is not further defined in Section 101 of Title 10, U.S. Code , although "active service" is given the meaning "service on active duty or full-time National Guard duty," in §101(d)(3). Under the prior law, the definition of "military service" included language referring to "periods of training or education under the supervision of the United States preliminary to induction into military service." Under the SCRA, persons on active duty and attending a service school are covered, while persons attending training prior to entering active duty, such as officer candidates, may not be covered. It is unclear, for example, whether "active military service" under 10 U.S.C. §101(d) covers training as a member of the Reserve Officer Training Corps or attendance at a military academy. 'Period of military service' —A servicemember's "period of military service" begins when he or she enters military service and ends on the date of release from military service or upon death during military service. 'Dependent' —"Dependent" is defined as a servicemember's spouse or child (as defined for purposes of veterans' benefits, in 38 U.S.C. §101 ), or another individual for whom the servicemember provided more than one half of the support in the 180 days prior to an application for relief under the act. This language appears to codify courts' treatment of the term "dependent" as relating to financial dependency rather than strict familial relationships. 'Court' —The term "court" includes federal and state courts and administrative agencies, whether or not a court or agency of record. 'State' —"State" includes commonwealth, territory, or possession of the United States and the District of Columbia. 'Secretary Concerned' —With respect to a member of the armed forces, "secretary concerned" refers to the meaning in 10 U.S.C. §101(a)(9) with respect to commissioned officers of the Public Health Service, the Secretary of Health and Human Services; and with respect to commissioned officers of the National Oceanic and Atmospheric Administration, the Secretary of Commerce. 'Motor Vehicle' —"Motor vehicle" is a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads and highways, but does not include a vehicle operated only on a rail line (as defined in 49 U.S.C. §30102(a)(6)). 'Judgment' —"Judgment" includes any judgment, decree, order, or ruling, final or temporary. The SCRA applies everywhere in the United States, including the District of Columbia, and in any territory "subject to the jurisdiction of" the United States. It applies to any civil judicial or administrative proceeding in any court or agency in any jurisdiction subject to the act. However, it does not apply to criminal proceedings. Protection is extended to persons who share a debt with one or more covered servicemembers or have secondary liability as a "surety, guarantor, endorser, accommodation maker, co-maker, or other person who is or may be primarily or secondarily subject to the obligation or liability" at issue. If the SCRA provisions are invoked as to the servicemember, the court has discretion to grant a stay, postponement, or suspension of the proceedings against such persons, or to set aside or vacate a judgment. Whether a court grants such relief appears to be influenced by equitable considerations, including whether the servicemember is able to appear in court, whether the servicemember's presence is necessary for the defense, and whether an unjust forfeiture could otherwise result. If the servicemember is only nominally a party to the suit, as in cases of negligence where the insurance company might be considered the "true defendant," the modern trend is to deny a stay. The act added the term "co-maker" to the list of persons who may be entitled to a stay in an action which has been stayed with respect to a servicemember. This effectively codifies courts' interpretations of the previous version of the SCRA. However, it does not explicitly adopt the test some courts have used to determine whether a stay is appropriate. Bail bondsmen who are unable to procure the appearance of the principal due to that person's active duty service receive protection under the act. In such a case, the court hearing the charge may not enforce the bond during the period of military service of the accused, and has the discretion to return the bail in its entirety to the bail bondsman in the interest of equity and justice. While some courts have interpreted this subsection to allow for no discretion, others have required sureties to make a further showing that the appearance of the principal was in fact prevented due to military service and that the surety made an effort to secure the appearance of the principal in court. Persons who are primarily or secondarily liable on the obligation of a person in military service may waive their rights under the SCRA, but such a waiver must be executed in a separate instrument from that which creates the obligation. If the individual executes the waiver and then enters active military service, the waiver as applied to the individual, or to the dependents of the person, is invalidated. In the event that the waiver is executed after the person receives orders to active duty, but before entering active service, the waiver remains valid. Citizens of the United States who serve in the armed forces of allies of the United States in the prosecution of a war or military action, as long as such service is similar to the service in the U.S. armed forces, are protected under the act. Military authorities are required to provide servicemembers with written information of their rights and benefits under the SCRA. Military authorities must provide servicemembers with pertinent information on rights and protections available under the SCRA during initial orientation or, in the case of reserve servicemembers, during initial orientation and when mobilized. Additionally, military authorities may provide pertinent information to the adult dependents of servicemembers on the rights and protections available to the servicemembers and dependents. Benefits under Titles I, II, and III of the SCRA are applicable to servicemembers during the period of time between the date they receive their induction or activation orders and the date they report for active duty. The coverage ends in the event the orders to active duty are revoked. Servicemembers may waive some of the benefits of the SCRA by agreeing to modify or terminate a contract, lease or bailment, or an obligation secured by a mortgage, trust, deed, lien, or other security in the nature of a mortgage. In order for the waiver to be effective, it must be executed during or after the servicemember's period of active military service. The written agreement must specify the legal instrument to which the waiver applies and, if the servicemember is not a party to that instrument, the identity of the servicemember concerned. This section extends the protections to servicemembers covered under Section 106 of the act (reservists ordered into active duty and persons ordered to report for induction). The act was amended in 2004 to include two additional requirements for a waiver to be effective. The first requirement is that it must be executed separate from the legal instrument to which it applies. The second is that it must be in at least 12 point type. Servicemembers are protected from any penalty imposed solely due to their invocation of rights under the SCRA. In other words, a lender cannot revoke a covered person's credit card or exercise foreclosure rights because the servicemember requests that the rate of interest be capped at 6% pursuant to the SCRA. It provides that no stay, postponement, or suspension of any tax, fine, penalty, insurance premium, or other civil obligation or liability applied for, or received by, a person in military service can be the sole basis for any of the following: 1. a determination by a lender (or other person) that the servicemember is unable to pay the civil obligation or liability; 2. a decision by a creditor to deny or to revoke credit; to change the terms of an existing credit arrangement; or to refuse to grant credit in substantially the amount, or on substantially the terms, requested; 3. an adverse creditworthiness report by, or to, a consumer credit information enterprise; 4. an insurer's refusal to sell insurance coverage; 5. an annotation by the creditor or a person engaged in the practice of assembling or evaluating consumer credit information, to reference the servicemember's military status on his or her credit report; or, 6. a change in the terms offered or conditions required for issuance of insurance. Creditors may, however, take adverse action against a servicemember who fails to comply with obligations after they are adjusted by reason of the act. The act does not appear to preclude insurers or creditors from offering different terms or conditions, denying credit, or taking other adverse actions based solely on the servicemember's status in anticipation that the servicemember might later invoke a right under the act. Legal representatives, such as attorneys or persons possessing a power of attorney, may assert the benefits of the act when acting on the servicemember's behalf. Sections 201 through 208 describe the general relief available in most kinds of court actions. They serve to suspend civil liabilities of military personnel and preserve causes of action either for or against them. In a civil lawsuit, the failure of the defendant to appear in court may result in the award of a default judgment on behalf of the plaintiff. When a default judgment is entered in favor of the plaintiff, it is done without consideration on the merits of the case. Under the act, servicemembers are protected from default judgments in civil actions, including any child custody proceeding, when they are unable to appear in court due to military service. An amendment to the act in 2008 added language clarifying that civil lawsuits include child custody proceedings. Before a court can grant a default judgment, a plaintiff must file an affidavit stating that the defendant is not on active duty in military service showing necessary facts to support the affidavit or that the plaintiff was unable to determine whether or not the defendant is in military service. A false affidavit to that effect is punishable by imprisonment for up to one year, a fine of up to $1,000, or both. The court, before entering a judgment, must also appoint an attorney to represent the person on active duty in order to protect his or her legal rights and interests. However, if the attorney appointed to the case cannot locate the servicemember, actions by the attorney would not waive any defenses or otherwise bind the servicemember. Additionally, if the court is unable to determine if a defendant is in military service, the court may require a bond which may later be used to indemnify the defendant if it is determined that he or she was in military service and the judgment against the defendant is set aside or vacated in part. Moreover, if a court enters a default judgment against a servicemember, the court may set aside its judgment if the servicemember files a motion within 60 days after leaving active military service and can demonstrate that military service prejudiced his or her availability to appear in court (unless the default was based on a false affidavit by the plaintiff regarding military service of the defendant, in which case such a showing is unnecessary) and that there are meritorious or legal defenses to the suit. This section does not provide a means to challenge judgments resulting from cases in which the servicemember made an appearance before the court. Some courts have found that a communication to the court regarding the servicemember's military status, and the resulting applicability of the SCRA to the suit, constitutes an appearance and bars asserting certain defenses, such as a lack of jurisdiction, and negates the right to petition to have the judgment overturned. An informal communication, such as a letter or a telegram to the court asking for protection under the SCRA should not be counted as an appearance, but some courts have found that a letter from a legal assistance attorney constitutes an appearance, waiving the servicemember's protection against a default judgment. An appearance by defendant's counsel may also waive protection, unless the counsel was appointed pursuant to this section. Subsection (h) contains a provision to protect the rights of a bona fide purchaser by stating that vacating, setting aside, or reversing any judgment under the act will not impair any right or title acquired by any bona fide purchaser for value under the judgment. Therefore, it may be impossible to recover property that had been attached to satisfy a default judgment, although the servicemember would have the right to damages for the value of the property. A court must stay further proceedings in civil litigation, including any child custody proceeding, where the servicemember's ability to participate in the litigation, as either the plaintiff or the defendant, is materially affected by absence due to military service. It applies to servicemembers who are in military service or within 90 days after termination or release from military service. An amendment to the act in 2008 added language specifying that civil lawsuits include child custody proceedings. The servicemember must set forth, in the application for a stay, facts stating the manner in which current military duty requirements materially affect the ability to appear and state a date when he or she will be able to appear. Additionally, the servicemember must submit a letter from his or her commanding officer certifying that leave is not authorized to attend proceedings at that time. While a stay is a reasonable imposition upon an individual citizen on behalf of those discharging their obligations to the common defense, it is not available to shield wrongdoing or lack of diligence or to postpone relief indefinitely, or to be used to stay proceedings in matters where the interests or safety of the general public may be at stake. Courts may deny a stay in cases involving purely legal issues or where the servicemember is not the true party in interest or in which presence of the individual is not essential. A request for a stay under this section does not constitute an appearance for jurisdictional purposes or a waiver of any substantive or procedural defense. Therefore, a servicemember may apply for relief without waiving the right, for example, to assert that the court has no jurisdiction in the case. Moreover, additional stays may be granted based on continuing material effect of military duty. If additional stays are denied, the court must appoint counsel to represent the servicemember. A servicemember who is unsuccessful in securing a stay under this section is precluded from seeking the protections against default judgments granted under Section 201. This section is inapplicable to Section 301 (protection from eviction or distress). Whenever an action is stayed by the court pursuant to the SCRA, penalties that would otherwise accumulate against the person for failing to carry out the terms of the contract cannot be imposed during the period the stay remains in effect. In the absence of a stay, the court has discretion to relieve a servicemember of the obligations to pay fines or penalties for failing to carry out the terms of a contract if that person's ability to pay or to carry out the terms is impaired by military service. If a servicemember is materially affected by reason of service from complying with a court judgment or order, the court may, on its own motion, and will on the application of the servicemember, stay the execution of any judgment or order against the servicemember and vacate or stay an attachment or a garnishment of property, money, or debts in the possession of the person on active duty for actions or proceedings commenced against the servicemember. This section applies to actions brought against the servicemember before or during the period of military service or within 90 days after termination of service. Stays granted by courts under the SCRA can remain in effect for the entire period of a servicemember's military service plus 90 days, or any part thereof. As a practical matter, however, courts do not look favorably on protracted stays, and expect most military members to make themselves available to participate in proceedings within a reasonable period of time, especially during peacetime if the servicemember is not stationed abroad. Suits against any co-defendants not in military service may proceed even if the suit has been stayed with respect to the person in the military. This section does not apply to Sections 202 (stays for actions for which the defendant has notice) and 701 (anticipatory relief). These sections contain their own rules for determining the maximum length of a stay. In cases in which a statute of limitations would prohibit any court action with respect to a lawsuit brought after expiration of the time specified by law, this section tolls (extends) the time period applicable to a covered servicemember by an amount of time equal to the person's period of military service. That time is not counted in determining the servicemember's deadline for exercising the right to redeem real estate that has been sold or forfeited to enforce an obligation, tax, or assessment. The section applies not just to an action or proceeding in a court but also to any federal or state board, commission, or agency, and may be exercised by the servicemember's heirs, executors, administrators, or assigns, regardless of whether the right or cause of action arose prior to or during the person's period of military service. It does not, however, apply to federal tax laws. This section caps the maximum interest charged on any debt incurred by a servicemember individually or with the servicemembers' spouse jointly prior to entering active duty at a rate of interest no higher than six percent (6%) a year, if the servicemember's ability to pay is materially affected by active duty status. The interest above the 6% cap is to be forgiven by the creditor and does not accrue to be owed after the debtor's release from active duty. The monthly payments of an obligation or liability covered by this section is to be reduced by the amount in excess of the 6%, but the terms of the original obligation are to remain the same. A court may grant a creditor relief from this section if, in the opinion of the court, the ability of the servicemember to pay a interest rate in excess of 6% is not materially affected by the military service. A servicemember who wrongly receives an adverse credit report or has his or her credit limit reduced or further credit denied after invoking the 6% interest cap provision may seek relief through the Fair Credit Reporting Act (FCRA) provisions for "adverse actions" and consumer remedies for "willful or negligent noncompliance by credit reporting agencies upon consumer showing of causal connection between inaccurate credit report and denial of credit or other consumer benefit." Historically, federally guaranteed student loans were not eligible for the 6% interest rate cap. Section 428(d) of the Federal Family Education Loan Program, addressing applicability of usury laws, excluded the SCRA interest rate limitation on those loans. P.L. 110-315 , the Higher Education Opportunity Act, amended Section 428(d) to permit explicitly application of the SCRA interest rate cap on federally guaranteed student loans. As of August 14, 2008, federally guaranteed student loans are treated like all other debts incurred prior to entering active duty. Loans disbursed prior to enactment of the amendment are not covered and therefore are not subject to the 6% interest rate limitation. Additionally, servicemembers currently on active duty that received loans prior to entering active duty will not be able to claim the 6% cap. P.L. 110-389 , the Veterans' Benefits Improvement Act, added two new subsections addressing penalties for violation of the section. The section, as amended, closely mirrors the penalty and preservation of remedies provisions found in other sections of the SCRA. Anyone who violates the maximum interest prohibition may be fined or imprisoned for not more than one year. An individual claiming protection under this section may also be awarded consequential or punitive damages. In addition to the ability to stay legal proceedings discussed above, this section provides protections specific to child custody proceedings. If a court enters a temporary change in custody based solely on the deployment or anticipated deployment of a servicemember, the order must expire no later than the conclusion of a period of time justified by the deployment. The section also prohibits a court from considering deployment or possible deployment of the custodial parent as the sole factor in determining the best interest of the child when contemplating a permanent change in custody. Finally, the section does not create a right to hear the child custody dispute in federal courts; nor does it preempt state law when the state provides greater protections to the deploying servicemember. Sections 301 through 308 provide protections from eviction and loss of other benefits or rights due to the failure of a servicemember to meet payments on rent, loans, mortgages, or insurance policies. Unlike the other parts of the SCRA, the rights described in these sections can be asserted by a servicemember's dependents in their own right. Under this section as it was enacted in 2003, unless a court orders otherwise, a landlord or person with "paramount title" may not evict a servicemember during a period of military service or his or her dependents from a rented home (such as an apartment, a trailer, or a house) if the rent is $2,400 per month or less. The rent ceiling is adjusted annually for inflation, and in 2015 the amount was $3,329.84. In a case where the landlord seeks a court order for the eviction of a servicemember or his or her dependents, the court is obligated to stay the proceedings for up to three months if the servicemember requests it. In the alternative, the court may adjust the obligation under the lease to preserve the interests of all the parties. Section 202 (stay of proceedings when servicemember has notice) of the act is not applicable to this section. The section provides that anyone who knowingly takes part in an eviction in violation of this section can be punished by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both. Persons claiming relief under this section may collect consequential and punitive damages in cases involving wrongful eviction. Additionally, courts are allowed to grant landlords, or other persons with "paramount title," equitable relief in cases where a stay is granted. If the court orders payment, Subsection (d) authorizes the Secretary concerned to make an allotment from the servicemember's military pay to satisfy the terms of the order. Except by court order, no one who has collected a deposit as partial payment for property, where the remainder of the price is to be paid in installments, can repossess the property or cancel the sale, lease, or bailment because of the failure to meet the terms of the contract, if the buyer enters active duty military service after paying the deposit and subsequently breaches the terms of the contract. A violation of this section is punishable by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both. A court may order the cancellation of the installment sale, mandating the return of the property to the seller as well as the return of paid installments to the buyer, or the court may stay the proceedings. This section does not permit a servicemember unilaterally to terminate the contract, although the servicemember may be able to bring an action under Section 701 for relief. This section covers servicemembers who, prior to a period of active military service, entered into a property transaction subject to a mortgage, a trust deed, or other security loan. The sale, foreclosure, or seizure of property during a servicemember's period of military service, and 90 days after, is prohibited unless such action is taken under a court order issued prior to foreclosure on the property, or pursuant to an agreement under Section 107 of the act. If the servicemember's ability to comply with the terms of the obligation is materially affected by military service and thereby breaches the terms of a mortgage, trust deed, or other loan, the court may adjust the obligation to preserve the interests of all parties, or may stay any proceeding for a period of time as justice and equity require. Property repossessed or other action taken without benefit of a court order is punishable by imprisonment of up to one year, a fine as provided by Title 18, U.S. Code , or both, and may subject the creditor to a suit for wrongful conversion. In addition, where a covered person can show oppression, fraud, or malice on the part of the creditor, consequential and punitive damages, among other remedies, may be awarded. If a court stays an action for foreclosure on property, repossession, or the cancellation of a sales contract against a servicemember, the court can appoint three disinterested persons to appraise the property and, on the basis of the appraisal, order the amount of the servicemember's equity to be paid back to the person on active duty in military service as a condition for allowing the foreclosure, repossession, or cancellation. Military persons who live in rental property are allowed to terminate leases entered into prior to a period of active service. It applies to (1) property leased for a dwelling or for professional, business, or farm use, or other similar purpose, where the person leasing the property later enters active duty in military service, or where the servicemember executes the lease while in military service and thereafter receives military orders for a permanent change of duty station (PCS) or to deploy with a military unit for a period of at least 90 days; and (2) motor vehicle leases for personal or business transportation where the person later enters active military service of not less than 180 days or where the servicemember executes the lease while in military service and thereafter receives PCS orders outside of the continental United States or to deploy with a military unit for at least 180 days. Servicemembers who rent premises are advised to ensure the rental agreement contains a "military" clause to allow for early termination of a lease in case of military orders to deploy. In 2004, the right to terminate leases was expanded to include joint leases. The added language specifies that any lease terminated pursuant to this section also terminates any obligation a dependent of the lessee may have under the lease. The servicemember may terminate a property lease by delivering by hand, private business carrier, or mailing return receipt requested, a written notice and a copy of his or her's military orders to the lessor or its agent. With regard to a motor vehicle lease, the servicemember must return the motor vehicle to the lessor or its agent no later than 15 days after the date of delivery of the written notice. As for a residential lease, if the lease called for monthly rent, then cancellation takes effect thirty days after the next due date for rent following the day the written notice is sent. For all other property leases, the cancellation is considered effective at the end of the month following the month in which the written notice is sent. Any unpaid rent prior to the effective cancellation must be paid to the landlord on a prorated basis. The servicemember is entitled to a refund of any prepaid rent for time after the lease is canceled within 30 days of the termination of the lease. The recent amendment to the act prohibits the lessor from charging an early termination fee, but the servicemember is liable for any taxes, summonses, or other obligation in accordance with the terms of the lease. A court can make adjustments if the landlord petitions the court for an "equitable offset" prior to the date the lease is effectively canceled. For motor vehicle leases, the cancellation is considered effective on the day on which the vehicle is returned to the lessor. The lessor cannot impose early termination fees, but the servicemember is still responsible for any taxes, summonses, title and registration fees, and any other obligation and liability under the lease, including reasonable fees for excessive wear, use, and mileage. Anybody who knowingly seizes personal effects, a security deposit, or any other property belonging to a person who has lawfully canceled a lease pursuant to this section is subject to punishment. Anyone who seizes or otherwise interferes with the removal of property in order to satisfy a claim for rent due for any time after the date of the effective cancellation of the lease may be punished by imprisonment for up to one year, a fine as provided in Title 18, U.S. Code , or both. Originally added to the SCRA by P.L. 110-389 , the Veterans' Benefits Improvement Act of 2008, this section was replaced in its entirety by P.L. 111-275 , the Veterans' Benefits Act of 2010. Under the new Section 305a, a servicemember is able to terminate a contract for telephone exchange service, in addition to the previously covered cellular phone service in certain circumstances. To be eligible, the servicemember must receive orders to relocate for a period of at least 90 days to a location that does not support the contract and the contract must have been entered into prior to receiving the orders. The telephone service provider is required to cancel the contract without assessing an early termination charge and in the case of a period of relocation less than three years in duration, allow the servicemember to retain the phone number previously terminated. Additionally, dependents of the servicemember may also terminate their cellular telephone service if they accompany the servicemember to an area that does not support the service contract. If a person entering military service has used a life insurance policy as collateral to secure a debt, they are protected from foreclosure on the policy to satisfy the debt unless the assignee first obtains a court order, except where the assignee is the insurance company itself (in which case the debt amounts to a policy loan). A court may refuse to grant the order if it determines that the servicemember's ability to repay is materially affected by military service. This rule applies during the entire time the insured is on active duty plus one year. The rule does not apply in three cases: (1) if the insured gives his or her written permission to let a creditor make a claim against the policy in order to satisfy the debt involved; (2) if any premiums required under the life insurance policy are due and unpaid (excluding premiums guaranteed under Title IV of this act); or (3) if the person whose life is insured has died. Anyone who knowingly takes or attempts action contrary to this section shall be punished by imprisonment for up to a year, or a fine as provided in title 18, U.S. Code , or both. A servicemember with property or effects subject to a lien, including liens for storage, repair or cleaning of property, is protected from foreclosure or enforcement of the lien during the period of military service plus three months unless a court finds that the servicemember's ability to meet the obligation is not materially affected by military service. A court can also stay the proceedings in these types of enforcement actions or order some other disposition of the case it deems equitable to the parties. This section does not affect the scope of Section 303 (mortgages and trust deeds). Anyone who knowingly takes any action contrary to the provisions is punishable by imprisonment up to one year, a fine as provided by title 18, U.S. Code , or both. The benefits of the rules provided under Title III (50 U.S.C. app. §§531 to 537) of the SCRA are extended to dependents of active duty personnel in their own right. A dependent must petition a court for permission to take advantage of those rules, and the court is not required to grant permission if it determines that the ability of the applicant dependent to comply with the terms of the obligation, contract, lease, or bailment has not been materially impaired by the military service of the person upon whom the applicant is dependent. Title IV provides relief from insurance premiums and guarantees servicemembers continued coverage under certain commercial life insurance policies. For the purposes of Title IV of the SCRA, the following definitions apply: 'Policy' — "Policy" includes any individual contract for whole, endowment, universal, or term life insurance (other than group term life insurance), or benefit similar to life insurance that comes from membership in any fraternal or beneficial association and has to satisfy all of the following conditions: 1. the policy does not include a provision limiting the amount of insurance coverage based on the insured's military service; 2. the policy does not require the insured to pay higher premiums if he or she is in military service; 3. the policy does not include a provision that limits or restricts coverage if the insured person engages in any activity required by military service; and 4. the policy has to be "in force" (premiums have to be paid on time before any benefit guaranteed by these sections of the law can be claimed) for at least 180 days before the insured enters military service. 'Premium' —"Premium" is the amount specified in the policy to be paid to keep the policy in force. 'Insured' —"Insured" is defined as a servicemember who owns a life insurance policy. 'Insurer' —"Insurer" includes any firm, corporation, partnership, association, or business that can, by law, provide insurance and issue contracts or policies. Either the person insured, an insured's legal representative, or, when the insured person is outside the United States, a beneficiary of the insurance policy must apply for protection of a covered policy under the act. The written application must be submitted to the insurer with a copy sent to the Secretary of Veterans Affairs. The total amount of policies covered are limited to the greater of $250,000, or an amount equal to the maximum limit of the Servicemember's Group Life Insurance(SGLI). In 2005, the maximum limit of SGLI was increased to $400,000 thereby raising the maximum amount of covered policies. In order to invoke protection for the policies covered under this part of the SCRA, the servicemember, his or her legal representative, or beneficiary must submit an application in writing identifying the policy and insurer, with an acknowledgment that the insured's rights under the policy are subject to and modified by the provisions of Title IV of this act. The Secretary of Veterans Affairs may require the parties to provide additional information as necessary. The insurer then reports the action to the Department of Veterans Affairs as required by regulation (found in 38 C.F.R. Part 7). By making an application for the protection guaranteed by these sections of the law, the insurer and insured are deemed to have accepted any necessary modifications to the terms of the life insurance policy. The Secretary of Veterans Affairs determines whether a policy is entitled to the protection guaranteed by these sections, and is responsible for notifying the insurer and the insured as to his determination. Once the policy is deemed qualified for protection, it may not lapse or otherwise be terminated or be forfeited for the nonpayment of a premium, or interest or indebtedness on a premium. This protection applies during the time the insured person is in military service and for two years after he or she leaves military service. The approval of the Secretary of Veterans Affairs is necessary for a policy holder to make certain withdrawals and other payments or credits under a policy protected by this part of the SCRA. If such approval is not obtained, rather than paying dividends to the insured or reinvesting them to purchase additional coverage, the insurer must add dividends to the value of the policy to be treated as a credit. The insured is not permitted to take out loans against the policy or cash it in while it is protected without the approval of the Secretary of Veterans Affairs. However, the insured retains the right to modify the designation of beneficiaries. If a covered policy matures due to the death of the insured, the insurance company may reduce its settlement with the beneficiaries by the amount of any unpaid premiums (plus interest). If the rate of interest is not specified in the policy, it will be the same rate applied to policy loans in other policies issued at the time when the insured's policy was issued. Deductions must be reported to the Secretary of Veterans Affairs. In the event the insured fails to pay all of the premiums owed on a policy at the time the guarantee period expires and the cash surrender value of the policy is less than the amount due, the United States will pay the unpaid premiums and may then attempt to collect the amount from the insured. (Any funds collected from the insured are added to appropriations for the payment of guaranteed premiums under this part of the SCRA.) If the unpaid premiums do not exceed the policy's cash surrender value, the insurer will treat them as a policy loan. Moreover, any money paid by the government to an insurance provider under this section is a debt owed by the insured to the government and may not be discharged by bankruptcy. The Secretary of Veterans Affairs will promulgate regulations to carry out the provisions of the article. The findings of fact and conclusions made by the Secretary in administering these sections are subject to review by the Board of Veterans' Appeals and the U.S. Court of Appeals for Veterans' Claims. Judicial review is permitted only to the extent provided by chapter 72 of Title 38, U.S. Code . The fifth broad category of provisions of the SCRA provides certain rights regarding public lands and relieves servicemembers from having to pay certain taxes to multiple jurisdictions. It also prevents the attachment of certain personal or real property in order to satisfy tax liens. Personal property (including motor vehicles) belonging to a person in military service, as well as real property used by the servicemember as a home, a business, or for agriculture, as long as the property continues to be occupied by the servicemember's family or employees, cannot be sold to collect unpaid taxes or assessments, except income taxes, without a court order. A court may stay an action to force the sale of property belonging to a person in military service for the collection of unpaid taxes if it finds that the debtor's ability to pay the taxes is materially affected by his or her military service. In the event a servicemember's property is sold to satisfy tax liabilities, the servicemember has the right to redeem the property for up to six months after the person leaves military service. This section may not be construed to shorten any period of redemption provided by state law. If a servicemember fails to pay a tax or assessment on property covered by this section when due, the amount unpaid and due shall accrue interest at 6%, but no other penalties or interest may be assessed. Additionally, joint ownership of all forms of personal and real property by a servicemember and his or her dependents are covered by this section. Servicemembers cannot be deemed to have forfeited any right (including mining and mineral leasing rights) they had to use public lands of the United States prior to entering military service based on absence from the land or failure to perform required maintenance or other improvements. Holders of permits and licenses who subsequently enter military service may suspend the licenses for the duration of military service plus six months, allowing the servicemember to obtain a reduction or cancellation of fees for the duration of that time. Servicemembers with claims to desert lands prior to entering military service may not have those claims contested or canceled (1) for failing to expend required amounts in improvements annually, (2) failing to effect the reclamation of the claim during the period of service, or (3) during hospitalization or rehabilitation due to an injury or disability incurred in the line of duty. The protection is in force during and for six months after he or she leaves military service or is released from hospitalization. To qualify for this protection, notice must be given to the appropriate land office within six months after entering military service. Certain requirements for maintaining a mining claim are suspended during the holder's period of active military service and for six months after or is released from hospitalization because of wounds or disability suffered while in the line of duty. During this period, the mining claim cannot be forfeited due to nonperformance of the requirements of the lease. To qualify for this protection, the servicemember must notify the appropriate claims office of commencement of military service within 60 days after the end of the assessment year in which the service began. Any person who holds a permit or a lease under the federal mineral leasing laws who enters military service is allowed to suspend all operations during military service (plus six months), in which case the period of service is not counted as part of the term of the person's permit or license but the holder is not required to pay rentals or royalties during that time. However, to qualify for these privileges, the person has to notify the Bureau of Land Management that he or she has entered military service within six months after entering. Nothing in Title V of the SCRA prevents a person in military service from taking any action authorized by law or regulations of the Department of the Interior to assert, perfect, or protect the rights covered in those sections. A servicemember may submit any evidence required to assert this right in the form of affidavits or notarized documents. Affidavits provided pursuant to this section are subject to 18 U.S.C. §1001. The Secretary concerned is responsible for providing military authorities with information about the benefits of this Title (except those pertaining to taxation) for distribution among servicemembers and shall provide application forms to be used by applicants requesting relief. Protection of land rights under this Title are extended to servicemembers under the age of 21. Residency requirements related to the establishment of a residence within a limited time will be suspended for six months after release from military service for both the servicemember and his or her spouse. The Secretary of the Interior has the authority to issue regulations necessary to carry out Title V of the act, other than the sections that deal with taxes (§§501, 510, and 511). The collection of income taxes (excluding Social Security (FICA) taxes) owed by a servicemember, either before or after entering service, may be deferred during the period of service, and for up to six months after, if his or her ability to pay the taxes is materially affected by military service. No interest or other penalty may be imposed on a debt deferred under this section. The statute of limitations for paying the debt is tolled for the length of the person's period of service plus nine months. In order to prevent multiple state taxation on the property and income of military personnel serving within various tax jurisdictions by reason of military service, this section provides that servicemembers neither lose nor acquire a state of domicile or residence for taxation purposes when they serve at a duty station outside their home state in compliance with military orders. A servicemember who conducts other business while in military service may be taxed by the appropriate jurisdiction for resulting income. However, a tax jurisdiction cannot include the military compensation earned by nonresident servicemembers to compute the tax liability imposed on the non-military income earned by the servicemember. Spouses of servicemembers neither lose nor acquire a state of domicile or residence for taxation purposes when they are present in any tax jurisdiction solely to be with the servicemember in compliance with the servicemember's orders. However, the guarantee of residency is contingent on the spouse having the same original residence or domicile as the servicemember. The section further provides that income earned by a spouse while in a duty-station tax jurisdiction, other than his or her original residence or domicile, solely to be with the servicemember may not be taxed by that tax jurisdiction. Personal property of a servicemember and his or her spouse will not be subject to taxation by a jurisdiction other than their domicile or residence while stationed at a duty station outside of their home state. However, relief from personal property taxes does not depend on whether the property is taxed by the state of domicile. Property used for business is not exempt from taxation. An Indian servicemember whose legal residence or domicile is a Federal Indian reservation will only pay taxes under the laws of the Federal Indian reservation and not to the state where the reservation is located. "Tax jurisdiction" is defined to include "a State or a political subdivision of a State," which would include the District of Columbia and any commonwealth, territory or possession of the United States (Section 101(6)). "Taxation" includes licenses, fees, or excises imposed on an automobile that is also subject to licensing, fees or excise in the servicemember's state of residence. "Personal property" includes intangible and tangible property including motor vehicles. Title VI provides courts the authority to deny remedies that would abuse the purpose of the SCRA, indicates how a servicemember's military and financial status can be established in court, and covers other procedural requirements. A court may deny a servicemember the protections of the act with respect to a transfer it finds was made with the intent to exploit the provisions of the act, in order to delay enforcement of the contract, to obtain reduced interest rates, or to avoid obligations with respect to property that was the subject of the transaction. A certificate signed by the Secretary concerned serves as prima facie evidence in an action under the SCRA that the individual is in the military service, date of induction or discharge, person's residence at time of induction, rank and rate of pay, and other facts relevant to asserting rights under the SCRA. A servicemember who is missing in action is presumed to continue in military service until he or she is accounted for or his or her death has been reported to the Department of Defense or determined by a court or board with the authority to make such determination. Courts may revoke, modify, or extend any interlocutory orders they issued pursuant to the SCRA. Title VII of the SCRA provides a means for servicemembers to petition for relief without having to wait until a creditor brings an enforcement action against them. It also treats powers of attorney and provides relief from liability insurance premiums for servicemembers who need to maintain such policies for their civilian occupations. A servicemember may initiate an action for relief prior to defaulting on any pre-service obligation or liability, including tax obligations, rather than waiting for the creditor to commence proceedings. Dependents do not have independent protection under this section as they do for the provisions of Title III. Courts may grant the following relief: 1. if the obligation involves payments of installments for the purchase of real estate (like a mortgage), the court can stay enforcement of the obligation by adding a period of time, no greater than the period of military service, to the remaining life of the contract, subject to the payment of the balance of principal and accumulated interest that remains unpaid at the termination of the applicant's military service, in equal installments over the duration of the extended life of the contract; and 2. for any other type of obligation, liability, tax, or assessment, the court can stay enforcement, for a period of time equal to the petitioner's period of military service, subject to payment of the balance of principal due plus accumulated interest in equal installments over the duration of the stay. If a stay has been granted under this section, no fine or penalty can be imposed for its duration as long as the servicemember complies with the terms and conditions of the stay. This provision allows servicemembers who are not yet in default on an obligation, but whose ability to make payments is materially affected by military service, to petition the court in effect to rewrite the contract by extending its life, allowing the servicemember to pay down the amount in arrears with equal installments over a longer of period of time. The servicemember must resume making regular payments on the debt after leaving active duty, in addition to the payments to make up for the smaller payments he or she made while on active duty. A valid power of attorney for a person who is declared to be missing in action is automatically extended. Unless the document explicitly states that it is to expire, even in the event that the person who executed it becomes missing in action, the document continues in force for the entire period the person remains in a missing status. It is limited to documents that designate the servicemember's spouse, parent, or named relative as the servicemember's attorney in fact. Certain persons who, prior being called to active duty, were furnishing health care, legal, or any other services which the Secretary of Defense determines to be professional services and who had in effect a professional liability (i.e., malpractice) insurance policy, may suspend payment of premiums on their liability insurance while they serve on active duty without losing any coverage. The section covers insurance policies that, according to their terms, would not continue to cover claims arising prior to a lapse in coverage unless the insured continues to pay premiums. Definitions — "Profession" is defined in Subsection (i) to include "occupation." Similarly, the expression "professional" includes the term "occupational." Subsection (i) also defines "active duty," adopting the definition used in Section 101 of Title 10, U.S. Code . However, the provision is further limited to persons called to active duty (other than for training) under 10 U.S.C. §§688 (retired members of regular armed forces, members of the Retired Reserves, and members of the Fleet Reserve or Fleet Marine Corps Reserve); 12301(a) (activation of Reserves during war or national emergency declared by Congress); 12301(g) (member of Reserve component in captive status); 12302 (Ready Reserve); 12304 (Selected Reserve and certain Individual Ready Reserve members called to active duty other than during war or national emergency); 12306 (Standby Reserve); 12307 (Retired Reserve); and, if any of the preceding sections are invoked, Section 12301(d) (volunteer member of a Reserve component). Suspension of coverage —Professional liability insurance policies covered by this section are suspended from the time the insurer receives a request for protection until the insured requests in writing to have the policy reinstated. In the case of a joint insurance policy, no suspension of coverage is required for the policyholders who are not called to active duty. For example, if several physicians jointly purchase a group policy of malpractice insurance, and only one of them is called to active duty, the coverage of those not called to active duty need not be suspended by the insurer. Premiums —The insurer may not charge premiums for coverage that is suspended. The insurer must either refund any amount already paid for coverage that is suspended or, if the insured professional person chooses, apply the amount toward payment of any premium that comes due after coverage is reinstated. Liability during suspension —The insurer is not obligated to pay any claim that is based on a professional's actions (or inaction) during a period when a policy is suspended. In the case of claims involving obligations imposed by state law on a professional person to assure that his or her patients or clients will receive professional assistance in his or her absence to serve on active duty, the section clarifies that the failure of the professional person to satisfy such an obligation will generally be considered to be a breach that occurred before the professional person began active duty. In such a situation, the insurer would be liable for the claim. In the event a claim arises while the patient is receiving alternate care as arranged by the servicemember for patients during his or her absence, the insurer would not be liable for the claim. Actions against policy holder during suspension of coverage —In the event a malpractice suit (or administrative action) is filed during the period when the insurance is suspended, the litigation will be stayed until the end of the suspension period. The stay only applies where the malpractice is alleged to have occurred before the suspension began, and would thus be covered by the policy. Litigation stayed under this rule is deemed to be filed on the date the suspended insurance is reinstated. The period of any stay granted under this provision is not counted when computing whether or not the relevant statute of limitations has run. In the event that a professional person whose malpractice insurance coverage has been suspended should die during the period of the suspension, any stay of litigation or administrative action against the person under this section is lifted. In addition, the insurer providing the coverage that was suspended is to be liable under the policy just as if the deceased person had died while covered by the policy but before the claim was filed. Reinstatement of coverage —The insurer is required to reinstate the insurance coverage on the date the servicemember transmits a written request for reinstatement, which must occur within 30 days after the covered servicemember is released from active duty. The insurer must notify the policyholder of the due date for payment of any premium required for reinstatement of the policy, and that the premium must be paid within 30 days after the notice is received by the professional person. The section also limits the premium that the insurer can charge for reinstated coverage to the rate that would have applied if the servicemember had not been deployed. The insurer is not allowed to recoup missing premiums by charging higher rates for reinstated coverage, but it may charge higher rates for reinstated coverage if it raised the rates for all policyholders with similar coverage, provided that the servicemember would have had to pay a higher premium even if he or she had not suspended coverage. This section grants servicemembers who were called to military service, as described in §703(a)(1), the right, upon termination or release from military service, to reinstatement of any health insurance policy that was in effect on the day before the servicemember entered military service, and that terminated at any time during his or her service. No new exclusions from coverage or waiting periods for reinstatement of coverage may be imposed with respect to conditions arising prior to or during the servicemember's period of military service, if such an exclusion or waiting period would not have applied during regular coverage and the condition has not been determined to be a disability incurred in the line of duty under 38 U.S.C. §105. The section does not apply to employer-sponsored health insurance plans covered by the provisions of the Uniformed Services Employment and Reemployment Rights Act (USERRA). Insurance plans covered by USERRA are subject to similar protections under 38 U.S.C. §4317. Servicemembers must apply for reinstatement within 120 days of termination or release from active duty. In 2006, language was added limiting premium increases on a health insurance policy covered by the section. The amount of the premium may not be increased on a policy being reinstated for the balance of the period for which the coverage would have continued had it not been terminated, above an amount that would have been charged before termination. In the event that the premiums for similarly covered individuals increased during the terminated period, the increased premium may be assessed to the servicemember upon reinstatement of the policy. Military personnel and their spouses are not deemed to have changed their state of residence or domicile for the purpose of voting for any federal, state, or local office, solely because of their absence from the respective state in compliance with military or naval orders. The assets of a servicemember are protected from attachments to satisfy business debts for which the servicemember is personally liable, as long as the assets sought to be attached are not held in connection with the business. The obligor would have the right to apply to the court for a modification of the servicemember's relief when warranted by equitable considerations. This section authorizes the U.S. Attorney General to commence a civil action in U.S. district court for violations of the SCRA by a person who (1) engages in a pattern or practice of violating the act; or (2) engages in a violation that raises an issue of significant public importance. Courts may grant any appropriate equitable or declaratory relief, including monetary damages. Additionally, courts, in order to vindicate the public interest, may assess a civil penalty up to $55,000 for a first violation, and up to $110,000 for subsequent violations. Finally, individuals alleging violations of the SCRA, for which the Attorney General has commenced an action, are authorized to intervene in previously commenced cases as a plaintiff. In addition to the right to join a previously commenced case, covered individuals have the ability to commence a civil action for an alleged violation of the SCRA in their own right. The court may grant an appropriate equitable or declaratory relief, including monetary damages. The court is also authorized to award the costs of the action and reasonable attorney fees to a covered individual who prevails in a civil action under this section. This section provides that Sections 801 and 802 do not preclude or limit any other remedies available under the law, including consequential or punitive damages for violations of the SCRA.
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Recognizing the special burdens that members of the military may encounter trying to meet their financial obligations while serving their country, Congress passed the Soldiers' and Sailors' Civil Relief Act (SSCRA) in 1940. The law was amended from time to time, ordinarily in response to military operations that required the activation of the Reserves. P.L. 108-189, the Servicemembers Civil Relief Act (SCRA), was enacted on December 19, 2003, as a modernization and restatement of the protections contained in the SSCRA. Much like with the SSCRA, the SCRA has been amended since its initial passage and proposed changes continue to be introduced in Congress. This report summarizes the rights granted to persons serving on active duty in the U.S. Armed Forces, and in some instances, to their dependents, under the SCRA. The SCRA provides protections for servicemembers in the event that their military service impedes their ability to meet financial obligations incurred before entry into active military service. Forgiveness of all debts or the extinguishment of contractual obligations on behalf of servicemembers, who have been called up for active duty, is not provided, nor is absolute immunity from civil lawsuits granted. Instead, the act suspends civil claims against servicemembers and protects them from default judgments. The SCRA includes provisions that prohibit the eviction of military members and their dependents from rental or mortgaged property; create a cap on interest at 6% on debts incurred prior to an individual entering active duty military service; protect against the cancellation of life insurance or the non-reinstatement of health insurance policies; allow some professionals to suspend malpractice or liability insurance while on active duty; and proscribe taxation in multiple jurisdictions and forced property sales in order to pay overdue taxes. The U.S. Attorney General is authorized to commence a civil action to enforce provisions of the SCRA. Additionally, servicemembers and their dependents have the right to commence a civil action, that is, a private cause of action, to enforce protections afforded them under the SCRA.
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The United States is a party to numerous security agreements with other nations. The topics covered, along with the significance of the obligations imposed upon agreement parties, may vary. Some international security agreements entered by the United States, such as those obliging parties to come to the defense of another in the event of an attack, involve substantial commitments and have traditionally been entered as treaties, ratified with the advice and consent of the Senate. Other agreements dealing with more technical matters, such as military basing rights or the application of a host country's laws to U.S. forces stationed within, are entered more routinely and usually take a form other than treaty. Regardless of the form of a security arrangement, Congress has several tools which enable it to exercise oversight regarding the negotiation, form, conclusion, and implementation of the agreement by the United States. This report begins by providing a general background as to the types of international agreements that are binding upon the United States, as well as considerations affecting whether they take the form of a treaty or an executive agreement. Next, the report examines historical precedents, with specific attention paid to past agreements entered with Afghanistan, Iraq, Germany, Japan, South Korea, and the Philippines. Finally, the report discusses the oversight role that Congress exercises with respect to entering and implementing international agreements involving the United States. Under U.S. law, a legally binding international agreement can be entered into pursuant to either a treaty or an executive agreement. The Constitution allocates primary responsibility for entering such agreements to the executive branch, but Congress also plays an essential role. First, in order for a treaty (but not an executive agreement) to become the "Law of the Land," the Senate must provide its advice and consent to treaty ratification by a two-thirds majority. Alternatively, Congress may authorize congressional-executive agreements. Many treaties and executive agreements are not "self-executing," meaning that in order for them to take effect domestically, implementing legislation is required to provide U.S. bodies with the authority necessary to enforce and comply with the agreements' provisions. While some executive agreements do not require congressional approval, adherence to them may nonetheless be dependent upon Congress appropriating necessary funds or authorizing the activities to be carried out (where compliance with the agreement would contravene some statutory provision). Under U.S. law, a treaty is an agreement negotiated and signed by the executive branch, which enters into force if it is approved by a two-thirds majority in the Senate and is subsequently ratified following presidential signature. The Senate may, in considering a treaty, condition its consent on certain reservations, declarations, and understandings concerning treaty application. If accepted, these reservations, declarations, and understandings may limit and/or define U.S. obligations under the treaty. The great majority of international agreements that the United States enters into are not treaties but executive agreements —agreements made by the executive branch that are not submitted to the Senate for its advice and consent. There are three types of prima facie legal executive agreements: (1) congressional-executive agreements , in which Congress has previously or retroactively authorized an international agreement entered into by the executive; (2) executive agreements made pursuant to an earlier treaty , in which the agreement is authorized by a ratified treaty; and (3) sole executive agreements , in which an agreement is made pursuant to the President's constitutional authority without further congressional authorization. The executive's authority to promulgate the agreement is different in each case. Although executive agreements are not specifically discussed in the Constitution, they nonetheless have been considered valid international compacts under Supreme Court jurisprudence and as a matter of historical practice. Starting in the World War II era, reliance on executive agreements has grown significantly, with the number of international agreements entered as executive agreements significantly dwarfing those entered as treaties. Although some have argued that certain agreements may only be entered as treaties, subject to the advice and consent of the Senate, this view has been rejected by many scholars. Adjudication of the propriety of executive agreements has been rare, in significant part because plaintiffs often cannot demonstrate that they have suffered a redressable injury giving them standing to challenge an agreement, or fail to make a justiciable claim. In 2001, the Eleventh Circuit Court of Appeals held that the issue of whether the North American Free Trade Agreement (NAFTA) was a treaty requiring approval by two-thirds of the Senate presented a nonjusticiable political question. It does not appear that an executive agreement has ever been held invalid by the courts on the grounds that it was in contravention of the Treaty Clause. Nonetheless, as a matter of historical practice, some types of agreements have been concluded as treaties, while others have been concluded as executive agreements. In the case of congressional-executive agreements, the "constitutionality ... seems well established." Unlike treaties, where only the Senate plays a role in authorization, both houses of Congress are involved in the authorizing process for congressional-executive agreements. Congressional authorization takes the form of a statute passed by a majority of both houses of Congress. Historically, congressional-executive agreements cover a wide variety of topics, ranging from postal conventions to bilateral trade to military assistance. NAFTA and the General Agreement on Tariffs and Trade (GATT) are notable examples of congressional-executive agreements. Congressional-executive agreements also may take different forms. Congress may enact legislation authorizing the executive to negotiate and enter agreements with other countries on a specific matter. A congressional-executive agreement may also take the form of a statute passed following the negotiation of an agreement which incorporates the terms or requirements of the agreement into U.S. law. Such authorization may be either explicit or implied by the terms of the congressional enactment. The legitimacy of agreements made pursuant to treaties is also well established, though controversy occasionally arises as to whether the agreement was actually imputed by the treaty in question. Since the earlier treaty is the "Law of the Land," the power to enter into an agreement required or contemplated by the treaty lies fairly clearly within the President's executive function. However, the Senate occasionally conditions its approval of a treaty upon a requirement that any subsequent agreement made pursuant to the treaty also be submitted to the Senate as a treaty. Sole executive agreements rely on neither treaty nor congressional authority for their legal basis. There are a number of provisions in the Constitution that may confer limited authority upon the President to promulgate such agreements on the basis of his power to conduct foreign affairs. The Litvinov Assignment, under which the Soviet Union purported to transfer claims against American assets previously nationalized by the Soviet Union, is an example of a sole executive agreement. If the President enters into an executive agreement pursuant to and dealing with an area where he has clear, exclusive constitutional authority—such as an agreement to recognize a particular state for diplomatic purposes—the agreement is legally permissible regardless of Congress's opinion on the matter. If, however, the President enters into an agreement and his constitutional authority over the subject matter is unclear, or if Congress also has constitutional authority over the subject matter, a reviewing court may consider Congress's position in determining whether the agreement is enforceable as U.S. law. If Congress has given implicit approval to the President to enter into the agreement, or is silent on the matter, a reviewing court might be more likely to view the agreement as valid. When Congress opposes the agreement and the President's constitutional authority to enter the agreement is ambiguous, it is unclear if or under what circumstances a court would recognize such an agreement as controlling. Because sole executive agreements do not rely on congressional authority to support their legality, they do not require congressional approval to become binding, at least as a matter of international law. Courts have recognized, however, that if a sole executive agreement conflicts with preexisting federal law, the earlier law will remain controlling in most circumstances. Even if a sole executive agreement does not conflict with prior federal law, Congress may still act to limit the agreement's effect through a subsequent legislative enactment, so long as it has constitutional authority to regulate the matter covered by the agreement. In the security context, Congress has clear constitutional authority to enact measures that would limit the effect of sole executive agreements involving military commitments. Article I, Section 8 of the Constitution accords Congress the power "To lay and collect Taxes ... to ... pay the Debts and provide for the common Defence," "To declare War, grant letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water," "To raise and support Armies," "To provide and maintain a Navy," "To make Rules for the Government and Regulation of the land and naval Forces," as well as "To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions" and "To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States." Further, Congress is empowered "To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers" as well as "all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof." In addition to the constitutional provisions that provide Congress with authority to legislate on matters concerning military affairs, Congress also has virtual plenary power over appropriations—authority not qualified with reference to Congress's enumerated powers under Article I, Section 8. The Appropriations Clause provides that "[n]o money can be paid out of the Treasury unless it has been appropriated by an act of Congress." Accordingly, adherence to pledges made in sole executive agreements may be dependent upon the availability of appropriations authorized by Congress. Congress may specify the terms and conditions under which appropriations may be used, so long as it does not impose unconstitutional conditions upon the use of appropriated funds. Not every pledge, assurance, or arrangement made between the United States and a foreign party constitutes a legally binding international agreement. In some cases, the United States makes "political commitments" or "gentlemen's agreements" with foreign states. Although these commitments are nonlegal, they may nonetheless carry significant moral and political weight. The executive has long claimed the authority to enter such agreements on behalf of the United States without congressional authorization, asserting that the entering of political commitments by the executive is not subject to the same constitutional constraints as the entering of legally binding international agreements. An example of a nonlegal agreement is the 1975 Helsinki Accords, a Cold War agreement signed by 35 nations, which contains provisions concerning territorial integrity, human rights, scientific and economic cooperation, peaceful settlement of disputes, and the implementation of confidence-building measures. An international agreement is generally presumed to be legally binding in the absence of an express provision indicating its nonlegal nature. State Department regulations recognize that this presumption may be overcome when there is "clear evidence, in the negotiating history of the agreement or otherwise, that the parties intended the arrangement to be governed by another legal system." Other factors that may be relevant in determining whether an agreement is nonlegal in nature include the form of the agreement and the specificity of its provisions. A recurring concern for the executive and legislative branches is whether an international commitment should be entered into as a treaty or an executive agreement. The Senate may prefer that significant international commitments be entered as treaties, and fear that reliance on executive agreements will lead to an erosion of the treaty power. The House may want an international compact to take the form of a congressional-executive agreement, so that it may play a greater role in its consideration. In cases where congressional action is necessary for an agreement to be implemented, the executive may prefer to submit an international compact as a congressional-executive agreement, so that approval of the agreement and the enactment of necessary implementing legislation may be accomplished in a single step. The executive's preference as to whether an international compact takes the form of a treaty or executive agreement may also be influenced by the agreement's prospects for approval by a two-thirds majority of the Senate or a simple majority of both houses. State Department regulations prescribing the process for coordination and approval of international agreements (commonly known as the "Circular 175 procedure") include criteria for determining whether an international agreement should take the form of a treaty or an executive agreement. Congressional preference is one of several factors considered when determining the form that an international agreement should take. According to State Department regulations, In determining a question as to the procedure which should be followed for any particular international agreement, due consideration is given to the following factors: (1) The extent to which the agreement involves commitments or risks affecting the nation as a whole; (2) Whether the agreement is intended to affect state laws; (3) Whether the agreement can be given effect without the enactment of subsequent legislation by the Congress; (4) Past U.S. practice as to similar agreements; (5) The preference of the Congress as to a particular type of agreement; (6) The degree of formality desired for an agreement; (7) The proposed duration of the agreement, the need for prompt conclusion of an agreement, and the desirability of concluding a routine or short-term agreement; and (8) The general international practice as to similar agreements. In determining whether any international agreement should be brought into force as a treaty or as an international agreement other than a treaty, the utmost care is to be exercised to avoid any invasion or compromise of the constitutional powers of the President, the Senate, and the Congress as a whole. In 1978, the Senate passed a resolution expressing its sense that the President seek the advice of the Senate Committee on Foreign Relations in determining whether an international agreement should be submitted as a treaty. The State Department subsequently modified the Circular 175 procedure to provide for consultation with appropriate congressional leaders and committees concerning significant international agreements. Consultations are to be held "as appropriate." Congressional consultation on the substance and form of international agreements is discussed in more detail later in this report. The following sections provide a general overview of the categories of security agreements entered into by the United States of a legally binding nature. Such categories of security agreements predominantly take the form of a treaty, while others typically take the form of an executive agreement. Although some categories of security agreements have historically been entered as treaties and others as executive agreements, this does not necessarily mean that future arrangements must follow the same pattern. Arguably, an arrangement that has typically been entered into as a treaty might instead take the form of a congressional-executive agreement, and vice versa. Similarly, while some security arrangements have historically been entered as sole executive agreements, Congress might effectively limit such agreements in the future via statutory enactment —for example, limiting the availability of appropriations to carry out commitments made in a sole executive agreement. The State Department currently lists the United States as being party to seven collective defense agreements, under which members are obligated to assist in the defense of a party to the agreement in the event of an attack upon it: the Inter-American Treaty of Reciprocal Assistance; the North Atlantic Treaty; the Australia, New Zealand, and United States Security Treaty; the Southeast Asian Treaty; and bilateral security treaties with Japan, the Philippines, and South Korea. All seven agreements take the form of treaties that were ratified by the United States between 1947 and 1960. Each agreement, with the exception of the Inter-American Treaty of Reciprocal Assistance (the first to be ratified by the United States), includes a provision specifying that the agreement's requirements are to be carried out in accordance with the parties' respective constitutional processes. These provisions were included to assuage congressional concerns that the agreements could be interpreted as sanctioning the President to engage in military hostilities in defense of treaty parties without further congressional authorization (i.e., a declaration of war or joint resolution authorizing the use of military force). In addition to these defense treaties, the United States has also adopted security commitments with respect to several former territories and possessions, including pursuant to congressional-executive agreement. Congress has approved compacts changing the status of certain territories to Freely Associated States (FAS), while also imposing upon the United States "the obligation to defend the [FAS] ... from attack or threats thereof as the United States and its citizens are defended." Arguably, these security commitments are distinct from other international defense arrangements, as they concern commitments to newly sovereign entities over whom the United States formerly exercised extensive and long-standing control. The United States also has established security arrangements with other countries in which the United States pledges to take some action in the event that the other country's security is threatened. A 1992 report submitted by President George H. W. Bush to Congress listing U.S. security commitments and arrangements, claimed that unlike "security commitments," which oblige the United States to act in the common defense of a country in case of an armed attack, "security arrangements" generally "oblige the United States to consult with a country in the event of a threat to its security. They may appear in legally binding agreements, such as treaties or executive agreements, or in political documents, such as policy declarations by the President, Secretary of State or Secretary of Defense." Most legally binding "security arrangements" listed in the President's report constitute sole executive agreements, including agreements with Israel, Egypt, Pakistan, and Liberia. Only one arrangement, committing the United States to the establishment of the Multinational Force and Observers in the Sinai, could clearly be described as a congressional-executive agreement. Although some scholars and government officials have characterized the terms "security commitment" and "security arrangement" as having distinct and particular meanings, this practice is by no means uniform. Indeed, the question of what constitutes a "security commitment" has long been a subject of dialogue and dispute by the executive and legislative branches. The United States is also a party to a significant number of defense agreements that do not obligate the United States to take action when another country is attacked, but nonetheless involve military affairs. Categories of such agreements include military basing agreements, permitting the United States to build or use permanent facilities, station forces, and conduct certain military activities within a host country; access and pre-positioning agreements, permitting the stationing of equipment in a host country and the improvement and use of the country's military or civilian facilities, without establishing a permanent military presence; Status of Forces Agreements (SOFAs), defining the legal status of U.S. forces within a host country and typically according them with certain privileges and immunities from the host country's jurisdiction; burden-sharing agreements, permitting a host country to assume some of the financial obligations incurred by the stationing of U.S. forces within its territory; and agreements providing for arms transfers, military training, and joint military exercises. Historically, almost all such agreements have taken a form other than treaty. Sometimes these arrangements have taken the form of sole executive agreements; others could be deemed executive agreements pursuant to treaty (e.g., military stationing agreements concluded with other NATO parties); still others have been explicitly or implicitly authorized by statute and may be considered congressional-executive agreements. As a matter of historical practice, the types of agreements described above have not directly authorized the United States to engage in significant military operations in defense of the host country, though such agreements may supplement separate agreements or U.N. mandates that do. For example, although U.S. basing agreements with Germany, Japan, and South Korea do not expressly authorize the United States to use military force to defend those countries in case of attack, they assist the United States in fulfilling security commitments owed to those countries under separate defense treaties. Arguably, an exception to this practice occurred in 2008, when the United States and Iraq concluded a security agreement, sometimes characterized as a SOFA, which authorized U.S. forces to engage in military operations within Iraq. The agreement is discussed in more detail infra. Besides the categories of agreements described above, the United States has, on occasion, entered into long-term agreements that grant the United States the legal right to intervene militarily within the territory of another party to defend it against internal or external threats. Unlike collective defense agreements, these security agreements provide the United States with the right, but not the duty, to militarily intervene when the security of the other country is threatened. Such agreements may also be distinguished from the authority to intervene recognized under the United Nations Charter. Whereas military intervention agreements discussed below provide the United States with the positive legal right to intervene in a country, the U.N. Charter merely provides that its provisions do not " impair the inherent right of individual or collective self-defense 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." In the early part of the 20 th century, the United States entered into legal agreements with several Latin American countries which granted the United States the right to use military force either to defend those countries from external threat or to preserve domestic tranquility. All of these agreements were concluded as treaties. In 1903, following the Spanish-American War, the United States concluded a treaty with the newly independent Republic of Cuba under which the United States was expressly given "the right to intervene for the preservation of Cuban independence, the maintenance of a government adequate for the protection of life, property, and individual liberty." Similarly, in the aftermath of the U.S. invasion and occupation of Haiti in 1915, a treaty between the two countries was concluded that provided the United States with the right to intervene in Haiti when the United States deemed it necessary. In 1904, the United States ratified a treaty with Panama that provided the United States "the right, at all times and in its discretion" to employ its armed forces for the safety and protection of the Panama Canal and the shipping occurring therein. In 1907, the United States concluded a treaty with the Dominican Republic establishing plans for the financial rehabilitation of that country, and authorizing the United States to use military force necessary to effectuate the carrying out of those plans. There have been numerous instances where a country has permitted or invited the United States to use military force within its territory, but authority to intervene has not been given via treaty. When the Senate initially opted not to approve a treaty authorizing U.S. military and financial involvement in the Dominican Republic, President Theodore Roosevelt entered a temporary " modus vivendi " executive agreement adopting similar policies as the unapproved treaty. This agreement, which elicited significant opposition from many Members of Congress as an unconstitutional usurpation of the Senate's treaty power, was terminated following Senate approval of a modified version of the treaty in 1907. Another example of a significant security agreement taking a form other than treaty occurred in 1941 when, prior to the United States entering World War II, President Franklin D. Roosevelt concluded sole executive agreements concerning the stationing of U.S. troops in Iceland and Greenland to protect those territories from attack. Although publicly available agreements expressly granting the United States the legal right to intervene militarily in another country generally take the form of a treaty, this report does not consider whether any comparable authority is provided pursuant to classified agreements. Some security arrangements are not legally binding; though they may nonetheless carry significant political or moral weight. While executive practice of extending political defense commitments to foreign countries can be traced back to the Monroe Doctrine, in which the United States proclaimed its opposition to further colonization of the Americas by European powers, U.S. pledges to assist foreign states in security matters have become more commonplace in the post-World War II era. Such commitments may take several forms, including a unilateral pledge or policy statement by the executive or a joint declaration between U.S. and foreign officials. For example, bilateral arrangements authorizing U.S. military intervention, when not concluded as treaties, generally have not taken the form of a legally binding, permanent agreement. Instead, in non-treaty arrangements authorizing U.S. intervention, the host country often retains full discretion as to the degree and duration of U.S. presence within its territory. In 1962, for instance, U.S. Secretary of State Dean Rusk and Thai Foreign Minister Thanat Khoman issued a joint declaration in which Secretary Rusk expressed "the firm intention of the United States to aid Thailand, its ally and historic friend, in resisting Communist aggression and subversion." The United States thereafter deployed armed forces to Thailand to assist the government in combating communist forces. The executive's authority to enter such arrangements, and, more broadly, to engage in military operations in other countries without congressional approval, has been the subject of long-standing dispute between Congress and the executive. In 1969, the Senate passed the National Commitments Resolution, stating the sense of the Senate that "a national commitment by the United States results only from affirmative action taken by the executive and legislative branches of the United States government by means of a treaty [or legislative enactment] ... specifically providing for such commitment." The Resolution defined a "national commitment" as including "the use of the armed forces of the United States on foreign territory, or a promise to assist a foreign country ... by the use of armed forces ... either immediately or upon the happening of certain events." According to the committee report accompanying the Resolution, the motivation for the Resolution was concern over the growing development of "constitutional imbalance" in matters of foreign relations, with Presidents frequently making significant foreign commitments on behalf of the United States without congressional action. Among other things, the report criticized a practice it described as "commitment by accretion," by which a sense of binding commitment arises out of a series of executive declarations, no one of which in itself would be thought of as constituting a binding obligation. Simply repeating something often enough with regard to our relations with some particular country, we come to support that our honor is involved in an engagement no less solemn than a duly ratified treaty. The National Commitments Resolution took the form of a sense of the Senate resolution, and accordingly had no legal effect. Although Congress has occasionally considered legislation that would bar the adoption of significant military commitments without congressional action, no such measure has been enacted. The executive branch regularly makes unilateral security pledges or enters non-binding arrangements with foreign countries concerning security matters. The primary means Congress uses to exercise oversight authority over such non-binding arrangements is its appropriations power, by which it may limit or condition actions the United States may take in furtherance of the arrangement. The following sections discuss in greater detail the form, nature, and content of bilateral security agreements made by the United States with Afghanistan, Germany, Japan, South Korea, the Philippines, and Iraq. Following the terrorist attacks of September 11, 2001, the United States initiated Operation Enduring Freedom to combat Al Qaeda and prevent the Taliban regime in Afghanistan from providing them with safe harbor. Shortly thereafter, the Taliban regime was ousted by U.S. and allied forces, and the United States thereafter concluded a number of security agreements with the new Afghan government. In 2002, the United States and Afghanistan, by an exchange of notes, entered into an agreement regarding economic grants under the Foreign Assistance Act of 1961, as amended. Additionally, the agreement allows for the furnishing of defense articles, defense services, and related training, pursuant to the United States International Military and Education Training Program (IMET), from the U.S. government to the Afghanistan Interim Administration (AIA). An agreement exists regarding the status of military and civilian personnel of the U.S. Department of Defense present in Afghanistan in connection with cooperative efforts in response to terrorism, humanitarian and civic assistance, military training and exercises, and other activities. Such personnel are to be accorded "a status equivalent to that accorded to the administrative and technical staff" of the U.S. Embassy under the Vienna Convention on Diplomatic Relations of 1961. Accordingly, U.S. personnel are immune from criminal prosecution by Afghan authorities, and are immune from civil and administrative jurisdiction except with respect to acts performed outside the course of their duties. In the agreement, the Islamic Transitional Government of Afghanistan (ITGA) explicitly authorizes the U.S. government to exercise criminal jurisdiction over U.S. personnel, and the government of Afghanistan is not permitted to surrender U.S. personnel to the custody of another state, international tribunal, or any other entity without consent of the U.S. government. Although the agreement was signed by the ITGA, the subsequently elected government of the Islamic Republic of Afghanistan assumed responsibility for ITGA's legal obligations, and the agreement remains in force. The agreement does not appear to provide immunity for contract personnel. The agreement with Afghanistan does not expressly authorize the United States to carry out military operations within Afghanistan, but it recognizes that such operations are "ongoing." Congress authorized the use of military force there (and elsewhere) by joint resolution in 2001, for targeting "those nations, organizations, or persons [who] planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001." The U.N. Security Council implicitly recognized that the use of force was appropriate in response to the September 11, 2001, terrorist attacks, and subsequently authorized the deployment of an International Security Assistance Force (ISAF) to Afghanistan. Subsequent U.N. Security Council resolutions provide a continuing mandate for ISAF, calling upon it to "work in close consultation with" Operation Enduring Freedom (OEF—the U.S.-led coalition conducting military operations in Afghanistan) in carrying out the mandate. While there is no explicit U.N. mandate authorizing the OEF, Security Council resolutions appear to provide ample recognition of the legitimacy of its operations, most recently by calling upon the Afghan government, "with the assistance of the international community, including the International Security Assistance Force and Operation Enduring Freedom coalition, in accordance with their respective designated responsibilities as they evolve, to continue to address the threat to the security and stability of Afghanistan posed by the Taliban, Al-Qaida, other extremist groups and criminal activities." In 2004, the United States and Afghanistan entered an acquisition and cross-servicing agreement, with annexes. An acquisition and cross-servicing agreement (ACSA) is an agreement providing logistic support, supplies, and services to foreign militaries on a cash-reimbursement, replacement-in-kind, or exchange of equal value basis. After consultation with the Secretary of State, the Secretary of Defense is authorized to enter into an ACSA with a government of a NATO country, a subsidiary body of NATO, or the United Nations Organization or any regional international organization of which the United States is a member. Additionally, the Secretary of Defense may enter into an ACSA with a country not included in the above categories, if after consultation with the Secretary of State, a determination is made that it is in the best interests of the national security of the United States. If the country is not a member of NATO, the Secretary of Defense must submit notice, at least 30 days prior to designation, to the Committee on Armed Services and the Committee on Foreign Relations of the Senate and the Committee on Armed Services and the Committee on Foreign Affairs of the House of Representatives. Since at least 2003, the United States has entered into several accommodation assignment agreements with Afghanistan regarding the use of land and facilities, including for the internment of captured enemy forces. Beginning in late 2001, the United States and its coalition partners utilized the Bagram Airfield for military purposes in the conflict against the Taliban and Al Qaeda. The Bagram Airfield also served as the primary facility used to detain suspected enemy belligerents captured in the conflict until 2010, when a new detention facility was completed in Parwan, Afghanistan. The detention center had reportedly been slated to be turned over to Afghan authority by January 2012, but rapid growth of the prisoner population caused the transfer to be delayed. In March 2012, the United States and the Afghan government concluded an agreement effectuating the transfer of the Parwan detention facility to Afghan control. The memorandum also contemplates U.S. forces maintaining continued control of Parwan detainees during a six-month handover period, at which point all Afghan nationals in U.S. custody shall be transferred to the control of Afghanistan. A separate memorandum of understanding was also concluded in April 2012 concerning special operations (night raids) on Afghan soil. Under the agreement, the parties affirm that such operations will be "conducted by Afghan Forces with support of U.S. Forces in accordance with Afghan laws." Afghan forces are designated with responsibility for the "temporary holding" of persons captured in the course of such operations. Afghan citizens detained by U.S. forces outside of special operations are to be transferred to Afghan authorities or released. On May 2, 2012, U.S. President Barack Obama and Afghan President Hamid Karzai signed the Enduring Strategic Partnership Agreement Between the United States of America and the Islamic Republic of Afghanistan (Strategic Partnership Agreement). The Strategic Partnership Agreement is a legally binding agreement under which the parties pledge to work cooperatively in a number of fields, including on promoting shared democratic values, advancing long-term security, reinforcing regional security, social and economic development, and strengthening Afghan institutions and governance. The agreement remains in force until the end of 2024, unless terminated at an earlier date by either party. In the area of security, the Strategic Partnership Agreement provides that the United States and Afghanistan shall "initiate negotiations on a Bilateral Security Agreement … with the goal of concluding within one year" an agreement to replace the current agreement relating to the status of military and civilian personnel currently in Afghanistan. The Strategic Partnership Agreement also states that Afghanistan "shall provide U.S. forces continued access to and use of Afghan facilities through 2014, and beyond as may be agreed in the Bilateral Security Agreement" and that the United States "reaffirms that it does not see permanent military facilities in Afghanistan, or a presence that is a threat to Afghanistan's neighbors." Additionally, the Agreement determines that the "nature and scope of the future presence and operations of U.S. forces in Afghanistan" shall be addressed in the Bilateral Security Agreement to be negotiated. In 2007, following the removal of the Saddam Hussein regime from power, the United States and the post-Saddam government of Iraq signed a Declaration of Principles for a Long-Term Relationship of Cooperation and Friendship Between the Republic of Iraq and the United States of America. The Declaration announced the intention of the parties to negotiate a long-term security agreement that would have committed the United States to provide security assurances to Iraq and maintain a long-term military presence in that country. This announcement became a source of congressional interest, in part because of statements by Administration officials that such an agreement would not be submitted to the legislative branch for approval. Congressional concern dissipated when U.S.-Iraq negotiations culminated in the signing of two separate agreements on November 17, 2008, neither of which provided for a long-term security commitment by the United States: (1) the Strategic Framework Agreement for a Relationship of Friendship and Cooperation between the United States and the Republic of Iraq (Strategic Framework Agreement), and (2) the Agreement Between the United States of America and Republic of Iraq On the Withdrawal of United States Forces from Iraq and the Organization of Their Activities during Their Temporary Presence in Iraq (Security Agreement). Indeed, rather than establishing a long-term security commitment by the United States, the Security Agreement concluded by the parties instead called for the withdrawal of U.S. forces from Iraq within three years. The concluded agreements cover different issues and were intended by the parties to have different legal significance. The Strategic Framework Agreement, which remains in force, is a legally binding agreement under which the parties pledge to work cooperatively in a number of fields, including on diplomatic, security, economic, cultural, and law enforcement matters. In the area of security, the Agreement provides that the United States and Iraq shall "continue to foster close cooperation concerning defense and security arrangements," which are to be undertaken pursuant to the terms of the Security Agreement. The Strategic Framework Agreement also states that "the temporary presence of U.S. forces in Iraq [was] at the request and invitation of the sovereign government of Iraq," and that the United States could not "use Iraqi land, sea, or air as a launching or transit point for attacks against other countries[,] nor seek or request permanent bases or a permanent military presence in Iraq." The Security Agreement remained in effect for three years, and contained provisions addressing a variety of military matters, including a deadline for the withdrawal of all U.S. forces from Iraq by December 31, 2011. The Agreement also contained numerous provisions resembling those regularly contained in SOFAs concluded by the United States. Specifically, the Agreement contained provisions concerning the parties' right to assert civil and criminal jurisdiction over U.S. forces, as well as provisions which establish rules and procedures applicable to U.S. forces relating to the carrying of weapons, the wearing of uniforms, entry and exit into Iraq, taxes, customs, and claims. The Security Agreement established other rules and requirements traditionally not found in SOFAs concluded by the United States, including provisions addressing combat operations by U.S. forces. The Security and Strategic Framework Agreements entered into force on January 1, 2009, following an exchange of diplomatic notes between the United States and Iraq. Although the agreements required approval on multiple levels by the Iraqi government, the Bush Administration did not submit the agreements to the Senate for its advice and consent as a treaty or request statutory authorization for the agreements by Congress. There has been some controversy regarding whether these agreements were properly entered on behalf of the United States by the executive without the participation of Congress. As previously discussed, security agreements authorizing the United States to take military action in defense of another country have typically been ratified as treaties. It could be argued that the Security Agreement, which contemplated the United States engaging in military operations in Iraq and potentially defending the Iraqi government from external or internal security threats, properly required congressional authorization for it to be legally binding under U.S. law. On the other hand, because Congress had authorized the President to engage in military operations in Iraq, both pursuant to the 2002 Authorization to Use Military Force Against Iraq and subsequent appropriations measures in effect for the duration of the Security Agreement, it arguably had impliedly authorized the President to enter short-term agreements with Iraq in order to facilitate these operations. In 1951, the United States and Germany entered into an agreement related to the assurances required under the Mutual Security Act of 1951. This act is "an act to maintain the security and promote the foreign policy and provide for the general welfare of the United States by furnishing [material] assistance to friendly nations in the interest of international peace and security." Specifically, the agreement references the "statement of purpose contained in Section 2 of the Mutual Security Act of 1951, and reaffirms that ... [Germany] is firmly committed to join in promoting international understanding and good will and in maintaining world peace and to take such action as may be mutually agreed upon to eliminate causes of international tension." The statement of purpose in Section 2 of the act is to maintain the security and to promote the foreign policy of the United States by authorizing military, economic, and technical assistance to friendly countries to strengthen the mutual security and individual and collective defense of the free world, to develop their resources in the interest of their security and independence and the national interest of the United States and to facilitate the effective participation of those countries in the United Nations system for collective security. In 1955, the United States and Germany, both parties to the North Atlantic Treaty, entered into an agreement on mutual defense assistance, obligating the United States to provide for "such equipment, materials, services, or other assistance as may be agreed" to Germany. The agreement reflected the desire to foster international peace and security through measures which further the ability of nations dedicated to the purposes and principles of the Charter of the United Nations to participate effectively in arrangements for collective self-defense in support of those purposes and principles, and conscious of the determination to give their full cooperation to United Nations collective security arrangements and measures and efforts to obtain agreement on universal regulation of armaments under adequate guarantees against violation or evasion; [and] considering the support which the Government of the United States of America has brought to these principles by enacting the Mutual Security Act of 1954, which authorizes the furnishing of military assistance to certain nations[.] Germany guarantees that it "will not use such assistance for any act inconsistent with the strictly defensive character of the North Atlantic Treaty, or, without the prior consent of the [United States], for any other purpose." The mutual defense assistance agreement is the basis for numerous subsequent agreements between the United States and Germany. In 1959, the countries entered into an agreement implementing the NATO SOFA of 1953. The agreement provided additional supplemental agreements, beyond those contained in the NATO SOFA, specific to the relationship between the United States and Germany. In 1954, the United States and Japan entered into a mutual defense assistance agreement with annexes. The agreement was amended on April 18 and June 23, 2006. The agreement references the Treaty of Peace signed between the countries in San Francisco, CA, in 1951. The Mutual Defense Assistance Act of 1949 and the Mutual Security Act of 1951 are also referenced in the agreement as they provide for the furnishing of defense assistance by the United States. The agreement provides that the United States and Japan "will make available to the other and to such other governments as the two Governments signatory to the present Agreement may in each case agree upon, such equipment, materials, services, or other assistance as the Government furnishing such assistance may authorize" subject to the conditions and provisions of the Mutual Defense Assistance Act of 1949, the Mutual Security Act of 1951, and appropriation acts which may affect the furnishing of assistance. In 1960, the countries entered into the Treaty of Mutual Cooperation and Security Between the United States of America and Japan. The treaty was amended on December 26, 1990. Article III of the Treaty provides that the countries, "individually and in cooperation with each other, by means of continuous and effective self-help and mutual aid will maintain and develop, subject to their constitutional provisions, their capacities to resist armed attack." Article V provides that the countries recognize "that an armed attack against either party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes." Under Article VI of the Treaty, the United States is granted "the use by its land, air and naval forces of facilities and areas in Japan" in order to contribute "to the security of Japan and maintenance of international peace and security in the Far East[.]" Article VI provides further that the use of facilities and the status of U.S. Armed Forces will be governed under a separate agreement. Under Article VI of the Treaty of Mutual Cooperation and Security Between the United States of America and Japan, the countries entered into a SOFA in 1960. The SOFA addresses the use of facilities by the U.S. Armed Forces, as well as the status of U.S. forces in Japan. The agreement has been modified at least four times since the original agreement. In 1948, the United States and South Korea entered into an agreement related to the transfer of authority to the government of South Korea and the withdrawal of U.S. occupation forces. Shortly after the initial agreement, the United States and Korea entered into a second agreement concerning interim military and security matters during a transitional period. This executive agreement was between the President of the Republic of Korea and the Commanding General, U.S. Army Forces in Korea. The agreement calls for the "Commanding General, United States Army Forces in Korea, pursuant to directives from his government and within his capabilities" to "organize, train and equip the Security forces of the Republic of Korea" with the obligation to train and equip ceasing "upon the completion of withdrawal from Korea of forces under his command." The agreement also requires the Commanding General, U.S. Army Forces in Korea, to retain authority to exercise over-all operational control of security forces of Korea until withdrawal, as contemplated by Resolution No. II passed by the United Nations General Assembly on November 14, 1948. Article III of the Agreement contains provisions related to the status of U.S. forces during the transition period. The Commanding General, U.S. Army Forces in Korea, "shall retain exclusive jurisdiction over the personnel of his command, both military and civilian, including their dependents, whose conduct as individuals shall be in keeping with pertinent laws of the Republic of Korea." The agreement provides that any individuals under the jurisdiction of the Commanding General who are apprehended by law enforcement agencies of South Korea shall be immediately turned over to the custody and control of the Commanding General. Individuals not under jurisdiction of the Commanding General, but apprehended in acts detrimental to the security of personnel or property under his jurisdiction, shall be turned over to the custody and control of the government of South Korea. In 1950, the countries entered into a mutual defense assistance agreement. The mutual defense agreement references the Military Defense Act of 1949, which provides for the furnishing of military assistance by the United States to South Korea. The mutual defense assistance agreement provides that each country "will make or continue to make available to the other, and to other Governments, such equipment, materials, services, or other military assistance" in support of economic recovery that is essential to international peace and security. The United States and South Korea entered into a mutual security agreement in 1952. The mutual security agreement references the Mutual Security Act of 1951, which provides for military, economic, and technical assistance in order to strengthen the mutual security of the free world. The mutual security agreement provides that South Korea agrees to promote international understanding and good will and to take action, that is mutually agreed upon, to eliminate causes of international tensions. In 1954, the countries entered into a mutual defense treaty. As part of the treaty the countries agree to attempt to settle international disputes peacefully, consult whenever the political independence or security of either party is threatened by external armed attack, and that either party would act to meet the common danger in accordance with their respective constitutional processes. Article IV of the treaty grants the United States "the right to dispose ... land, air and sea forces in and about the territory" of South Korea. Pursuant to the treaty, specifically Article IV, in 1966, the countries entered into a SOFA with agreed minutes and an exchange of notes. It was subsequently amended January 18, 2001. In 1947, the United States and the Republic of the Philippines entered into an agreement on military assistance. The agreement was for a term of five years, starting July 4, 1946, and provided that the United States would furnish military assistance to the Philippines for the training and development of armed forces. The agreement further created an advisory group to provide advice and assistance to the Philippines as had been authorized by the U.S. Congress. The agreement was extended, and amended, for an additional five years in 1953. A mutual defense treaty was entered into by the United States and the Philippines in 1951. The treaty publicly declares "their sense of unity and their common determination to defend themselves against external armed attack, so that no potential aggressor could be under the illusion that either of them stands alone in the Pacific Area[.]" The Treaty does not address or provide for a SOFA. The countries entered into a mutual security agreement in 1952, as related to the assurances required by the Mutual Security Act of 1951. The assurances required under the Mutual Security Act of 1951 included a commitment to accounting procedures for monies, equipment, and materials furnished by the United States to the Philippines. In 1993, the countries entered into a SOFA. The agreement was subsequently extended on September 19, 1994; April 28, 1995; and November 29, December 1, and December 8, 1995. The countries entered into an agreement regarding the treatment of U.S. Armed Forces visiting the Philippines in 1998. The distinction between this agreement and the SOFA originally entered in 1993 is that this agreement applies to U.S. Armed Forces visiting, not stationed in the Philippines. The countries also entered into an agreement regarding the treatment of Republic of Philippines personnel visiting the United States. Congress has several tools at its disposal to exercise oversight regarding the negotiation, conclusion, and implementation of international security agreements entered by the United States. One manner in which Congress exercises oversight of international agreements is via notification requirements. Obviously, in cases where an agreement requires action from one or both houses of Congress to take effect, notification is a requisite. Before a treaty may become binding U.S. law, the President must submit it to the Senate for its advice and consent. Likewise, the executive must inform Congress when it seeks to conclude an executive agreement that requires congressional authorization and/or implementing legislation to become U.S. law, so that appropriate legislation may be considered. While constitutional considerations necessitate congressional notification in many circumstances, it has historically been more difficult for Congress to keep informed regarding international agreements or pledges made by the executive that did not require additional legislative action to take effect—that is, sole executive agreements and executive agreements made pursuant to a treaty. Additionally, even in cases where congressional action is necessary for an agreement to take effect, the executive has sometimes opted not to inform Congress about an agreement until it has already been drafted and signed by the parties. In response to these concerns, Congress has enacted legislation and the State Department has implemented regulations to ensure that Congress is informed of the conclusion (and in some cases, the negotiation) of legally binding international agreements. The Case-Zablocki Act was enacted in 1972 in response to congressional concern that a number of secret agreements had been entered by the executive imposing significant commitments upon the United States. It is the primary statutory mechanism used to ensure that Congress is informed of international agreements entered by the United States. Pursuant to the act, all executive agreements are required to be transmitted to Congress within 60 days of their entry into force . If the President deems the immediate public disclosure of an agreement to be prejudicial to national security, the agreement may instead be transmitted to the House Committee on Foreign Affairs and the Senate Committee on Foreign Relations. The President is also required to annually submit a report regarding international agreements that were transmitted after the expiration of the 60-day period, describing the reasons for the delay. Although the Case-Zablocki Act originally only imposed reporting requirements with respect to executive agreements that had entered into force , the act was amended in 2004 to ensure that Congress was regularly notified regarding the status of signed agreements which have yet to enter force, as well. The Secretary of State is required to annually report to Congress a list of executive agreements which (1) have not been or are not proposed to be published in the United States Treaties and Other International Agreements compilation and (2) the United States has "signed, proclaimed, or with reference to which any other final formality has been executed, or that has been extended or otherwise modified, during the preceding calendar year." The Case-Zablocki Act does not define what sort of arrangements constitute "international agreements" falling under its purview, though the legislative history suggests that Congress "did not want to be inundated with trivia ... [but wished] to have transmitted all agreements of any significance." In its implementing regulations, the State Department has established criteria for determining whether an arrangement constitutes a legally binding "international agreement" requiring congressional notification. These include the identity of the parties, and whether they intended to create a legally binding agreement; the significance of the agreed-upon arrangement, with "[m]inor or trivial undertakings, even if couched in legal language and form," not considered to fall under the purview of the Case-Zablocki Act; the specificity of the arrangement; the necessity that the arrangement constitute an agreement by two or more parties; and the form of the arrangement, to the extent that it helps to determine whether the parties intended to enter a legally binding agreement. The State Department's Circular 175 procedure also contemplates that Congress will be notified of developments in the negotiation of "significant" international agreements. Specifically, department regulations provide that With the advice and assistance of the Assistant Secretary for Legislative Affairs, the appropriate congressional leaders and committees are advised of the intention to negotiate significant new international agreements, consulted concerning such agreements, and kept informed of developments affecting them, including especially whether any legislation is considered necessary or desirable for the implementation of the new treaty or agreement. In addition to the Case-Zablocki Act, Congress has on occasion enacted legislation designed to ensure that it remains informed about existing U.S. security arrangements. Section 1457 of the National Defense Authorization Act for FY1991 ( P.L. 101-510 ) requires the President to submit an annual report to specified congressional committees regarding "United States security arrangements with, and commitments to, other nations." The report, produced in classified and unclassified form, is to be submitted by February 1 each year to the Committee on Armed Services and the Committee on Foreign Relations of the Senate, and the Committee on Armed Services and the Committee on Foreign Affairs of the House of Representatives. In addition to legally binding security arrangements or commitments (e.g., mutual defense treaties and pre-positioning agreements), the report must describe non-binding commitments, such as expressed U.S. policy formulated by the executive branch. It must also include, among other things, "[a]n assessment of the need to continue, modify, or discontinue each of those arrangements and commitments in view of the changing international security situation." Although reports were submitted to the appropriate committees pursuant to this statutory requirement in 1991 and 1992, it does not appear that any subsequent reports have been issued. The Federal Reports Elimination and Sunset Act of 1995 (Sunset Act, P.L. 104-66 ) terminated many reporting requirements existing prior to its enactment. The act eliminated or modified several specific reporting requirements, and also generally terminated any reporting requirement that had been listed in House Doc. 103-7, unless such a requirement was specifically exempted. However, the reporting requirement contained in Section 1457 of the FY1991 National Defense Authorization Act was neither specifically terminated by the Sunset Act nor listed in House Doc. 103-7. Moreover, Congress has twice amended Section 1457 after the enactment of the Sunset Act, in 1996 and 1999. Accordingly, it does not appear that this requirement has been terminated. State Department regulations requiring consultation with Congress regarding significant international agreements may provide a means for congressional oversight as to the negotiation of security arrangements. One of the stated objectives of the Circular 175 procedure is to ensure that "timely and appropriate consultation is had with congressional leaders and committees on treaties and other international agreements." To that end, State Department regulations contemplate congressional consultation regarding the conduct of negotiations to secure significant international agreements. Circular 175 procedures may also provide for congressional consultation concerning the form that a legally binding international agreement should take. When there is question as to whether an international agreement should be entered as a treaty or an executive agreement, the matter is first brought to the attention of the State Department's Legal Adviser for Treaty Affairs. If the Assistant Legal Adviser for Treaty Affairs believes the issue to be "a serious one that may warrant formal congressional consultation," consultations are to be held with appropriate congressional leaders and committees. State Department regulations specify that "every practicable effort will be made to identify such questions at the earliest possible date so that consultations may be completed in sufficient time to avoid last minute consideration." Perhaps the clearest example of congressional oversight in the agreement-making context is through its consideration of treaties and congressional-executive agreements. For a treaty to become binding U.S. law, it must first be approved by a two-thirds majority in the Senate. The Senate may, in considering a treaty, condition its consent on certain reservations, declarations, and understandings concerning treaty application. For example, it may make its acceptance contingent upon the treaty being interpreted as requiring implementing legislation to take effect, or condition approval on an amended version of the treaty being accepted by other treaty parties. If accepted, these reservations, declarations, and understandings may limit and/or define U.S. obligations under the treaty. As previously discussed, a congressional-executive agreement requires congressional authorization via a statute passed by both houses of Congress. Here, too, approval may be conditional. Congress may opt to authorize only certain types of agreements, or may choose to approve only some provisions of a particular agreement. In authorizing an agreement, Congress may impose additional statutory requirements upon the executive (e.g., reporting requirements). Congress may also include a statutory deadline for its authorization of an agreement to begin or expire. Because sole executive agreements do not require congressional authorization to take effect, they need not be approved by Congress to become binding, at least as a matter of international law. Nonetheless, as discussed earlier, Congress may limit the effect of a sole executive agreement through a subsequent legislative enactment or through the conditioning of appropriations necessary for the agreement's commitment to be implemented. Similar measures could also be taken to limit or condition U.S. adherence to a non-binding security arrangement. Congress may exercise oversight regarding international agreements via legislation implementing the agreements' requirements. Certain international treaties or executive agreements are considered "self-executing," meaning that they have the force of law without the need for subsequent congressional action. However, many other treaties and agreements are not considered self-executing, and are understood to require implementing legislation to take effect, as enforcing U.S. agencies otherwise lack authority to conduct the actions required to ensure compliance with the international agreement. Treaties and executive agreements have, in part or in whole, been found to be non-self-executing for at least three reasons: (1) implementing legislation is constitutionally required; (2) the Senate, in giving consent to a treaty, or Congress, by resolution, requires implementing legislation for the agreement to be given force; or (3) the agreement manifests an intention that it shall not become effective as domestic law without the enactment of implementing legislation. Until implementing legislation is enacted, existing domestic law concerning a matter covered by an international agreement that is not self-executing remains unchanged and is controlling law in the United States. However, when a treaty is ratified or an executive agreement is entered, the United States acquires obligations under international law and may be in default of those obligations unless implementing legislation is enacted. Perhaps for this reason, Congress typically appropriates funds necessary to carry out U.S. obligations under international agreements. After an international agreement has taken effect, Congress may still exercise oversight over executive implementation. It may require the executive to submit information to Congress or congressional committees regarding U.S. implementation of its international commitments. It may enact new legislation that modifies or repudiates U.S. adherence or implementation of an international agreement. It may limit or prohibit appropriations necessary for the executive to implement the provisions of the agreement, or condition such appropriations upon the executive implementing the agreement in a particular manner.
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The United States is a party to numerous security agreements with other nations. The topics covered, along with the significance of the obligations imposed upon agreement parties, may vary. Some international security agreements entered by the United States, such as those obliging parties to come to the defense of another in the event of an attack, involve substantial commitments and have traditionally been entered as treaties, ratified with the advice and consent of the Senate. Other agreements dealing with more technical matters, such as military basing rights or the application of a host country's laws to U.S. forces stationed within, are entered more routinely and usually take a form other than treaty (i.e., as an executive agreement or a nonlegal political commitment). Occasionally, the substance and form of a proposed security agreement may become a source of dispute between Congress and the executive branch. In late 2007, the Bush Administration announced its intention to negotiate a long-term security agreement with Iraq that would have committed the United States to provide security assurances to Iraq and maintain a long-term military presence in that country. This announcement became a source of congressional interest, in part because of statements by Administration officials that such an agreement would not be submitted to the legislative branch for approval. Congressional concern dissipated when U.S.-Iraq negotiations culminated in an agreement that did not contain a long-term security commitment by the United States, but instead called for the withdrawal of U.S. forces from Iraq by December 31, 2011. On May 2, 2012, President Barack Obama and President Hamid Karzai signed the Enduring Strategic Partnership Agreement Between the United States of America and the Islamic Republic of Afghanistan. Under the terms of the Agreement, the parties pledge to work cooperatively in a number of fields, including to promote shared democratic values, advance long-term security, reinforce regional security, advance social and economic development, and strengthen Afghan institutions and governance. Additionally, the Agreement provides that the United States and Afghanistan shall initiate negotiations on a Bilateral Security Agreement (with the goal of concluding such an agreement within a year), which is intended to replace the existing agreement relating to the status of military and civilian personnel currently in Afghanistan. It is likely that future disputes will arise between the political branches regarding the entering or implementation of international security agreements. Regardless of the form a security arrangement may take, Congress has several tools to exercise oversight regarding the negotiation, form, conclusion, and implementation of the agreement by the United States. This report begins by providing a general background on the types of international agreements that are binding upon the United States, as well as considerations affecting whether they take the form of a treaty or an executive agreement. Next, the report discusses historical precedents as to the role that security agreements have taken, with specific attention paid to past agreements entered with Afghanistan, Germany, Japan, South Korea, the Philippines, and Iraq. The report discusses the oversight role that Congress exercises with respect to entering and implementing international agreements involving the United States.
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For many years, the unauthorized alien population has been seen as a public policy challenge. Addressing this population, estimated to number more than 11 million today, may take on added urgency in 2013 if the 113 th Congress tackles comprehensive immigration reform. Despite longstanding concern about the unauthorized population, however, there has not been much discussion about its composition. While the individuals included in this population at any point in time are officially categorized as unauthorized, they may differ significantly in their particular status-related circumstances under immigration law. For example, some unauthorized aliens in the United States have U.S. citizen or LPR family members or employers who are petitioning for them to become legal permanent residents (LPRs) of the United States under current law; others have no such sponsors. The variety of status-related circumstances among unauthorized aliens warrants attention because some immigration reform policy options under discussion would make distinctions based on individual circumstances. While there continue to be proposals seeking to establish statutory legalization programs to enable large numbers of unauthorized aliens to become LPRs or, conversely, proposals aimed at promoting the departure of large numbers of unauthorized aliens from the country over time, there also has been discussion of developing policies to provide targeted immigration relief to the unauthorized alien population. Immigration relief is a broad term that encompasses relief from removal from the United States without the granting of a legal immigration status as well as relief in the form of a legal immigration status, which could be a temporary immigration status or a permanent immigration status. A main focus of these various discussions about targeted relief has been limiting eligibility for legal status to certain segments of the unauthorized population. To help inform policy discussions about addressing the unauthorized alien population in these targeted ways, this report will analyze components of the unauthorized population and discuss policy options to provide relief to selected subgroups of particular congressional and public interest. According to recent estimates by the Department of Homeland Security (DHS), the unauthorized resident alien population totaled 11.5 million in January 2011. Using different sources, the Pew Hispanic Center estimated the unauthorized resident population at 11.1 million for March 2011. Both sets of estimates include individuals who are sometimes described as being "quasi-legal" because they have temporary authorization to remain in the United States but do not have a legal immigration status. These individuals include applicants for asylum (see Asylum under Other Avenues to Legal Immigration Status ) and persons with Temporary Protected Status (TPS) (see Other Forms of Immigration Relief ). DHS and Pew have analyzed the demographic characteristics of the unauthorized alien population. These characteristics help determine an individual's status-related prospects. Among the DHS and Pew findings, DHS estimated that about 85% of the unauthorized population in January 2011 had entered the country before 2005. With respect to labor force participation, Pew estimated that there were 8.0 million unauthorized aliens in the labor force in 2010, representing almost four of every five unauthorized adults in the United States that year. Pew also considered the U.S. families of unauthorized aliens, estimating that about half of all unauthorized adults (about 5 million individuals) were in families with minor children in 2010. About 1 million of these children were unauthorized aliens; another estimated 4.5 million children in families with at least one unauthorized parent were U.S.-born citizens. According to the Pew analysis, at least 9 million adults and children were in mixed-status families (i.e., families with at least one unauthorized parent and at least one U.S.-born child) in 2010. Under the Immigration and Nationality Act (INA), the basis of current immigration law, unauthorized aliens are typically unable to be legally employed and are subject to being removed from the country. They also have limited opportunities to obtain legal status while remaining in the United States. The INA prescribes pathways through which a foreign national can obtain legal temporary status and legal permanent status while in the United States. Nonimmigrants comprise the main category of legal temporary admissions. They include tourists, foreign students, and temporary workers, among others. Immigrants , synonymous with legal permanent residents , comprise the main category of legal permanent admissions. They consist primarily of family-based admissions (foreign nationals admitted on the basis of family ties) and employment-based admissions (foreign nationals admitted on the basis of employment ties or abilities). Also included among permanent admissions are humanitarian cases, such as individuals granted asylum on the basis of persecution claims. Foreign nationals in the United States—whether legally present or illegally present—who want to become LPRs and who are not eligible for humanitarian relief may lack the requisite family or employment relationships to obtain LPR status under the permanent family-based or employment-based immigration systems. In addition, the INA includes mechanisms, such as the grounds of inadmissibility, that may bar an unauthorized alien with the requisite ties from obtaining legal immigration status. In order to be eligible for a nonimmigrant or immigrant visa and for admission to the United States, a foreign national must be found to be admissible to the country. The INA enumerates grounds of inadmissibility—grounds upon which aliens are ineligible for visas and admission. They include health-related grounds and security- and terrorism-related grounds as well as grounds concerning illegal entrants, public charge (the likelihood that an alien will require public support), and other issues. Some grounds of inadmissibility may be waived, as specified in the INA. Selected grounds of inadmissibility, including those related to illegal entrants and illegal presence in the United States, are discussed separately below (see " Admissibility "). The following are key provisions in current law relevant to gaining legal nonimmigrant or immigrant admission to the United States while in the country. The provisions are introduced generally here to provide the background information necessary to discuss their application to unauthorized aliens. As explored briefly here and more fully in subsequent sections of this report, current law provides potential pathways for some components of the unauthorized resident population to obtain legal status, but not for others. Those without existing pathways would require new legislative enactments to become eligible for legal immigration status. Nonimmigrants are foreign nationals who are admitted to the United States for a temporary period of time and a specific purpose. Typically, they are admitted from abroad. The INA provides for lawfully admitted nonimmigrants to change from one nonimmigrant classification to another in the United States, with some exceptions and subject to certain conditions. It does not generally allow for unauthorized aliens to obtain legal nonimmigrant status. Unauthorized aliens, however, are able to obtain legal nonimmigrant status in limited cases. Under the INA, the Secretary of Homeland Security has broad discretionary authority to waive grounds of inadmissibility, including those related to illegal entry and unlawful presence, in the case of certain nonimmigrant categories. These categories include the "T" category for alien victims of severe forms of trafficking in persons and the "U" category for aliens who have suffered substantial physical or mental abuse as a result of being a victim of certain criminal activities. The INA also provides for eligible T nonimmigrants and U nonimmigrants to obtain LPR status under special provisions. More limited statutory exceptions to the INA inadmissibility provisions apply in the case of the "V" category for certain LPR spouses and children with pending immigrant visa petitions or pending applications for an immigrant visa or for adjustment of status. Adjustment of status , which is the subject of a succeeding section, is the process of becoming an LPR in the United States without having to go abroad to apply for a visa. Individuals in the United States applying for a V visa are not subject to the grounds of inadmissibility for illegal entrants, documentation, or unlawful presence (see " Admissibility ," below). Unlike T nonimmigrants and U nonimmigrants, however, V nonimmigrants need to adjust status under existing law. The INA provides for specified family members of U.S. citizens or LPRs and specified categories of workers to be admitted to the United States for permanent residence as LPRs. Both family-based immigration and employment-based immigration are subject to a complex set of preference categories and numerical limits. The process of becoming an LPR through either route has multiple steps. In most cases the sponsoring family member or employer must file an immigrant visa petition on behalf of the alien with DHS's United States Citizenship and Immigration Services (USCIS). There is no statutory restriction on submitting a visa petition on behalf of an illegally present alien. If the family-based or employment-based petition is approved, the State Department then must determine if a visa number is immediately available to the alien. Because of the numerical limits and their allocation among the various preference categories and countries of origin, it can take many years between the time an immigrant petition is filed and a visa number becomes immediately available to an alien. When a visa number becomes immediately available, the alien beneficiary can apply for assignment of a visa number. Aliens applying for visas abroad are subject to admissibility checks as part of that application process. Individuals who are issued visas become LPRs upon admission to the United States. Aliens eligible to adjust status, that is, obtain LPR status within the United States, do not have to go through the visa application process. They, however, are subject to admissibility checks as part of the adjustment of status process. Under current law, there are only limited opportunities for unauthorized aliens in the United States (with the requisite family or employment ties) to adjust to LPR status in the United States (see " Adjustment of Status ," below). Leaving the country to apply for a visa abroad, however, may pose risks (see " Admissibility ," below). Family-based immigrants are defined in the INA, by category. Top priority is given to immediate relatives of U.S. citizens. Immediate relatives include children, spouses, and, if the citizen is at least age 21, parents. This "age 21" sponsorship requirement is relevant for unauthorized aliens with U.S. citizen children; as noted, there were an estimated 4.5 million children in 2010 in families with at least one unauthorized parent. Immediate relatives are the only family-based immigrants admitted outside the preference system. They do not have to wait for a visa number to become available and are not subject to direct numerical limits. Other family-based immigrants, by order of preference, are: (1) unmarried adult sons and daughters of U.S. citizens; (2) spouses, children and unmarried adult sons and daughters of LPRs; (3) married adult sons and daughters of U.S. citizens; and (4) brothers and sisters of U.S. citizens. Employment-based immigration is subject to a ranked system similar to family-based immigration, with five preference categories. The categories are: (1) priority workers: (2) members of the professions holding advanced degrees or persons of exceptional abilities; (3) skilled workers, professionals, or unskilled workers; (4) special immigrants; and (5) employment creation investors. The unskilled worker classification under category (3) explicitly excludes individuals performing temporary or seasonal work, the type of work presumably being done by many unauthorized workers. The admissions process for prospective employment-based immigrants is similar to that for family-based immigrants but may require an additional step at the beginning of the process. In some preference categories, before an employer can file an immigrant petition on behalf of an alien, the employer must first apply for labor certification from the U.S. Department of Labor (DOL). Labor certification reflects a finding by DOL that there are not sufficient U.S. workers available to perform the work, and that the employment of alien workers will not adversely affect the wages and working conditions of similarly employed U.S. workers. As mentioned, aliens who are in the United States when a visa number becomes immediately available to them may be able to apply to adjust to LPR status without going abroad to obtain a visa. Section 245 of the INA sets forth the eligibility requirements for adjustment of status. The main provision (§245(a)) generally allows an alien to adjust to LPR status in the United States if the alien has been legally admitted or paroled into the United States, is eligible to receive an immigrant visa, is admissible to the United States, and has an immigrant visa number immediately available. Certain aliens who otherwise meet these requirements, however, are ineligible to adjust status under §245(a), including those in unlawful immigration status at the time of filing the adjustment of status application. At the same time, there are limited exceptions to ineligibility due to unlawful status or unauthorized employment (see " Family Connection ," below). INA §245(a) primarily benefits legal nonimmigrants who are eligible for LPR status. In 1994, adjustment of status became more widely available to unauthorized aliens when a new, temporary subsection (i) to was added to INA §245. INA §245(i) enables an alien who entered the United States unlawfully or is otherwise ineligible for adjustment of status to adjust status in the United States if he or she is eligible to receive an immigrant visa, is admissible for permanent residence, has a visa number immediately available to him or her, and pays an additional fee. Currently, to be eligible to adjust status under INA §245(i), which was last extended by a 2000 law, an alien must be the beneficiary of a family-based petition or a labor certification application filed by April 30, 2001. Given this 2001 cut-off date, a diminishing number of aliens are covered by this provision. An individual who has properly filed an adjustment of status application is considered by DHS to be in an authorized period of stay (but not to have lawful immigration status); will not accrue unlawful presence during the pendency of the application; and is eligible to apply for employment authorization. Having a pending adjustment application does not provide protection from removal, although, according to USCIS, "an immigration judge may, in his or her discretion, consider whether an alien has any avenue for relief prior to issuing a final order [of removal]." In order to be issued a nonimmigrant or immigrant visa, to adjust to LPR status, or to otherwise be granted admission to the United States, an alien must be admissible to the United States. Determinations about admissibility are based on the INA grounds of inadmissibility, as mentioned. Some grounds of inadmissibility relate to aliens who seek to enter the United States without required documentation. Among these is a ground of inadmissibility for aliens without properly issued documents, and a ground of inadmissibility for certain prospective employment-based immigrants who lack DOL labor certification (see " Employment-Based Immigration " under " Permanent Admissions ," above). Certain inadmissibility grounds directly address illegal entrants and illegal presence. For example, INA §212(a)(6)(A) states: "An alien present in the United States without being admitted or paroled, or who arrives in the United States at any time or place other than as designated by the Attorney General, is inadmissible." Another ground of inadmissibility (INA §212(a)(9)(B)) makes aliens who in the past were illegally present in the United States inadmissible to the country for a period of time. Known as the 3- and 10-year bars, these provisions were added to the INA by the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996. They apply to all aliens except LPRs. Under INA §212(a)(9)(B): (1) an alien who was unlawfully present in the United States for more than 180 days but less than one year, voluntarily departed, and seeks admission within three years is inadmissible, and (2) an alien who has been unlawfully present in the United States for one year or more and seeks admission within 10 years of such alien's departure or removal date is inadmissible. With the addition of the 3- and 10-year bars to the INA grounds of inadmissibility, the ability of unlawfully present prospective immigrants to adjust to LPR status in the United States took on greater significance because aliens who were unlawfully present in the country for more than 180 days and went abroad to obtain their visas could be found to be subject to the bars upon seeking admission. Some grounds of inadmissibility have exceptions and/or may be waived, as specified in the INA. For example, the grounds of inadmissibility under both INA §212(a)(6)(A) and INA §212(a)(9)(B) include exceptions for certain battered aliens. Among the other exceptions under INA §212(a)(9)(B) is one for minors; any period of time in which an alien is under 18 does not count as unlawful presence for purposes of the 3- and 10-year bars. In addition, an alien who is found to be inadmissible under §212(a)(9)(B) may be eligible for a discretionary waiver. To obtain a waiver, an alien, who must be the spouse, son, or daughter of a U.S. citizen or LPR, must establish that the refusal of admission would result in extreme hardship to the citizen or LPR spouse or parent. (A related USCIS proposed rule that would make changes to the unlawful presence waiver application process for certain immediate relatives of U.S. citizens is discussed under " Unauthorized Aliens with Approved Immigrant Visa Petitions ," below.) In addition to nonimmigrant admissions and permanent family-based or employment-based admissions, the immigration system includes other pathways to legal status for unauthorized aliens who meet the applicable requirements. Special rules concerning the INA grounds of inadmissibility (discussed in the preceding section) are specified in these provisions. The three provisions described here—registry, asylum, and cancellation of removal—are avenues to LPR status. Long-resident unauthorized aliens may be able to acquire lawful permanent residence through the INA registry provision. Last updated by a 1986 law, this provision allows for the creation of a record of lawful admission for permanent residence for an alien who lacks such a record; has continuously resided in the United States since before January 1, 1972; and meets other specified requirements. With the requirement for continuous residence since 1972, a decreasing number of individuals have adjusted status under this provision in recent years. Asylum represents a form of humanitarian relief available to legal and unauthorized aliens in the United States. The INA provides that any alien who is in, or who arrives in, the United States, regardless of his or her status, may apply for asylum. Aliens may apply for asylum affirmatively, or they may apply defensively, while in removal proceedings. To be eligible for asylum, an alien must show that he or she has been persecuted or has a well-founded fear of persecution based on race, religion, nationality, membership in a particular social group, or political opinion and must meet other requirements. If asylum is granted, the alien may legally live and work in the United States and, after one year, may apply to adjust to LPR status, subject to a set of requirements. Cancellation of removal is a discretionary form of relief authorized by the INA that an alien can apply for while in removal proceedings before an immigration judge. If cancellation of removal is granted, the alien's status is adjusted to that of an LPR. The INA authorizes the cancellation of removal/adjustment of status of certain "nonpermanent residents" (those who are not LPRs) who are inadmissible to or deportable from the United States. To be eligible for this form of relief, the alien, among other requirements, must have been continuously physically present in the United States for the prior 10 years and must establish that removal would result in "exceptional and extremely unusual hardship" to the alien's citizen or LPR spouse, parent, or child. There is a statutory cap of 4,000 on the number of aliens who can be granted cancellation of removal in any fiscal year. Through the mechanisms described above, an eligible unauthorized alien may obtain legal permanent status or, in the case of nonimmigrant admissions, legal nonimmigrant status. Other forms of relief enable unauthorized aliens to remain in the United States temporarily but do not grant them a legal status. For this reason, beneficiaries of these types of relief are sometimes referred to as "quasi-legal." These types of relief, some of which are applied as blanket relief to members of a designated class and some of which are applied on a case-by-case basis, have historically been provided for humanitarian purposes. There are several forms of blanket relief that have been provided for humanitarian purposes over the years. In most cases, this relief has been provided on a discretionary basis administratively, by the Attorney General or, more recently, by the Secretary of Homeland Security. Individuals granted blanket relief typically can apply for employment authorization. The most common discretionary procedures to provide blanket relief have been extended voluntary departure (EVD), and deferred departure or deferred enforced departure (DED). Over the years, EVD and DED have been provided to otherwise deportable aliens of various nationalities, including Ethiopians, Iranians, Afghans, Poles and Salvadorans. Currently, certain Liberians in the United States have DED. While EVD and DED do not confer legal status, in the past legislation has been enacted to grant LPR status to members of specified groups with these forms of relief. For example, legislation enacted by the 100 th Congress in 1987 provided for the adjustment of status of aliens who were provided with, or allowed to maintain, EVD on the basis of a nationality group determination during the previous five years. Nationality groups covered by this language included Ethiopians, Afghans, and Poles. One form of blanket relief—Temporary Protected Status (TPS)—is authorized by the INA. The Secretary of Homeland Security, in consultation with the Secretary of State, may designate a foreign state or part of a foreign state for TPS in certain situations, including in cases of ongoing armed conflict or environmental disaster, as specified in the INA. A foreign state can be designated for TPS for a period of between 6 and 18 months, subject to extension. To obtain TPS, eligible aliens report to USCIS, pay a processing fee, and receive registration documents and a work authorization. As of January 2013, the following countries are designated for TPS: El Salvador, Haiti, Honduras, Nicaragua, Somalia, Sudan, South Sudan, and Syria. The INA provision authorizing TPS, however, places restrictions on congressional consideration of legislation to grant those with TPS a legal immigration status (see " Aliens with Temporary Protected Status or Other Temporary Relief from Removal ," below). Rather than being applied as blanket relief to members of a designated class, relief from removal can also be applied on a case-by-case basis. The discretionary procedure of deferred action provides relief, on an individual basis, to a particular individual for a specific period of time. Individuals granted deferred action may apply for employment authorization. The USCIS Adjudicator's Field Manual describes deferred action, as follows: A DHS field office director may, in his or her discretion, recommend deferral of (removal) action, an act of administrative choice in determining, as a matter of prosecutorial discretion, to give some cases lower enforcement priority.… Accrual of unlawful presence stops on the date an alien is granted deferred action and resumes the day after deferred action is terminated. DHS and its predecessor, the former Immigration and Naturalization Service (INS), have utilized deferred action to provide relief to members of defined groups. For example, in 1997, INS issued a guidance memorandum concerning deferred action in cases of battered aliens who were self-petitioning for immigrant status in accordance with the 1994 Violence Against Women Act (VAWA). More recently, as described below under " Unauthorized Aliens Who Arrived as Children ," DHS established a Deferred Action for Childhood Arrivals (DACA) program. Another form of case-by-case relief for unauthorized aliens falls under DHS's parole authority, as set forth in the INA. Parole is discretionary authority that may be exercised by DHS to allow an alien to enter the United States temporarily (without being formally admitted) for urgent humanitarian reasons or when the entry is determined to be for significant public benefit. Granting parole to unauthorized aliens already in the United States is known as parole-in-place. In recent years, parole-in-place has been used to enable the spouses and children of military service members to adjust status in the United States. As discussed, aliens who have been paroled into the United States are eligible to adjust status under the main INA §245(a) adjustment of status provision. While a stereotypical view of an unauthorized alien may be of a young man with no connections to the United States who crosses the Southwest border illegally in search of work, in reality the unauthorized alien population includes individuals who entered the country in different ways, for different reasons, and who have different types of connections to the United States. The circumstances of individuals who compose the unauthorized alien population affect their treatment under current immigration law as well as their future status-related prospects. The following factors are relevant to a consideration of the treatment and status prospects of unauthorized aliens in the United States. Unauthorized aliens enter the United States in three main ways: (1) some, known as visa overstays , are admitted to the United States on valid nonimmigrant visas (e.g., as visitors or students) or on border-crossing cards and either remain in the country beyond their authorized period of stay or otherwise violate the terms of their admission; (2) some are admitted based on fraudulent documents (e.g., fake passports) that go undetected by U.S. officials; and (3) some, known as illegal entrants , enter the country illegally without inspection (e.g., by crossing over the Southwest or northern U.S. border). It is unknown what percentages of the current unauthorized resident population entered the United States in these different ways. In past years, researchers have endeavored to make this type of determination. For example, in 2006, the Pew Hispanic Center estimated that about 40% to 50% of the unauthorized aliens living in the United States that year had entered the country with inspection and that the remaining 50% or more had entered the country without inspection. While visa overstays and illegal entrants are both considered to be unauthorized aliens, they are treated differently for some purposes under immigration law. For example, the ground of inadmissibility under INA §212(a)(6) concerning unlawful presence applies only to illegal entrants. By contrast, the 3- and 10-year bars to admissibility in INA §212(a)(9), which are based on periods of unlawful presence, apply to both illegal entrants and visa overstays. An important difference in treatment between illegal entrants and visa overstays, with important implications for future status prospects, concerns the INA adjustment of status provisions (see " Adjustment of Status ," above). To adjust to LPR status under INA §245(a), an alien must have been inspected or paroled into the United States. An alien who legally enters the country and then overstays his or her visa satisfies this requirement; an illegal entrant does not. While, as a general rule, those who overstay their visas are not eligible to adjust status under INA §245(a), there are exceptions, as noted. To illustrate the difference in treatment, a visa overstay who marries a U.S. citizen today could adjust to LPR status under INA §245(a), if otherwise eligible. An illegal entrant who marries a U.S. citizen today could not adjust status in this way. In order to obtain LPR status, the illegal entrant would have to return to his or her home country and apply for a visa once a visa number became available. The individual could be found to be inadmissible to the United States under the 3- or 10-year bars based on the alien's prior unlawful presence. The length of an alien's unlawful presence in the United States may affect the alien's ability to obtain immigration benefits and relief. Under the INA ground of inadmissibility for unlawfully present aliens, as discussed, an alien who was unlawfully present for more than 180 days but less than one year, voluntarily departed, and seeks admission within three years is inadmissible, and an alien who has been unlawfully present for one year or more and seeks admission within 10 years of such alien's departure or removal date is inadmissible. Unauthorized aliens who are unlawfully present for 180 days or less would not be subject to these bars. On the other hand, some forms of immigration relief for unauthorized aliens require a multi-year period of presence. For example, the INA provision on cancellation of removal/adjustment of status for certain "nonpermanent residents" (non-LPRs) who are inadmissible to or deportable from the United States requires the alien to have been continuously physically present in the United States for the prior 10 years. While this provision does not specify 10 years of unlawful presence, the general legalization program enacted as part of the Immigration Reform and Control Act (IRCA) of 1986 did require continuous unlawful residence since 1982. A primary route for aliens in the United States to become LPRs is through the family-based immigration system. As detailed above, this pathway requires a close family relationship with a U.S. citizen or LPR, and in most cases, it requires the U.S. citizen or LPR to file an immigrant visa petition on behalf of the foreign national (see Family-based Immigration under Permanent Admissions ). Close relatives of U.S. citizens and LPRs also can benefit from some special provisions and exceptions in immigration law. Of particular significance to unauthorized aliens in the United States who want to obtain LPR status are exceptions to the requirements for adjustment of status in the INA. Among these exceptions, the immediate relatives of U.S. citizens are excepted from the general provision that makes adjustment of status unavailable to individuals who, following legal entry, engage in unauthorized employment or who fail to continuously maintain a lawful immigration status. A relationship to a U.S. citizen or LPR is likewise a prerequisite for some forms of immigration relief for unauthorized aliens. For example, one of the requirements for an unauthorized alien to be granted cancellation of removal/adjustment of status is that the alien must establish that removal would result in exceptional and extremely unusual hardship to the alien's citizen or LPR spouse, parent, or child (see "Cancellation of Removal" under " Other Avenues to Legal Immigration Status ," above). Similarly, an alien who is found to be subject to the 3- and 10-year bars on inadmissibility due to unlawful presence can apply for a discretionary waiver. To be granted a waiver, the alien must establish that that the refusal of admission would result in extreme hardship to a citizen or LPR spouse or parent. Aliens in the United States can also become LPRs through the employment-based immigration system, which, as described above, includes five preference categories. The third preference category for skilled workers, professionals, and unskilled workers is likely to be the most relevant for unauthorized aliens. This category, which is not applicable to work of a temporary or seasonal nature, requires an employer sponsor and a labor certification determination by DOL (see " Employment-Based Immigration " under " Permanent Admissions ," above). The potential utility of this category for unauthorized aliens, however, is limited both by the exclusion of temporary and seasonal work and by a statutory cap on admissions of unskilled workers under this category of 10,000 per year. Prospective employment-based immigrants, like prospective family-based immigrants, benefit from some special provisions and exceptions in immigration law. Among these is an exception to the INA requirements for adjustment of status that is targeted at aliens who entered the U.S. legally and then violated the terms of their admission. More limited than the exception for immediate relatives of U.S. citizens, this provision enables certain prospective employment-based immigrants, including those applying under the third preference category for skilled workers, professionals, and unskilled workers, to adjust status in the United States. It applies to aliens who, for no more than 180 days after being legally admitted: failed to continuously maintain a lawful immigration status, engaged in unauthorized employment, or otherwise violated the terms and conditions of their admission. The INA grounds of inadmissibility (discussed under " Admissibility ," above) and the companion INA grounds of deportability include grounds related to criminal offenses and security concerns, which are particularly relevant to the consideration of eligibility for immigration relief. Some forms of immigration relief available to unauthorized aliens contain special requirements regarding these grounds and related issues. For example, the cancellation of removal/adjustment of status provisions for "nonpermanent residents" (non-LPRs) specify that this form of relief is not available to those who have been convicted of an offense under the INA criminal grounds of inadmissibility or deportability. The INA provisions on granting asylum provide another example. They explicitly exclude aliens based on criminal- or security-related concerns. These exclusions cover aliens who fall under specified INA security-related inadmissibility grounds concerning terrorist activity. They also cover other cases, such as where "the alien, having been convicted by a final judgment of a particularly serious crime, constitutes a danger to the community of the United States" and where "there are reasonable grounds for regarding the alien as a danger to the security of the United States." Based on the factors discussed in the preceding section and other considerations, individuals in the unauthorized alien population can be grouped into various status-related categories. The subgroups listed here, which overlap and are fluid, reflect aliens' current status and available avenues for immigration relief. While these subgroups cover the large majority of those considered to be unauthorized, they do not necessarily cover the entire population. This subgroup includes unauthorized individuals who have approved or pending family-based or employment-based immigrant petitions. Depending on their particular circumstances, individuals with approved petitions may be able to adjust status in the United States (see " Adjustment of Status ," above). If they are not eligible to adjust status and opt to depart the United States to apply for a visa in their home country, they may be subject to a 3- or 10-year bar on admission based on their prior period of unlawful presence. Others that may be considered as part of this subgroup are individuals who, based on existing family relationships, may be future beneficiaries of family-based immigrant petitions. Included in this possible future beneficiary group would be the unauthorized parents of U.S citizen children. Under current immigration law, citizens must be at least age 21 in order to sponsor their parents for legal permanent residence. As immediate relatives of U.S. citizens, these unauthorized parents could adjust to LPR status in the United States, if otherwise eligible, provided that they originally entered the United States legally. If they originally entered the country without inspection, however, they would be ineligible to adjust status under current law and would have to return to their home countries to apply for a visa. Battered spouses and children of U.S. citizens or LPRs and battered parents of U.S. citizens, as these groups are defined in the INA, are a unique class of prospective immigrants. They are subject to special INA provisions that enable them to self-petition for immigrant status and to adjust status under the main INA adjustment of status provision, regardless of whether they entered the country legally. Aliens self-petitioning for LPR status under these provisions are eligible for employment authorization. There is also a special cancellation of removal rule for battered spouses and children, through which eligible aliens can obtain LPR status during the removal process. Aliens who are physically present in the United States or who arrive in the United States may apply for asylum. While an alien's asylum application is being considered, he or she may remain in the United States but is not granted a legal immigration status. An asylum seeker is not entitled to employment authorization by law but may be granted it by regulation. Successful asylum applicants are granted asylum status, and after one year, may apply to adjust to LPR status. As discussed, aliens with TPS or other forms of temporary relief from removal have protection from removal and can receive employment authorization, but are not granted a legal immigration status. This subgroup also includes those with pending applications for these various forms of relief. Some groups granted administrative blanket relief, such as EVD and DED, have been able to adjust to LPR status under subsequent legislative enactments. In the case of TPS, however, which is authorized by the INA, there are statutory restrictions on the subsequent granting of legal immigration status. INA §244(h) states that any bill, resolution, or amendment to grant either lawful temporary status or LPR status to those with TPS requires an affirmative vote of three-fifths of all Senators. This subgroup includes unauthorized aliens who are prospective beneficiaries of special provisions in the INA that offer a pathway to legal status separate from the permanent family- or employment-based immigrant systems or the humanitarian avenues listed above. Among these individuals are applicants for a nonimmigrant T visa for trafficking victims or a nonimmigrant U visa for crime victims, as discussed above under " Nonimmigrant Admissions ." This subgroup also encompasses certain unauthorized applicants for LPR status, such as those eligible for the special immigrant juveniles (SIJ) program. The SIJ program is intended to provide relief to foreign-born children who have been victims of abuse, neglect, or abandonment. Aliens with SIJ status can adjust to LPR status, if eligible. Another subpopulation of unauthorized aliens in the United States can be distinguished from the subgroups discussed above. This subpopulation is composed of individuals who do not have an affirmative pathway to a legal immigration status under current law—through a family or employment connection, asylum, nonimmigrant categories for certain trafficking or crime victims, etc.—and are not eligible for other forms of humanitarian relief from removal. These aliens also would not typically be eligible for work authorization. Aliens in this subgroup may apply for cancellation of removal in removal proceedings if they have a citizen or LPR spouse, parent, or child. As noted, requirements for cancellation of removal in the case of unauthorized aliens include 10 years of continuous physical presence in the United States and establishment that removal would result in exceptional and extremely unusual hardship to the alien's citizen or LPR spouse, parent, or child. If cancellation of removal is granted, the alien's status is adjusted to that of an LPR. For a number of years, unauthorized alien students who were brought to the United States as children comprised a prominent segment of this subgroup. For several Congresses, these students have been the subject of DREAM Act legislation, which would enable eligible individuals to obtain LPR status. In 2012, in the absence of congressional action on DREAM Act legislation, DHS established an administrative process, known as Deferred Action for Childhood Arrivals (DACA), to provide temporary relief to certain unauthorized alien residents who entered the country before age 16 and satisfy other requirements (see " Unauthorized Aliens Who Arrived as Children ," below). There has been increasing discussion in recent years of developing policies to provide targeted relief to unauthorized aliens. These policies could take a variety of forms. They could be legislative or administrative, and could provide different types of relief to different subgroups of the unauthorized population. A main focus of these policy discussions has been unauthorized aliens with approved immigrant visa petitions, especially those with U.S. citizen or LPR family members. Selected segments of the unauthorized alien population without an affirmative pathway to legal status, such as students who entered the United States as children and aliens with long-term TPS, also have been the subject of policy proposals. Unauthorized aliens in the United States with approved family-based or employment-based immigrant visa petitions may face difficulties under current law in obtaining LPR status. As discussed, those who are not eligible to adjust status under current law and decide to return to their home country to apply for a visa may be found to be inadmissible to the United States for 3 or 10 years based on their prior unlawful presence. Unlawful presence for one year or more, which triggers the 10-year inadmissibility bar, is among the top grounds of refusal for an immigrant visa, according to State Department data. A prospective immigrant who is found to be ineligible for a visa by DOS based on prior unlawful presence may be eligible for a waiver. DHS may grant an alien a discretionary waiver if the alien is the spouse or son or daughter of a U.S. citizen or LPR, and it is established that refusal of admission to the alien would result in extreme hardship to the citizen or LPR spouse or parent. Currently, an alien must wait until he or she receives an ineligibility finding from DOS during the overseas immigrant visa process before applying for a waiver, if eligible. In January 2013, USCIS issued a final rule, effective March 4, 2013, which seeks to administratively facilitate the immigration process for certain prospective immigrants with approved visa petitions. The rule would make changes to the unlawful presence waiver application process for certain immediate relatives of U.S. citizens by establishing a provisional unlawful presence waiver. According to the rule summary, DHS "anticipates that these changes will significantly reduce the length of time U.S. citizens are separated from their immediate relatives who engage in consular processing abroad." Under the final rule, a beneficiary of an approved immediate relative petition could apply for and receive a provisional waiver of the unlawful presence ground of inadmissibility while still in the United States, if the alien met all the applicable requirements, including demonstrating that a U.S. citizen spouse or parent would experience extreme hardship if the alien were denied admission to the United States as an LPR. In the supplementary information accompanying the rule, USCIS stated that it "is not modifying how it makes extreme hardship determinations or how it defines extreme hardship." A recipient of a provisional waiver could depart the United States to attend the immigrant visa interview with a DOS consular officer abroad. If the consular officer determined that the applicant, given the approved waiver, was admissible to the United States and eligible for a visa, the officer would issue the immigrant visa, which the individual could then present at a port-of-entry to gain lawful admission to the United States. Under the final rule, once a provisional unlawful presence waiver takes full effect, "the period of unlawful presence for which the provisional unlawful presence waiver is granted is waived indefinitely." Another administrative option to facilitate the acquisition of LPR status by illegal entrants with approved family-based or employment-based immigrant petitions, or by some subset of this larger group, would be parole-in-place. Under the INA, DHS can grant parole for urgent humanitarian reasons or for significant public benefit. Although parole does not constitute formal admission, aliens granted parole-in-place are eligible to adjust status in the United States; they do not have to travel to their home countries for consular processing. As noted, parole-in-place has been used recently to enable certain dependents of military service members to adjust status in the United States. Alternatively, legislation could be enacted to provide immigration relief to unauthorized aliens who are otherwise eligible prospective family-based or employment-based immigrants. One set of options would involve modifying existing statutory barriers to the acquisition of LPR status. As an example, the unlawful presence ground of inadmissibility could be amended to add additional exceptions to the 3-and 10-year bar provisions for certain family-based or employment-based immigrants. A more direct, legislative option to facilitate the adjustment to LPR status of unauthorized aliens who are prospective immigrants would involve amending the INA adjustment of status provisions (see " Adjustment of Status ," above). As discussed, INA §245(i) enables an alien who entered the United States unlawfully to adjust status in the United States if he or she is eligible to receive an immigrant visa, is admissible for permanent residence, has a visa number immediately available to him or her, and pays an additional fee. Under current law, INA §245(i) applies only to beneficiaries of family-based petitions or labor certification applications filed by April 30, 2001. Legislation could be enacted to enable illegal entrants with approved immigrant visa petitions to adjust status in the United States by updating this April 30, 2001, cutoff date or making INA §245(i) or a similar provision permanent. Such legislation has been proposed in past Congresses. Adjustment of status could be made available to all illegal entrants who meet the existing INA §245(i) criteria or, alternatively, to a subset of illegal entrants who meet a different set of criteria. As an example of a potential subset, legislation has been introduced in recent Congresses to enable the immediate family members of certain U.S. citizen or LPR military service personnel to adjust status in the United States regardless of the immediate family members' immigration status. Another subgroup of unauthorized aliens that has received considerable attention in the last few years consists of aliens who came to the United States as children. These aliens have been the subject of legislation, commonly referred to as the DREAM Act, to provide them relief. Under traditional DREAM Act bills, unauthorized aliens who meet specified age, physical presence, educational, and other requirements would be able to adjust to LPR status in the United States through cancellation of removal (see "Cancellation of Removal" under " Other Forms of Immigration Relief ," above). Successful applicants would first be granted conditional LPR status. After meeting additional requirements, including two years of either college or service in the uniformed services, the aliens could apply to have the condition on their status removed and become full-fledged LPRs. For many years DREAM Act bills have followed this basic outline. Since 2011, however, some alternative versions of the DREAM Act also have been introduced in Congress. For example, some recent proposals would have first granted beneficiaries conditional nonimmigrant status (rather than conditional LPR status) and would have required the aliens to apply to have that conditional nonimmigrant status extended before they could adjust to LPR status. These and other new elements were incorporated in a pair of bills introduced in the 112 th Congress, which, unlike traditional DREAM Act bills, would have established separate military and higher education pathways to LPR status, each with its own set of eligibility requirements. In the case of the higher education pathway, for example, an alien granted conditional nonimmigrant status would have had to graduate from an accredited four-year institution of higher education in the United States in order to stay on track to be eligible for LPR status. While the granting of legal immigration status to this subgroup of unauthorized aliens would require enactment of the DREAM Act or other legislation, more limited relief from removal could be provided administratively, and DHS has established a program to do so. In June 2012, in the absence of legislative action on DREAM Act bills, DHS issued a memorandum announcing that certain individuals who were brought to the United States as children and meet other criteria would be considered for deferred action for two years, subject to renewal. DHS began accepting requests for consideration of deferred action for childhood arrivals, or DACA, as the program is known, in August 2012. The eligibility criteria for DACA are similar to those for relief in DREAM Act bills, and include, among other requirements, that the alien: entered the United States before age 16, has been continuously resident for at least five years, and either is in school, has a high school diploma or the equivalent, or has been honorably discharged from the Armed Forces. Aliens granted deferred action can apply for employment authorization. The DACA program, however, provides no pathway to a legal immigration status. For many years, legislation has been introduced in Congress to establish a legalization program for agricultural workers, based, in part, on a belief that there is an inadequate supply of U.S. farm workers. A longstanding proposal, known as the Agricultural Job Opportunities, Benefits, and Security Act, or AgJOBS, would couple a legalization program for farm workers with provisions to reform the H-2A temporary agricultural worker program. Under AgJOBS legislation, eligible farm workers could obtain LPR status through a two-stage process, with work requirements at each stage. To be eligible for temporary legal status in the first stage of the legalization program, an alien would have to show that he or she had performed a requisite amount of agricultural work during a prescribed period, among other requirements. To be eligible to adjust to LPR status in the second stage of the program, the alien would have to perform additional agricultural work and satisfy other requirements. An alternative proposal would pair an AgJOBs-like agricultural worker legalization program not with changes to the H-2A program, but with other provisions on agricultural labor. While agriculture is considered to be a unique industry in various ways, a similar approach could conceivably target unauthorized workers in other relatively low-skilled industries where U.S. workers are seen to be in short supply. A discussion is also underway about the need for foreign workers with graduate-level training in certain fields. Many policymakers argue that the United States should take steps to retain U.S.-educated foreign nationals with degrees in science, technology, engineering, or mathematics (STEM). At the same time, there is considerable debate about if, and how, the United States should create STEM visas to accomplish this. The term STEM visas refers to expedited avenues for foreign nationals with graduate degrees in STEM fields to adjust to LPR status. Typically, STEM students first enter the United States legally as foreign students on nonimmigrant visas, and much of the discussion about these students centers on facilitating their adjustment from nonimmigrant to LPR status. It is unknown how many unauthorized aliens there may be among STEM graduates, but they could be addressed as part of broader STEM legislation. Another subgroup of unauthorized aliens that has been targeted for immigration relief consists of aliens who are long-term holders of temporary protected status, or in the case of Liberia, temporary protected status and deferred enforced departure. Some countries, including El Salvador, Honduras, Nicaragua, and Somalia, have had TPS designations for more than 10 years; Liberians were first granted TPS in 1991 and have had DED since 2007. Aliens with TPS or DED can legally remain in the United States and receive employment authorization while the designations remain in place, but neither TPS nor DED is considered a legal immigration status and neither provides a pathway to a legal status. Moreover, as discussed, the INA requires that any bill, resolution, or amendment to grant either lawful temporary status or LPR status to those with TPS receive an affirmative vote of three-fifths of all Senators. Legislation has been introduced in recent Congresses that would facilitate the adjustment to LPR status of certain aliens in the United States with TPS or DED. Some DREAM Act bills would explicitly extend coverage to those with TPS; under these bills, aliens with TPS could apply to adjust to LPR status, provided that they meet the eligibility requirements. Other bills have focused on Liberian nationals. These bills would establish a mechanism for Liberians who have been continuously present in the United States since a specified date and who meet other requirements to adjust to LPR status. Similar legislation could be developed to target other long-term beneficiaries of temporary humanitarian relief. Considering targeted immigration relief for unauthorized aliens may offer policymakers new options for tackling the vexing issue of unauthorized immigration. Pursuing a targeted approach, however, would require policymakers to make distinctions among members of the unauthorized population to determine what type of relief to make available to what subgroup. Among the many related questions that could arise may be whether to limit the prospect of legal status to those who qualify under current law, whether to provide pathways to permanent legal status as well as temporary legal status, and whether to place any numerical limits on any new forms of relief. Also important would be questions about which subgroups of unauthorized aliens in the United States would not be covered by targeted immigration relief options under discussion and what policies would be pursued toward them.
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The 113th Congress is expected to consider comprehensive immigration reform legislation. If and when it does, a key challenge will be how to address the unauthorized alien population, estimated to number some 11 million. The unauthorized alien population is often treated as if it were monolithic, but it is, in fact, quite diverse. It includes individuals who entered the United States in different ways, for different reasons, and who have different types of connections to the United States. The circumstances of individuals who compose the unauthorized alien population affect their treatment under immigration law, especially with respect to prospects for obtaining legal status in the United States. Relevant immigration status-related factors include mode of entry into the United States, length of unlawful presence in the country, and the existence of family or employment connections. The differences in circumstances among unauthorized aliens are particularly relevant in the context of current discussions about how to address this population. In past years, immigration proposals on unauthorized aliens often called for the establishment of broad legalization programs to enable large numbers of unauthorized aliens to become U.S. legal permanent residents (LPRs) or, conversely, included provisions aimed at promoting the departure of large numbers of unauthorized aliens from the country over time. More recently, there has been discussion of developing policies to provide targeted immigration relief to unauthorized aliens. Immigration relief is a broad term that encompasses relief from removal from the United States without the granting of a legal immigration status as well as relief in the form of a legal immigration status. A main focus of recent discussions has been making eligibility for legal status available to certain segments of the unauthorized population. Aliens with approved immigrant visa petitions, especially those with U.S. citizen or LPR family members, seem to be of particular interest. Selected segments of the unauthorized alien population without an affirmative pathway to legal status, such as students who entered the United States as children and beneficiaries of long-term humanitarian relief, have also been the subject of policy proposals. Policies to provide targeted relief to unauthorized aliens could be legislative or administrative. Legislative options could include amending existing statutory provisions to make it easier for certain unauthorized aliens to obtain LPR status. They also could include establishing statutory mechanisms to enable certain subgroups of unauthorized aliens to become LPRs who may not have pathways to do so under current law, as in the case of the Development, Relief, and Education for Alien Minors (DREAM) Act. Unauthorized aliens also could receive temporary relief from removal through administrative action. The Department of Homeland Security's Deferred Action for Childhood Arrivals (DACA) program, which was established in the absence of congressional action on DREAM Act legislation and includes similar eligibility criteria, provides a recent example. Such administrative actions can provide temporary relief, but, unlike legislative enactments, cannot provide beneficiaries with a legal immigration status.
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Since the September 11 attacks on the World Trade Center and the Pentagon, the United States has launched three major military operations: Operation Noble Eagle (ONE), Operation Enduring Freedom (OEF), and Operation Iraqi Freedom (OIF). Operation Noble Eagle is the name given to military operations related to homeland security and support to federal, state, and local agencies in the wake of the September 11 attacks. Operation Enduring Freedom includes ongoing operations in Afghanistan, operations against terrorists in other countries, and training assistance to foreign militaries which are conducting operations against terrorists. Operation Iraqi Freedom includes the invasion of Iraq, the defeat of Saddam Hussein's regime, and the subsequent rebuilding and counter-insurgency operations in Iraq. This report provides short answers to commonly asked questions about military personnel and compensation issues related to these operations. The questions are grouped into three major thematic areas: personnel, compensation, and force structure. The section on personnel addresses issues such as casualties, reserve mobilization, "sole surviving" son or daughter status, conscientious objection, and "stop-loss." The section on compensation addresses issues related to the pay and benefits—including casualty and death benefits—provided to members of the U.S. military participating in ONE/OEF/OIF and their families. The section on force structure addresses issues related to how ONE/OEF/OIF might affect the number of personnel needed by the military, and answers common questions about whether or not a return to conscription is likely under current circumstances. As of January 17, 2006, there were 255 fatalities among U.S. military personnel serving in OEF. Of these, 130 were categorized as killed in action, while 125 were categorized as non-hostile deaths. As of that same date, 677 military personnel had been wounded in action while serving in OEF. Of these, 275 were returned to duty within 72 hours. As of January 17, 2006, there were 2,242 fatalities among U.S. military personnel serving in OIF. Of these, 1,761 were categorized as hostile deaths and 481 as non-hostile. As of that same date, 16,420 military personnel had been wounded in action while serving in OIF. Of these, 8,812 were returned to duty within 72 hours. As of January 15, 2006, there was one U.S. soldier classified as a POW, Private First Class Keith M. Maupin who was captured on April 9, 2004. There were no U.S. military personnel classified as MIA. Between September 11, 2001 and January 17, 2006, a total of 532,539 reservists (which includes the National Guard) were involuntarily called to active duty under federal orders for ONE, OEF, and OIF. Of these, 126,5345 were serving on active duty as of January 17, 2006, while 406,005 had been demobilized prior to that date after completing their tours. Note, however, that the total mobilization and demobilization figures count reservists more than once if they have been mobilized more than once. The total number of individuals mobilized is therefore lower than stated above, and probably by a significant margin due to the number of people who have been called up more than once. These reservists were called to active duty under a mobilization authority known as Partial Mobilization. In time of a national emergency declared by the President, Partial Mobilization authorizes the Service Secretaries to order members of the Ready Reserve to active duty for a period not to exceed 24 consecutive months. Up to 1 million members of the Ready Reserve may serve on active duty at any one time under this provision of law. The President may declare a national emergency and mobilize reservists under this provision of law without approval from Congress. This authority was also used to mobilize reservists during the later part of the Persian Gulf War (1991). DOD's general policy has been to keep reservists on active duty for no more than one year; and in the majority of cases to date, mobilized reservists have not been required to serve more than one year. However, the policy does allow the Service Secretary to keep reservists on active duty for up to 24 cumulative months if they are needed to meet operational or other requirements. It should be noted that DOD's policy capping reserve service at 24 cumulative months is more restrictive than the 24 consecutive month cap specified in law. If DOD were to change its policy to mirror the law, reservists could be mobilized multiple times for tours of 24 consecutive months apiece. Also, some members of the National Guard have been called up to perform duties related to ONE in a non-federal status . Additionally, in 2001 and 2002, thousands of members of the National Guard were activated at the order of their respective governors to provide additional security at airports. They were called up under Title 32 of the U.S. Code, which means they were under state control, but with federal pay and benefits. These distinctions have a significant bearing on the type of pay, benefits, and legal protections to which the affected individuals are entitled. For more information on this topic, see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by [author name scrubbed]. No statute governs the deployment of "sole surviving" sons and daughters in today's all-volunteer military. However, the Department of Defense does have an administrative policy governing assignments of a "sole surviving" son or daughter. This policy allows "sole surviving" sons or daughters to apply for a protective assignment status which, once approved, prohibits his or her assignment "to any overseas area designated as a hostile-fire or imminent-danger area ... nor to duties that regularly might subject him or her to combat with the enemy." In addition to protective assignment, enlisted personnel who become sole surviving sons or daughters after having entered service may also apply for and be granted a discharge in most circumstances. However, the term " sole surviving son or daughter " does not simply mean the only child in a family. According to DOD's definition, a sole surviving son or daughter is the only remaining son or daughter in a family where the father or mother, or one or more sons or daughters, served in the Armed Forces of the United States and, because of hazards with such military service, either (1) was killed, (2) died as a result of wounds, accident or disease, (3) is in a captured or missing-in-action (MIA) status, or (4) is permanently 100-percent disabled, is hospitalized on a continuing basis, and is not employed gainfully because of such disability. The "sole surviving" son or daughter issue is different from the commonly cited, albeit fictional, "Sullivan Act" or "Sullivan Law." The Sullivans were five brothers serving on board a single U.S. Navy ship (the U.S.S. Juneau ) during World War II. Their ship was sunk by the Japanese on November 13, 1942, and all of the brothers died. In response to this tragedy, some proposals were made to prohibit brothers from serving together on the same ship, but Congress did not pass any such law, nor did the President issue an executive order to that effect. In response to a similar tragedy which occurred the previous year (three brothers serving aboard the U.S.S. Arizona perished during the Pearl Harbor attacks) the Navy did issue a policy forbidding commanding officers from approving requests from brothers to serve together, but the policy was apparently not enforced and did not prohibit the Navy from assigning brothers to the same ship. Current DOD policy states that "concurrent assigning of service members of the immediate family to the same military unit or ship is not prohibited, but requests for reassignment to a different unit or ship may be approved for all but one service member." Approval of such requests, however, are contingent upon military requirements. No statute governs the treatment of conscientious objectors currently serving in the military. However, the Department of Defense does have an administrative policy relating to this issue. Of course, in today's all-volunteer military, those who have moral objections to participating in war will likely choose not to join the military. Nonetheless, some people volunteer to join the armed forces with every intention of fulfilling their military obligations, but later develop religious or moral objections to participation in war. Such people may apply for transfer to non-combat related duties or for an administrative discharge, depending on the nature of their convictions. Following application, a formal investigatory procedure is initiated by the military to ascertain the facts and nature of the applicant's claim. Based on this investigation and the criteria for granting conscientious objector status defined in the DOD policy, a determination is made to either grant or deny the applicant's claim. With respect to the criteria for granting conscientious objector status, a crucial one is the requirement that the individual be "opposed to participation in war in any form." In other words, the objection "must be to all wars rather than a specific war." This standard precludes those who are opposed to some wars, but not all wars, from being classified as conscientious objectors. In 2000, slightly over 100 servicemembers applied for conscientious objector status; in 2004 this number was over 400. Of those who apply, approximately half are approved. Yes, if a service member is killed, dies, or is declared captured or missing, the other service members of the same family will be exempt, upon request, from serving in designated hostile-fire areas or if already serving in such as area, will be reassigned. This also applies to those who are categorized as 100% disabled by the Service or the Veterans Administration. In addition, wounded personnel who have been medically evacuated and hospitalized for more than 30 days outside the hostile-fire area will not be returned during the same tour; they may, however, be eligible for subsequent combat tours. This provision does not apply to those hospitalized for injury, accident, illness, self-inflicted wounds, or other non-combat causes. Under federal law, the President has the authority to suspend laws related to promotion, retirement and separation of military personnel during a period of time when members of the Reserve Component have been involuntarily ordered to active federal service. Since 1990, this authority has been delegated to the Secretary of Defense by executive order. Secretary of Defense Donald Rumsfeld delegated this authority to each of the individual military services on September 19, 2001, allowing those services to "stop loss" by keeping individuals on active duty beyond their normal date of separation or retirement. Stop-loss has usually been implemented to permit the military to retain people with critical skills during a time of crisis. Since September 11, 2001, all of the Services have implemented such "skill based" stop loss for various lengths of time, although none of the Services currently have such a policy in effect. However, the Army has implemented a stop-loss policy which delays the departure of personnel from units deploying to Iraq and Afghanistan until 90 days after the unit returns from its deployment. The purpose of this "unit based" stop-loss is to maintain unit cohesion and thereby maximize military effectiveness among units headed for a combat environment. The Army has both an Active Army and Reserve Component Unit Stop Loss program. Under both, soldiers are affected from 90 days prior to their unit's mobilization/deployment date through their demobilizatioin/redeployment date, plus a maximum of 90 days. As of December 31, 2005 , stop loss impacted 12,467 soldiers (7,620 active component, 2,418 Reserve and 2,429 National Guard) Most involuntary separations—for example, discharges due to criminal acts—will not be affected by stop-loss. Additionally, the adoption of a stop-loss policy does not modify service policies or regulations which might lead to an administrative discharge (e.g. for homosexuality) or to a medical discharge. Most recently, Congress has required the Secretary of Defense to report on the actions being taken to ensure that new enlistees are adequately informed concerning service stop loss policies. Many military personnel participating in OEF and OIF are eligible for Hostile Fire or Imminent Danger Pay (HF/IDP). HF/IDP is authorized by 37 U.S.C. 310, which provides a special pay for "duty subject to hostile fire or imminent danger." While DOD regulations distinguish between Hostile Fire Pay and Imminent Danger Pay, they are both derived from the same statute and an individual can only collect Hostile Fire Pay or Imminent Danger Pay, not both simultaneously. The purpose of this pay is to compensate servicemembers for physical danger. Iraq, Afghanistan, Kuwait, Saudi Arabia and many other nearby countries have been declared imminent danger zones. Military personnel serving in such designated areas are eligible for HF/IDP. To be eligible for this pay in a given month, a servicemember must have served some time in one of the designated zones, even if only a day or less. The authorizing statute for HF/IDP sets the rate at $225 per month. Military personnel serving in Iraq, Afghanistan, parts of the Persian Gulf region, and certain nearby areas are also eligible for Hardship Duty Pay (HDP). HDP is authorized by 37 U.S.C. 305. It is compensation for the exceptional demands of certain duty, including unusually demanding mission assignments or service in areas with extreme climates or austere facilities. The maximum amount of HDP was recently increased by Congress from $300 to $750 per month. The current rate of HDP for Iraq and Afghanistan is $100 per month. Military personnel participating in OEF and OIF may also be eligible for Family Separation Allowance (FSA). FSA is authorized by 37 U.S.C. 427, which provides a special pay for those servicemembers with dependents who are separated from their families for more than 30 days. The purpose of this pay is to "partially reimburse, on average, members of the uniformed services involuntarily separated from their dependents for the reasonable amount of extra expenses that result from such separation...." To be eligible for this allowance, U.S. military personnel must be separated from their dependents for 30 continuous days or more; but once the 30-day threshold has been reached, the allowance is applied retroactively to the first day of separation. The authorizing statute for FSA sets the rate at $250 per month. Another benefit available to those deployed to Afghanistan, Iraq, and other designated areas nearby is eligibility for the Savings Deposit Program. This program allows service members to earn a guaranteed rate of 10 percent interest on deposits of up to $10,000, which must have been earned in the designated areas. The deposit is normally returned to the servicemember, with interest, within 90 days after he or she leaves the eligible region, although earlier withdrawals can sometimes be made for emergency reasons. Finally, there is a tax benefit for many of those serving overseas in OEF or OIF called the "combat zone tax exclusion." Afghanistan and the airspace above it have been designated a "combat zone" since September 19, 2001. Military personnel serving in direct support of the operations in this combat zone are also eligible for the combat zone tax exclusion. Additionally, certain areas in the Persian Gulf region —including Iraq—have been designated combat zones since 1991. Military personnel serving in direct support of operations in this combat zone are also eligible for the combat zone tax exclusion. For enlisted personnel and warrant officers, this means that all compensation for active military service in a combat zone is free of federal income tax. For commissioned officers, their compensation is free of federal income tax up to the maximum amount of enlisted basic pay plus any imminent danger pay received. While the combat zone tax exclusion contained in federal law applies only to federal income tax, almost all states have provisions extending the benefit to their state income tax as well. Dependents of active duty military personnel who die in the line of duty are eligible for a variety of special payments and benefits. The major compensation and benefit programs are listed below. The death gratuity is a lump sum payment to the surviving spouse of the servicemember, or to the children of the servicemember in equal shares if there is no spouse. The payment amount was recently increased by Congress from $12,420 to $100,000 for all active duty deaths and made retroactive to October 7, 2001. The death gratuity may also be paid if death occurs within 120 days after release from active duty if the death resulted from injury or disease incurred or aggravated during military service. The purpose of this benefit is to provide cash quickly to the survivors in order to help them meet immediate needs. The servicemembers' designated beneficiary, or the statutorily specified next of kin if no beneficiary was designated, is entitled to a payment for any unused leave the servicemember had accrued at the time of death. All members of the military are automatically enrolled in SGLI for the maximum benefit of $400,000. Servicemembers may reduce or decline coverage under SGLI, but doing so requires that they request this in writing. In contrast to most civilian life insurance providers, SGLI pays benefits in the event of combat-related deaths. Effective September 10, 2001, all active duty personnel are covered by the Survivor Benefit Plan (SBP). Under the SBP, if a servicemember dies while on active duty, the surviving spouse is entitled to an annuity, which is based in part on the deceased's basic pay level and years of service. The interaction between SBP benefits, Social Security benefits, and Dependency and Indemnity Compensation is complex and may result in reduced or offset SBP benefits. For a full description of these interactions, see CRS Report RL31664, The Military Survivor Benefit Plan: A Description of Its Provisions , by [author name scrubbed]. SBP payments are terminated for a surviving spouse who remarries before age 55. The Dependency and Indemnity Compensation (DIC) program, administered by the Department of Veterans' Affairs, provides a monthly payment to unremarried surviving spouses, or eligible children, of servicemembers who die because of service related illnesses or injuries. At present, the monthly payment for surviving spouses is $1,033 per month, plus $257 per child. Additional payments can also be made if the survivor has certain disabilities. See the previous paragraph on the Survivor Benefit Plan for important information on the combination of DIC with other government provided annuities. Surviving spouses and children of servicemembers who die while on active duty may be eligible for Social Security Survivor benefits if they meet certain eligibility requirements. The amount of benefits varies based on a number of factors, including the average lifetime earnings of the decedent, the number of quarters the decedent paid Social Security taxes, and certain characteristics of the beneficiary, such as age and relationship to the decedent. Remarriage can have an effect on a widow's or widower's benefit. See the previous paragraph on the Survivor Benefit Plan for important information on the combination of Social Security benefits with other government provided annuities. The following expenses may either be paid directly by the military service to which the deceased belonged, or reimbursed to the individual who pays for them: "(1) Recovery and identification of the remains. (2) Notification of the next of kin or other appropriate person. (3) Preparation of the remains for burial, including cremation if requested by the person designated to direct disposition of the remains. (4) Furnishing of a uniform or other clothing. (5) Furnishing of a casket or urn, or both, with outside box. (6) Hearse service. (7) Funeral director's service. (8) Transportation of the remains, and round-trip transportation and prescribed allowances for an escort of one person, to the place selected by the person designated to direct disposition of the remains or, if such a selection is not made, to a national or other cemetery which is selected by the Secretary and in which burial of the decedent is authorized. (9) Interment of the remains. (10) Presentation of a flag of the United States to the person designated to direct disposition of the remains. (11) Presentation of a flag of equal size to the flag presented under paragraph (10) to the parents or parent, if the person to be presented a flag under paragraph (10) is other than the parent of the decedent." Members of the Armed Forces who die while on active duty are eligible for burial in national cemeteries, including Arlington National Cemetery. The government provides a grave site, opening and closing of the grave, headstone or marker, and maintenance of the site at no cost to the family. Interment of cremated remains in a columbarium is an option as well. The FY2006 National Defense Authorization Act (NDAA) allows the Secretary of Defense to permit the family of a servicemember who dies on active duty to remain in government quarters for up to 365 days, free of charge. Alternatively, the Secretary can authorize payment of the Basic Allowance for Housing, a tax-free allowance designed to cover most of the costs of civilian housing in a given region, for 365 days. Previously, these benefits had been limited to 180 days. The unremarried surviving spouse of a deceased servicemember remains eligible for TRICARE, the military health care system, until age 65. At age 65, the surviving spouse becomes eligible for TRICARE for Life, provided he or she has Medicare Part A and Part B coverage. Children of the deceased servicemember remain eligible for TRICARE until they become 21 years of age, although eligibility may extend past age 21 if the child meets certain requirements and is either enrolled full time in an institution of higher learning or has a severe disability. Surviving family members of a deceased servicemember receive TRICARE benefits at the active duty dependent rate for a three year period, after which they receive TRICARE benefits at the retiree dependent rates. The unremarried surviving spouse of a deceased servicemember is eligible for unlimited access to the commissary and exchange systems indefinitely. Children of a deceased servicemember are eligible for unlimited access to the commissary and exchange system until they become 21 years of age or get married, although eligibility may extend past age 21 if the child meets certain requirements and is either enrolled full time in an institution of higher learning or has a severe disability. The Survivors' and Dependants' Educational Assistance program, administered by the Department of Veterans' Affairs, provides up to 45 months of educational assistance to unremarried surviving spouses, or eligible children, of servicemembers who die in the line of duty. At present, the monthly payment is $803 per month for full-time attendance at eligible institutions; a lesser amount is paid for part-time attendance. Unremarried spouses have up to ten years to use this benefit. Children may generally receive benefits between the ages of 18 and 26, although there are circumstances where a child can receive benefits before 18 or after 26. This benefit can be used for undergraduate or graduate study, technical or vocational schooling, correspondence courses, some types of on-the-job training, and certain other educational programs. Casualties from ongoing combat operations in Iraq and Afghanistan have received media attention and Members of Congress have frequently expressed concern about the level of care for those severely injured or wounded service members and their families. As a result, several new programs have been established: While the Servicemembers' Group Life Insurance (SGLI) program has offered low-cost life insurance to military personnel, there has not been, until recently, a provision for disability coverage. Effective December 1, 2005, all service members were insured for traumatic injuries at a monthly premium of $1.00, unless they decline coverage. This program, colloquially referred to as TSGLI or Traumatic SGLI, provides an immediate payment between $25,000 and $100,000 to ease the financial burden associated with hospitalization, recovery and rehabilitation. Those who are blind, deaf, paralyzed, severely burned or multiple amputees will qualify for the $100,000 maximum. Other severe injuries will be compensated on a sliding scale of $25,000, $50,000 and $75,000 based on the severity and duration of the condition. TSGLI is not disability compensation and it has no effect on Veterans Administration entitlements. The Office of the Under Secretary of Defense for Personnel and Readiness is responsible for implementing the program with the services. TSGLI is retroactive to October 7, 2001 if the loss was a direct result of injuries received in OEF or OIF. Based on the FY2006 National Defense Authorization Act (NDAA) , service members who are wounded, injured or become ill in a combat zone (as determined by the Secretary of Defense) and who are medically evacuated, will receive a special pay of $430 per month during the period of their hospitalization, recovery and rehabilitation. The special pay will be reduced by any amount of hostile fire or imminent danger pay that is received and the pay is not retroactive. Because service members receive a Basic Allowance for Subsistence, they have routinely been charged for meals while hospitalized in military medical treatment facilities. Previous legislation had temporarily waived this charge. However, with passage of the FY2006 National Defense Authorization Act , service members are no longer required to pay for these meals while they are undergoing continuous care, to include outpatient care, for an injury, illness or disease incurred in support of OEF, OIF or other military operations designated by the Secretary of Defense. This exemption is now effective from October 1, 2005 through December 31, 2006. Military personnel, including reservists called into active federal service, are eligible for a broad array of legal protections under the Servicemembers' Civil Relief Act (SCRA) of 2003. (Note, however, that National Guardsmen who are serving in a purely state status are not covered by the SCRA; National Guardsmen performing full time National Guard duty under Title 32, section 502(f) of the U.S. Code are eligible for coverage under the SCRA in certain circumstances). Among other things, the SCRA provides military personnel with certain protections against rental property evictions, mortgage foreclosures, insurance cancellations, and government property seizures to pay tax bills. The SCRA also limits to 6 percent the amount of interest that the servicemember has to pay on loans—except student loans—incurred prior to entry onto active duty. Usually, the provisions of the SCRA only apply during the period of active military service, or for a short period of time afterwards. For a full description of the legal protections provided to activated reservists by the SCRA, see the CRS Report RL32360, The Servicemembers Civil Relief Act (P.L. 108-189) , by [author name scrubbed]. Prior to the September 11 attacks, there was a serious debate between Congress and the executive branch over whether the military was being tasked with more missions than it could realistically handle, given its manpower levels. Congress was especially concerned that these missions—in Bosnia, Kosovo, Southwest Asia, the Sinai, and elsewhere—might be producing personnel tempo (PERSTEMPO) levels high enough to have a negative effect on retention. As such, Congress passed laws requiring the services to track the PERSTEMPO of every servicemember, to monitor individual PERSTEMPO levels more closely, and to pay an allowance to servicemembers assigned lengthy or numerous deployments. Similar concerns about PERSTEMPO led General Eric Shinseki, the Army Chief of Staff, to assert before the House Armed Services Committee in July, 2001, that "Given today's mission profile, the Army is too small for the mission load it is carrying." During that hearing, both Shinseki and Secretary of the Army Thomas White endorsed a proposal to increase the Army's end strength from 480,000 to 520,000 soldiers. Since September 11, 2001, operations Noble Eagle, Enduring Freedom and Iraqi Freedom have dramatically increased the manpower needs of the military services, especially for the Army, which has shouldered the bulk of the manpower burden associated with the occupation of Iraq. These manpower needs have been filled primarily through the call up of over 500,000 reservists, longer duty days and higher PERSTEMPO rates for many active duty personnel, and the use of contract personnel. So far, this response has enabled the military to perform its assigned missions, but some observers note that it could cause problems in the future—for example, in unacceptably low retention rates, unacceptable performance levels, and difficulty responding to new crises—if carried out over an extended period of time. In order to prevent such problems from occurring, Congress and the executive branch have taken a number of actions. For example, at the end of FY2003 and FY2004 the Department of Defense invoked a statutory provision which allowed it to exceeded its authorized end strength. Additionally, Congress recently authorized an increase of 20,000 to the size of the active Army and an increase of 3,000 to the size of the active Marine Corps in the Ronald W. Reagan National Defense Authorization Act for FY2005. A separate provision in that law gives the Secretary of Defense the authority to temporarily increase the size of the Army by another 10,000 people, and the size of the Marine Corps by 6,000 people. Most recently, the FY2006 National Defense Authorization Act provides for an active duty end strength (as of September 30, 2006) of 512,400 for the Army (an increase of 30,000) and an end strength of 179,000 for the Marine Corps (an increase of 4,000). Furthermore, this legislation authorized additional annual increases of 20,000 for the Army and 5,000 for the Marine Corps for each FY2007 through 2009. However, the Army is having difficulty increasing its strength due to recruiting shortfalls. Another prominent initiative intended to reduce manpower strain is the Army's ongoing effort to reorganize itself, converting from a divisional structure to one based on brigade sized "units of action." The Army believes that this reorganization will increase its pool of deployable units, which could help reduce PERSTEMPO rates. The Army is also shifting of some critical military capabilities from the reserve component to the active component, thereby reducing the need to call up reserve units to support military operations, and retraining personnel from skills in lower demand (such as air defense and artillery) to skills in higher demand (such as military police). Other alternatives which have been suggested include contracting out more functions to the private sector, increasing the use of technologies which reduce manpower needs, securing greater participation in Iraq and Afghanistan by allied military personnel, reducing U.S. involvement in missions such as the Sinai and Kosovo, and withdrawing U.S. forces from Iraq in relatively large numbers. Any attempt to reinstate the draft would require congressional approval. The legal framework for conscription is codified in law, but the law contains a provision which prohibits actual induction into the Armed Forces after July 1, 1973. To reinstate the draft, Congress would have to pass legislation reauthorizing inductions. At the present time, it appears unlikely that the U.S. will reinstate the draft to meet its manpower needs. While the Army and some of the Reserve Components are having difficulty making recruiting goals, the military is meeting its retention objectives and has a large pool of trained personnel in the reserves that it can draw on to augment its active forces. Additionally, while conscription is useful for producing large numbers of basically trained military personnel, it is not very useful for producing high skill specialists which the military often has the greatest need for: for example, intelligence analysts, linguists, special operations forces, civil affairs personnel, and pilots. These people need years of training and high motivation levels to become proficient in their military occupations. However, should reconstruction and counter-insurgency operations in Iraq require a major U.S. presence for a prolonged period of time, the utility of a draft might become a more active consideration. Such a mission could demand a large numbers of military personnel who do not require the more specialized skills. The draft might also be useful if Congress decided to dramatically expand the size of the Army over a short period of time. See also CRS Report RL31682, The Military Draft and a Possible War with Iraq , by [author name scrubbed] (pdf), for a more detailed discussion of arguments for and against a draft.
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This report provides short answers to commonly asked questions about military personnel, compensation, and force structure issues related to Operation Noble Eagle (ONE), Operation Enduring Freedom (OEF), and Operation Iraqi Freedom (OIF). Operation Noble Eagle is the name given to military operations related to homeland security and support to federal, state, and local agencies in the wake of the September 11 attacks. Operation Enduring Freedom includes ongoing operations in Afghanistan, operations against terrorists in other countries, and training assistance to foreign militaries which are conducting operations against terrorists. Operation Iraqi Freedom includes the invasion of Iraq, the defeat of Saddam Hussein's regime, and the subsequent rebuilding and counter-insurgency operations in Iraq. The questions are grouped into three major thematic areas: personnel, compensation and force structure. The section on personnel addresses issues such as casualties, reserve mobilization, "sole surviving" son or daughter status, conscientious objection, and "stop-loss." The section on compensation addresses issues related to the pay and benefits—including casualty and death benefits—provided to members of the U.S. military participating in ONE/OEF/OIF and their families. The section on force structure addresses issues related to how ONE/OEF/OIF might affect the number of personnel needed by the military, and responds to common questions about whether a return to conscription is likely under current circumstances. This report will be updated as needed.
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Article I, Section 2, of the Constitution states: "The House of Representatives shall chuse their Speaker and other Officers." The position of Speaker combines several roles: the institutional role of presiding officer and administrative head of the House, the partisan role of leader of the majority party in the House, and the representative role of an elected Member of the House. As the "elect of the elect," the Speaker has perhaps the most visible job in Congress. By statute, the Speaker is also second in line, behind the Vice President, to succeed to the presidency. The Constitution does not describe the office of the Speaker or its duties, nor was there any significant discussion of the office during the Constitutional Convention. The use of the title "Speaker" probably has its origins in the British House of Commons, where the presiding officer acted as the chamber's spokesman to the Crown, but any assumptions the authors of the Constitution had for the office undoubtedly also drew upon their own experiences in colonial legislatures and the Continental Congress. There does not seem to have been any grand plan or specific expectation as to how the Founding Fathers envisioned the speakership. Rather, the speakership has been shaped largely by the various individuals who have held the post, the circumstances in which they have operated, formal obligations that have been assigned to the office by House rules and by statute, the character of the House as a political and constitutional institution, and traditions and customs that have evolved over time. When the House of Representatives convenes at the beginning of a new Congress, its first order of business is to elect a Speaker. Because the House dissolves at the end of a Congress and must start anew at the beginning of each new Congress, the Clerk of the House presides over the House under general parliamentary law until a Speaker is elected. For its first 50 years, the House elected the Speaker by ballot. In 1839, this method was changed to election by vive voce , meaning that each Member names aloud whom he or she favors for Speaker. Tellers then record the result. In modern practice, each party places the name of a single Member in nomination for the position, but otherwise virtually the same vive voce method is used to elect the Speaker. Because the election of the Speaker typically takes place before the House adopts its rules of procedure, the election process is defined by precedent and practice rather than by any formal rule. To be elected Speaker, a candidate must receive an absolute majority of the votes cast, which may be less than a majority of the full membership of the House because of vacancies, absentees, or Members voting "present." Although the major parties nominate candidates for the position of Speaker, there is no limitation on for whom Members may vote. In fact, there is no requirement that the Speaker be a Member of the House. None of the other officers of the House is a Member. If no candidate receives the requisite majority, the roll call is repeated until a Speaker is elected. Again, Members may continue to vote for any individual, and no restrictions, such as eliminating minority candidates or prohibiting new candidates from being named, are imposed. For example, at the beginning of the 34 th Congress in 1855, 133 ballots over a period of two months were necessary to elect Nathaniel Banks of Massachusetts as Speaker. The last occasion on which multiple ballots were required to elect a Speaker was in 1923. At the beginning of the 68 th Congress, the nominees from both major parties initially failed to receive a majority of the votes because of votes cast for other candidates by Members from the Progressive Party and from the "progressive wing" of the Republican Party. After the Republican leadership agreed to accept a number of procedural reforms, many of these Members agreed to vote for the Republican candidate on the ninth ballot, making Frederick Gillett of Massachusetts the Speaker. If a Speaker dies or resigns during a Congress, the House immediately elects a new Speaker. Although it was an earlier practice of the House to elect a new Speaker under these conditions by adopting a resolution to that effect, the modern practice is to use the same practice as employed at the beginning of a Congress. The most recent example occurred during the 114 th Congress when Paul Ryan of Wisconsin was elected Speaker following the resignation of John Boehner of Ohio. After the ballots are tallied, the presiding officer announces the name of the newly elected Speaker and then appoints a committee of Members to escort the Speaker-elect to the chair. Traditionally, the minority floor leader makes remarks and presents the Speaker-elect to the House; the Speaker-elect then addresses the chamber before being sworn in by the longest continuously serving Member (the "Dean of the House"). The House, at that point, adopts two resolutions, one that informs the Senate of the Speaker's election and one that directs the Clerk to inform the President. In the 19 th century, longevity of House service was not as important a criterion in selecting the Speaker as it is today. It was not unusual for a Member to be elected Speaker with only a few years of service. From 1789 to 1899, the average length of House service before a Member was elected Speaker was 7.1 years. In fact, Henry Clay of Kentucky (in 1811) and William Pennington of New Jersey (in 1860) were each elected Speaker as freshmen. (The first Speaker, Frederick A. Muhlenberg of Pennsylvania, was obviously a third, albeit special, case.) The 21 Speakers elected between 1899 (David B. Henderson) and October 2015 (Paul D. Ryan) served an average of 23.3 years in the House prior to their first election as Speaker. The longest pre speakership tenure in this period belonged to Jim Wright, who served for 17 terms before being elected as Speaker. Sam Rayburn of Texas served longer as Speaker than any other Member: a tenure of 17 years (interrupted twice by Republican majorities). Thomas P. "Tip" O'Neill Jr. of Massachusetts holds the record for the longest continuous service as Speaker: 10 years. The record for the shortest tenure belongs to Theodore M. Pomeroy of New York, who served one day. ( Appendix A lists all the Speakers of the House as well as their party affiliations, home state, and dates of service in that office. See http://history.house.gov/Institution/Firsts-Milestones/Speaker-Fast-Facts/ for other "Speaker of the House Fast Facts" [e.g., youngest, oldest, etc.].) Although the Constitution mentions the office of the Speaker, it is silent on duties of the office. Today, the Speaker possesses substantial powers under House rules. Among the duties performed are the following: Administering the oath of office to Members (the act of 1789 [2 U.S.C. 25] provides that, on the organization of the House, the oath shall be administered by any Member—traditionally the Member with the longest continuous service—to the Speaker and by the Speaker to the other Members); Calling the House to order (Rule I, clause 1); Preserving order and decorum within the chamber and in the galleries (Rule I, clause 2); Recognizing Members to speak and make motions (Rule XVII); Deciding points of order (Rule I, clause 5); Counting a quorum (Rule XX, clause 7(c)); Presenting the pending business to the House for a vote (Rule I, clause 6); Appointing Speakers pro tempore (Rule I, clause 8) and chairs of the Committee of the Whole (Rule XVIII, clause 1); Certifying various actions of the House, including signing all acts and joint resolutions, writs, warrants, and subpoenas of (or issued to) the House (Rule I, clause 4); Appointing select and conference committees (Rule I, clause 11); Appointing certain House officers (such as the inspector general under Rule II, clause 6; the historian of the House under Rule II, clause 7; and the general counsel under Rule II, clause 8); Referring measures to committee(s) (Rule XII, clause 2); and Examining and approving the Journal of the proceedings of the previous day's session (Rule I, clause 1). The Speaker's powers offer him or her considerable latitude to exercise discretion. Under most circumstances, the Speaker has the authority to ask Members who seek recognition, "For what purpose does the gentleman (or gentlelady) rise?" The Speaker may then decide whether or not to recognize that Member for the specific reason given. In this way the Speaker is able to assert control over what motions may be made and therefore what measures will be considered and the general flow of House floor proceedings. House Rule XV, clause 1, allows the Speaker to entertain motions to suspend the rules on Mondays, Tuesdays, and Wednesdays and during the last six days of a session. Discretion over who may be recognized to make such motions gives the Speaker virtually complete control over the suspension process. The institutional role of the Speaker also extends beyond the duty to preside over the House. The Speaker also exercises general control over the Hall of the House and the House side of the Capitol (Rule I, clause 3) and serves as the chair of the House Office Building Commission. The Speaker is frequently authorized in statute to appoint Members to various boards and commissions, and it is typically the Speaker who is the formal recipient of reports or other communications from the President, government agencies, boards, and commissions. The role of the Speaker also extends to the requirement in House Rule V, clause 1, that he or she administer a system for audio and video broadcasting of the proceedings of the House. Rule I, clause 9, provides for the Speaker, in consultation with the minority leader, to devise a system of drug testing in the House. Finally, although it is not prescribed in any formal way, the elevated profile of the office of the Speaker often means he or she takes a leading role in negotiations with the Senate or President. Under both Republican and Democratic majorities, Speakers have played similar roles as leaders of their parties. A Speaker's role as leader of the majority party is manifested in two ways: within the party conference or caucus and on the House floor. Within the Republican Party conference, the Speaker acts as the chair of the party's Steering Committee, has four votes on the committee, and also appoints another member of it. The Speaker thus plays a major part in the committee assignment process, because Members are nominated to serve on or chair committees by the Steering Committee. These nominations are subject to approval by the full party conference and subsequently by the House. In addition, the Speaker is empowered to make nominations directly for the Republican Conference's consideration for membership (including chairs) on the Rules Committee and the Committee on House Administration as well as one Member (to serve as the second-ranking Republican) on the Budget Committee. The conference rules also authorize the Speaker to recommend to the House all Republican members of joint, select, and ad hoc committees. House Republican Conference rules also provide for the Speaker to serve on the National Republican Congressional Committee. He or she also serves on the party's Committee on Policy and can appoint additional Members to it. Because the Speaker's role as leader of the majority party in the House is sometimes at odds with the role as presiding officer of the chamber, House Republican Conference Rule 2(c) states: A Member of the elected or designated Republican Leadership has an obligation, to the best of his or her ability, to support positions adopted by the Conference, and the resources of the Leadership shall be utilized to support that position. Under the rules of the House Democratic Caucus (which are lengthier and more detailed than those of the Republican Conference), a Speaker from that party would recommend (to the caucus) nominees for officers of the House. A Speaker's prominence within the caucus is reinforced because he or she would chair the Steering and Policy Committee and appoint two vice-chairs, and up to 15 of the committee's members. In addition, a Speaker would appoint one Member to the House Budget Committee. He or she would nominate the Democratic membership on the Committee on Rules and on the Committee on House Administration and recommend to the caucus a nominee for chair of these two committees. A Speaker of the Democratic Party also serves as a member of the Democratic Congressional Campaign Committee and appoints eight of its members. The success of every person to hold the Speaker's office since the late 20 th century has been judged, at least in part, on the basis of his or her ability to use personal prestige and the powers of persuasion and bargaining to enunciate and advance his or her party's vision and legislative agenda, as well as on success in maintaining majority control of the House. To accomplish these objectives, modern Speakers have used varying personal styles and engaged in a variety of activities not just in Congress or their party conference but outside as well. For example, they publicize their party's policies and achievements (by giving speeches, appearing on radio and television, holding press conferences, etc.), assist party Members who are seeking reelection, consult with Presidents about both Administration and congressional agendas and goals, and act as a spokesman for the opposition when the majority in the House is not the same party as the President. In the words of one commentator: To an increasing degree, the way for a Speaker to win support among colleagues is to influence public opinion.... [A] House leader now needs some credibility outside the institution in order to win on the inside. Bringing coherence and efficiency to a decentralized and individualistic legislative body requires a Speaker to use the entire range of tangible and intangible rewards that can be bestowed or withheld. In an interview, Speaker O'Neill once described how he wielded these various minor powers by saying: You know, you ask me what are my powers and my authorities around here? The power to recognize on the floor; little odds and ends—like men get pride out of the prestige of handling the Committee of the Whole, being named Speaker for the day.... [T]here is a certain aura and respect that goes with the Speaker's office. He does have the power to pick up the telephone and call people. And Members oftentimes like to bring their local political leaders or a couple of mayors. And oftentimes they have problems from their area and they need aid and assistance.... We're happy to try to open the door for them, having been in the town for so many years and knowing so many people. We do know where a lot of bodies are and we do know how to advise people. The power to schedule legislation for floor consideration can be used in ways that reflect both institutional and partisan considerations. The Speaker is charged with ensuring that the House processes its fundamental annual workload, but determining what, when, and in which order measures reach the floor can help determine their fate. A week's delay in scheduling a controversial bill may work to enhance or minimize its chances for passage. According to Speaker O'Neill, it was one of his most important powers, because "if [a Speaker] doesn't want a certain bill to come up, it usually doesn't." Similarly, the Speaker's authority to appoint conferees can be a powerful tool for influencing the final provisions of a bill. The Members appointed represent a complex balance of support for House, committee, and party positions as determined by the Speaker and are not subject to challenge. Modern Speakers have also frequently had to act as mediators of conflicts within their parties. As one leader put it, this involves [t]rying to mollify members who are angry with other members, trying to keep dangerous rifts from developing within the party. Sometimes getting people together of opposite viewpoints and letting them talk their problems out in a way that lets each understand that the other has a problem. Sometimes you can come to a compromise. Balancing parliamentary and partisan roles is not always easily accomplished. At the start of the 20 th century, historian Mary Follett assessed this conundrum: The Speaker ... is not only allowed, but expected to use his position to advance party interests. It must not be supposed, however, that this implies gross partisanship on the part of our Speakers. They neither attempt to use every inch of power to be conjured out of the rules, nor guide the House entirely from party motives. Their office has on the whole been administered with justness and fairness. Another assessment states: Tradition and unwritten law require that the Speaker apply the rules of the House consistently, yet in the twilight zone a large area exists where he may exercise great discrimination and where he has many opportunities to apply the rules to his party's advantage. Although elected as an officer of the House, the Speaker continues to be a Member of the House as well. Accordingly, the Speaker continues to have the same rights, responsibilities, and privileges as all Members. However, because of the Speaker's position as leader, it may be notable or even controversial when he or she exercises the powers granted to other Members, such as debating, voting, and sitting as a Member of a standing committee of the House. Under the principles articulated in Jefferson ' s Manual , the Speaker is typically heard only on matters of order, and it is highly irregular to speak on any other matter while presiding. The Speaker may speak from the floor (as would any other Member), and the precedents of the House include examples of the Speaker leaving the chair to speak from the well, make motions, or debate points of order. However, in most periods in the history of the House, these privileges were infrequently exercised. Jonathan Dayton of New Jersey was the first Speaker to speak out on a matter in Committee of the Whole (during the Fourth Congress), and it was not until Henry Clay of Kentucky became Speaker that this practice became generally accepted. As late as 1850, Chauncy Cleveland of Connecticut, then a Member of the House, questioned whether it would be right or just by the power of party to place a man in the Speaker's chair, and then compel him to use the influence of the chair when he had defined his position.... It was utterly impossible that the Speaker, after having taken his side upon the floor, could go back to the chair, and award the floor with the same impartiality as if he had never spoken. Even today the Speaker does not typically participate in debate on the floor, although the Speaker may do so when he or she feels it necessary to highlight or rally support for the majority party's agenda. The right of the Speaker to vote has also evolved over time. The first rules of the House provided: In all cases of ballot by the House, the Speaker shall vote; in other cases he shall not vote, unless the House be equally divided, or unless his vote, if given to the minority, will make the division equal, and in case of such equal division, the question shall be lost. The Speaker was thus prevented from voting on legislative matters, although the precedents of the House record several examples of Speakers voting contrary to this rule. The Speaker was allowed to vote in Committee of the Whole, but most early Speakers apparently refrained from this practice as well. At least twice (in 1833 and 1837) the House debated proposals to compel the Speaker to vote on all questions, but these proposals were defeated. It was not until 1850 that the rule was amended to allow the Speaker to vote at his discretion, and the modern form of the rule was not adopted until 1880. Rule I, clause 7, currently reads: The Speaker is not required to vote in ordinary legislative proceedings, except when his vote would be decisive or when the House is engaged in voting by ballot. Unlike other Representatives, the Speaker does not sit on any standing committees of the House. This was not always the case. The Rules Committee was for many years a select committee authorized to report a system of rules at the beginning of a Congress and later also to report from "time to time." Beginning in 1858, and continuing after the Rules Committee was made a standing committee of the House in 1880, the Speaker served as chairman. This practice continued through 1910, when the House adopted a rule prohibiting the Speaker from sitting on the Rules Committee. The formal prohibition was removed from House rules by the Legislative Reorganization Act of 1946, but the tradition has continued. Today, the Speaker does not sit on the Rules Committee but does nominate the majority Members in the party conference, effectively making the Rules Committee an integral part of the leadership structure. Appendix A. Speakers of the House of Representatives, 1789-2017 Appendix B. Select Bibliography Albert, Carl Bert. Little Giant: The Life and Times of Speaker Carl Albert . Norman: University of Oklahoma Press, 1990. Bentley, Judith. Speakers of the House . New York: Franklin Watts Inc., 1994. Biggs, Jeffrey R. Honor in the House: Speaker Tom Foley . Pullman: University of Washington Press, 1999. Clancy, Paul R. Tip, A Biography of Thomas P. O ' Neill, Speaker of the House . New York: Macmillan, 1980. Cheney, Richard B. and Lynne V. Cheney. Kings of the Hill: Power and Personality in the House of Representatives . New York: Continuum, 1983. Chiu, Chang-wei. The Speaker of the House of Representatives Since 1896 . New York: Columbia University Press, 1928; reprint edition New York: AMS Press, 1968. Cooper, Joseph and David W. Brady. "Institutional Context and Leadership Style: The House from Cannon to Rayburn," American Political Science Review , vol. 75 (June 1981). Davidson, Roger H., Susan Webb Hammond, and Raymond Smock. Masters of the House: Congressional Leadership Over Two Centuries . Boulder, CO: West Press, 1998. Follett, Mary P. The Speaker of the House of Representatives . New York: Longmans Green, 1902; reprint edition New York: Burt Franklin, 1974. Fuller, Hubert Bruce. The Speaker of the House . Boston: Little Brown, 1909; reprint edition New York: Arno Press, 1974. Green, Matthew N. The Speaker of the House: A Study of Leadership . New Haven: Yale University Press, 2010. Harris, Douglas B. "The Rise of the Public Speakership," Political Science Quarterly , vol. 113 (summer 1998). Hinds, Asher C. "The Speaker of the House of Representatives: Origin of the Office, Its Duties and Powers," American Political Science Review , vol. 3 (May 1909). Hitchner, Dell G. "The Speaker of the House of Representatives," Parliamentary Affairs , vol. 13 (spring 1960). Kennon, Donald R., ed. The Speakers of the U.S. House of Representatives: A Bibliography, 1789-1984 . Baltimore: Johns Hopkins University Press, 1986. Moser, Charles A. The Speaker and the House: Coalitions and Power in the United States House of Representatives . Washington: Free Congress Research and Education Foundation, 1979. O'Neill, Thomas P. Jr. Man of the House . New York: Random House, 1987. Peters, Ronald M. The American Speakership: The Office in Historical Perspective (2 nd ed.) . Baltimore: Johns Hopkins University Press, 1997. ——, ed. The Speaker: Leadership in the U.S. House of Representatives . Washington: Congressional Quarterly, 1995. Peabody, Robert L. Leadership in Congress: Stability, Succession, and Change . Boston: Little Brown, 1976. Ripley, Randall B. Party Leaders in the House of Representatives . Washington: Brookings Institution, 1967. Rohde, David W. Parties and Leaders in the Postreform House . Chicago: University of Chicago Press, 1991. Sinclair, Barbara. Majority Leadership in the U.S. House . Baltimore: Johns Hopkins University Press, 1983. ——. Legislators, Leaders, and Lawmaking: The U.S. House of Representatives in the Postreform Era . Baltimore: Johns Hopkins University Press, 1995. Smith, Steven S. "O'Neill's Legacy for the House," Brookings Review , vol. 5 (Winter 1987). Smith, William Henry. Speakers of the House of Representatives of the United States . New York: AMS Press, 1971.
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The Speaker of the House of Representatives is widely viewed as symbolizing the power and authority of the House. The Speaker's most prominent role is that of presiding officer of the House. In this capacity, the Speaker is empowered by House rules to administer proceedings on the House floor, including recognition of Members to speak on the floor or make motions and appointment of Members to conference committees. The Speaker also oversees much of the nonlegislative business of the House, such as general control over the Hall of the House and the House side of the Capitol and service as chair of the House Office Building Commission. The Speaker's role as "elect of the elect" in the House also places him or her in a highly visible position with the public. The Speaker also serves as not only titular leader of the House but also leader of the majority party conference. The Speaker is often responsible for airing and defending the majority party's legislative agenda in the House. The Speaker's third distinct role is that of an elected Member of the House. Although elected as an officer of the House, the Speaker continues to be a Member as well. As such the Speaker enjoys the same rights, responsibilities, and privileges of all Representatives. However, the Speaker has traditionally refrained from debating or voting in most circumstances and does not sit on any standing committee of the House.
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This report discusses proposals to raise the cigarette tax to help pay for reauthorization of the State Children's Health Insurance Program. This report describes current taxes, discusses potential revenue gains, and discusses some of the basic issues surrounding a tax increase. It also briefly discusses the tax increase on cigars. H.R. 2 passed the House on January 14, 2009 and it included the same cigarette tax as proposed in the 110 th Congress, an increase of 61 cents per pack, raising the tax from 39 cents to $1. The estimated revenues in the House bill were $64.7 billion for FY2009-FY2018, with $57.3 billion of the total from cigarettes. The Senate version and the final legislation, P.L. 111-3 includes taxes similar to H.R. 2 (very slightly higher across the board, with a 61.66 cents increase in cigarette taxes). The vast majority of tobacco taxes are on cigarettes, which account for 94% of tobacco sales (totaling $75 billion in 2007). Federal cigarette taxes are $0.39 per pack, accounting for 94% of federal tobacco tax revenue. There is a 4 cent tax on a package of small cigars. Large cigars carry a tax of 20.719% of sales price, not to exceed $48.75 per 1,000 units, leading to a maximum tax of almost 5 cents per cigar. Per ounce, the tax is 7 cents on pipe tobacco; 1 cent on chewing tobacco; 4 cents on snuff; and 7 cents on pipe and roll-your-own tobacco. There are also taxes on cigarette paper and cigarette tubes. The 61-cent cigarette tax increase would lead to a tax about 2.5 times the current tax.; these same proportions are proposed for snuff, chewing, tobacco and pipe tobacco. Roll your own tobacco's tax increases about eight fold and seven fold and the relatively small taxes on small cigars are increased to those on cigarettes. Large cigars are the only tobacco product with a tax based on price, but they also have a cap; the price-based tax rises in proportionally, but the cap increases by much more, from 5 cents per cigar to $0.40 in the House bill ($0.4026 in the Senate Finance bill and the final legislation). Tobacco tax receipts in the United States in FY2007 included $7.5 billion in federal tax, $16.2 billion in state and local taxes, and $8 billion in payments from the Master Tobacco Settlement. State and local taxes, therefore, were roughly 88 cents per pack and the tobacco settlement payment is approximately the same as the federal tax, 43 cents per pack. Although the tobacco settlement payments resulted from negotiations between the tobacco companies and the states to settle state lawsuits, the payments function as if they were a national tobacco excise tax that is allocated to the states, and any changes that alter consumption would affect these payments. Some of the states have securitized their payments (exchanged the stream of payment for a fixed up-front amount). According to estimates, about a quarter of payments are made to private investors, rather than to state and local governments. As a percentage of sales revenues, the federal, state and local, and tobacco settlement payments are respectively 10.0%, 21.6% and 10.7%, for a total of 42.2%. The Joint Committee on Taxation projected an FY2010 revenue gain of $6.4 billion from the 61 cent increase. CRS estimates suggest there will be a loss of revenue to the states approaching $1.5 billion. There are many alternative sources of revenue (or offsetting spending) for funding the child health program. Are tobacco taxes the most desirable source of revenue? Compared to other taxes, the incentive effects may be desirable. At the same time, the burden falls heavily on lower income people, which may be of concern. Thus, there is a trade-off between the objective of discouraging smoking, and particularly discouraging youth smoking, and the distributional effects of the tax. The remaining issue involves an economic efficiency question relating to arguments that have been made that additional taxes are appropriate to cover costs smokers impose on others. A number of economic studies have questioned that proposition. The following sections discuss these issues. A large body of literature has suggested that increases in the price of tobacco reduce smoking. However, this response is not very large (in economists' parlance, the response is relatively "inelastic"). Most of the evidence has found the price elasticity to be between 0.3 and 0.5 in absolute value, meaning that a 10% increase in price would cause a 3% to 5% decrease in the number of cigarettes smoked. For older adult smokers, about half of this effect was due to fewer smokers (a participation response) and about half due a reduction in smoking (a quantity response). For younger smokers, the participation response was more important. There is some evidence that the response declines with age and that it rises with income, and that it is higher for women, African-Americans, and Hispanics. A recent study, however, found no variation with income. Some recent studies suggest that the response may be less, or that the benefits of reducing smoking may be less. There is some evidence that the response has been declining, an unsurprising outcome since, given a decline in smoking, the remaining smokers are more resistant to price signals. In addition, there is evidence that elasticities might be overstated in studies that compare state smoking levels because states with higher taxes may also have populations more hostile to smoking. Also, recent studies found that smokers may respond to price increases by increasing the intensity of smoking by buying cigarettes with more nicotine and tar, inhaling more deeply and smoking closer to the filter, which could have deleterious effects since more intensive smoking can be more harmful. Due to the limited effects on adult smoking, some arguments have been made that the increased taxes on adults are necessary over the interim to discourage teenage smoking. Evidence has suggested that teenage smoking is more responsive to price; the original responses were estimated at elasticities over one, but subsequent analysis led to an estimate of around 0.7 and a number of recent studies have confirmed this general range. Other studies have found smaller responses, or a very small response by younger teenagers. One recent study replicated the 0.7 elasticity using one statistical approach, but in using another the authors consider superior, they found essentially no response of the initiation of smoking to price. Another paper found a weak and insignificant effect after controlling for anti-smoking sentiment. While much evidence suggests that teenagers are more responsive to prices, these recent studies raise some questions about the effectiveness of tax increases on teenage smoking, especially among young teenagers. The evidence on smoking indicates that higher prices will decrease smoking participation and quantity. It is possible, however, that other types of interventions, such as stricter regulations on sales to teenagers, counseling, education, and assistance with smoking cessation might be more effective. It is generally recognized that cigarette taxes are one of the most regressive taxes, that is, a tax that falls more heavily on lower income individuals as a percentage of income. Indeed, it is probably the most regressive of the federal taxes. Smokers tend to smoke a fixed amount of cigarettes, so that they pay a fixed amount of tax. (Since the tax is a fixed amount per pack, lower income individuals who buy cheaper brands still pay the same amount of tax.) In addition, smoking is more prevalent among lower income individuals. To illustrate, in 1998 the Joint Committee on Taxation estimated that a 76 cent tax increase (brought about through a proposed federal tobacco settlement) would raise the effective tax rate on average by 0.3% of income, but would increase the burden of those with incomes below $10,000 by 2% of income and the burden of those in the $10,000-$20,000 income by 0.6% of income. Since this rate applies to all families, those families with smokers would pay more. For example, a family with one smoker who smokes 1.5 packs a day would pay, with a 76 cent tax, an additional $417 in taxes, which is 4.2% of a $10,000 income and 8.4% of a $5,000 income. To the extent the burden of the tax falls on low-income families and the individuals in those families continue to smoke, low-income children in some families could be harmed even though the child health care provision helps low-income children in general. A final issue that may arise relevant to cigarette taxes is the argument that higher taxes should be imposed on smokers because they impose costs on others largely through higher health care costs paid for through government and private insurance plans, lost days at work, and some other costs. Some economists have questioned this argument, however, because smokers' premature deaths, while harmful to smokers and their families, reduce costs of certain government programs such as Social Security, Medicare, and Medicaid. These calculations do not account for more subjective effects such as irritation to others, although such problems might be better addressed through private market mechanisms (provision of smoking and non-smoking commercial establishments) and regulation. Some disputes about the magnitude of environmental tobacco smoke remain. If smokers are not imposing costs on others, or imposing costs that are less than existing taxes, and if they are making rational decisions to engage in an activity which, while damaging to their health, is nevertheless pleasurable, then an additional tax would not increase economic efficiency. It is not clear, however, whether young smokers, where smoking is generally initiated, are able to fully assess the costs of smoking. Although taxes on other products are a small part of total tobacco taxes, there has been some controversy about the increases for cigars in 110 th Congress proposals and their potential disruption of the industry , as reported in the media. Small cigar taxes increase by a factor of 27. They are apparently viewed by some as substitute for cigarettes who argue they should bear the same tax. Small cigars constitute less than 1/10 of 1% of cigarette sales. For large cigar taxes, which are currently a maximum of 5 cents, the tax could rise to as much as $10 in the original Senate Finance Committee proposal in the 110 th Congress. The ceiling was lowered to $3 on the Senate floor in the 2007 legislation and the ceiling in the House bill was $1 in 2007. H.R. 2 has a ceiling of $0.40, which although much lower is eight times the previous maximum. According to tax data, large cigar sales above the current 5 cents cap (premium cigars) account for about half the total. According to the Cigar Association of America, the average manufacturer's price is about $1.90 for these premium cigars; the average tax on these cigars would be almost a dollar (0.5313 times $1.90 minus $.05) in the original 110 th Congress Senate proposal, but much smaller in the House bill because of lower rate and cap and smaller in the final proposal. Most state cigar taxes are based on value and would apply to the federal tax; they are estimated by the Cigar Association of America at about 30%. If retail prices are twice the manufacturer's price the price of large cigars under the cap in the original Senate proposal would have risen by 20.8% and the price of large cigars over the cap, while varying considerably, would have averaged a 33% increase. Prices would rise more if there is also a retailers markup on the tax. The ceiling of $0.4026 would result in much more modest effects. There is less information on the effects of other tobacco products on health or the behavioral response. If the purpose of the tax on cigars is to account for health costs, a per unit rather than a price based tax would seem appropriate. Cigars may differ from cigarettes in that a larger share may be likely to be smoked only occasionally and would therefore be less harmful to health. They may also be less concentrated at lower incomes. The occasional usage (lack of addictiveness) may mean a larger price response, but the usage by higher income consumers may mean a smaller response.
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On January 15, the House passed H.R. 2, a bill which included increased tobacco taxes to finance State Children's Health Insurance Program (SCHIP). This legislation was similar to that passed in the 110th Congress (H.R. 976 and H.R. 3162) although the initial House proposal had smaller tax increases.. H.R. 2 increases cigarette taxes, the primary source of tobacco tax revenues from 39 cents to $1.00. According to the Joint Committee on Taxation, the cigarette tax will raise $6.4 billion in federal revenues in FY2010 with all federal tobacco taxes increases raising $7.1 billion. A similar tax increase was contained in the Senate bill, and in the final proposal, P.L. 111-3 (although in both case the tax was increased by an additional two thirds of a cent, to $1.0066.) The analysis suggests that state and local governments will lose about $1 billion in cigarette tax revenues and up to $0.5 billion in lost revenues from the tobacco settlement payments. The legislation is now being considered in the Senate. A justification is to discourage teenage smoking, but this effect is probably small; a reservation is that the burden falls heavily on low-income individuals. Taxes on other tobacco products are also increased, although cigarette taxes account for most tobacco revenues. In the 110th Congress, the President vetoed the 110th Congress SCHIP proposal on October 3, 2008, the House failed to override the veto and a new bill, H.R. 3963 passed the House and Senate, with no changes in the cigarette tax, but changes in spending rules, and the President vetoed that version on December 12, 2008.
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Since FY2008, federal highway user taxes and fees have been inadequate to fund the surface transportation program authorized by Congress. Although the 2015 surface transportation act addressed the revenue shortfall through FY2020 by authorizing the use of general funds for transportation purposes, the Congressional Budget Office (CBO) projects that after FY2020 the gap between dedicated surface transportation revenues and spending will average $20 billion annually. The search for revenue to fill this gap may revive congressional interest in tolling as a means of financing transportation projects without federal expenditures. Although states are free to impose tolls on roads, bridges, and tunnels that have been built and maintained without federal assistance, federal law limits the imposition of tolls on existing federal-aid highways, especially on the Interstate Highways. This report explains current federal policies governing tolling and discusses issues related to increasing the use of tolls as a source of revenue for surface transportation projects. In some states, mostly in the Northeast and the mid-Atlantic region, many of today's highways were originally toll roads, often built and operated by private investors. While tolling often made it possible to build or improve roads at minimal cost to taxpayers, many of these roads failed due to overly optimistic revenue expectations, inability to attract sufficient investment to pay for improvements, competing capacity, and toll avoidance and the related cost of enforcement. Over time, toll roads came to be regarded as obstacles to the free flow of commerce. When it established the forerunner of today's federal-aid highway program in 1916, Congress emphasized the principle that roads should be free. Section 1 of the Federal Aid Road Act (39 Stat. 355) provided that "all roads constructed under the provision of this Act be free from tolls of all kinds." The Oldfield Act of 1927 (44 Stat. 1398) opened the door to tolls by permitting the use of federal funds to build toll bridges as long as they were operated by the states or their political subdivisions. However, the federal Bureau of Public Roads continued to oppose the use of federal funds on toll roads. Consequently, when states, mainly in the Northeast, undertook expressway construction in the decade after World War II, they built toll roads without federal aid. By January 1, 1955, there were 1,239 miles of completed "arterial toll roads" in the United States, another 1,382 miles were under construction, and 3,314 miles were being planned or studied. Many of these roads were on routes of the planned Interstate system. Although the Bureau of Public Roads supported the building of new Interstate Highways as free roads, it did recommend that existing toll roads that met its engineering standards and followed the routes of proposed Interstate Highways be incorporated into the new network. The tolling prohibition was reiterated in the Federal-Aid Highway Act and Highway Revenue Act of 1956 (P.L. 84-621; 70 Stat. 374), which authorized 13 years of funding for construction of the Interstate Highway system, created the Highway Trust Fund (HTF) as the source of federal funds for state road construction, and raised tax rates on motor fuels to help fund it. The fuel and other highway taxes that were now dedicated to the HTF were seen as a close proxy for a user-payer system of financing federal-aid roads. The increased flow of federal funds, heavily weighted toward the Interstate Highways, effectively stopped the development of new toll roads by the states. Thirty-five years later, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA; P.L. 102-240 ) opened non-Interstate federal-aid highways to tolling, but allowed existing roads or bridges to be tolled only after being reconstructed. This effectively linked tolling to capacity additions or road improvements. Both the 1998 Transportation Equity Act for the 21 st Century (TEA-21; P.L. 105-178 , as amended by P.L. 105-206 ) and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( P.L. 109-59 ; SAFETEA) allowed tolling on high-occupancy vehicle (HOV) lanes, established pilot projects for tolling of a limited number of Interstate system routes, and allowed limited use of tolls that vary according to the level of traffic, known as congestion pricing. The Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ), enacted in 2012, reinforced the encouragement of tolls on HOV lanes and congestion pricing. It allowed new Interstate system routes or route extensions to be built as toll roads, but continued to block tolling of most existing Interstate Highway lane capacity. MAP-21 retained two pilot programs, one encouraging the use of pricing to control congestion and another allowing Interstate route segments in three states to be converted to tolling as part of their reconstruction. The Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), enacted in December 2015, clarified that public authorities generally, as opposed to solely state agencies, may impose tolls on single-occupant vehicles using HOV lanes. It modified the TEA-21 pilot program allowing existing Interstate Highway segments in three states to be subject to tolls to finance reconstruction by providing that federal approval lapses if the selected states have not started construction within three years of approval. The law also included two provisions related to the setting of rates. One mandates that intercity buses that serve the public have the same access to toll roads and pay the same rates as public transportation buses. The other requires public authorities operating high-occupancy toll lanes (HOT lanes) on the Interstate system to consult with the metropolitan planning organizations concerning the placement and amount of tolls on the facility. Other than these changes, the FAST Act continued the general federal government policy of not regulating toll rates. Table 1 , below, briefly describes active federal tolling programs. An important attribute of federal tolling policy is that all conversions of existing federal-aid highways, bridges, or tunnels to toll facilities require that the facility be reconstructed, restored, rehabilitated, or replaced (unless the conversion occurs under the Value Pricing Pilot Program). The decision to convert a free facility to a tolled facility must be made prior to completion of the qualifying reconstruction project. According to the Federal Highway Administration (FHWA), once physical construction is completed it is too late to make the decision to toll, unless an additional qualifying reconstruction or rehabilitation project is undertaken. Whether it is built or operated by a government agency or by private investors, a toll road must have sufficient traffic willing to pay a high enough toll to cover construction, maintenance, and toll collection costs if it is to be financially successful. Most roads on the federal-aid system are not likely to pass that test. In rural areas, highways often do not have enough traffic to cover the cost of building toll-collection infrastructure and collecting tolls. While urban roads typically have more traffic, they may not be able to generate sufficient toll revenue to make the facilities self-sustaining. Some publicly owned toll roads have been financially successful, generating sufficient revenue to pay for capital improvements and operations, and, in some cases, to contribute to the cost of other highway activities and even to public transportation activities. Other public toll facilities, however, have struggled. One recent example is the 8 miles of express toll lanes built by the Maryland Transportation Authority on I-95 north of Baltimore. In the seven months following their opening in December 2014, the toll lanes produced $6 million in revenue before operating expenses, far from enough to cover the cost of financing the $1.1 billion project. The state government has had to use other funds to make up the difference. Recent federal policy has encouraged the use of tolling to attract private investment into highway and bridge construction, but a number of private toll roads have proven to be financial failures. The Pocahontas Parkway, an 8.8-mile-long toll road near Richmond, VA, that opened in 2002, has persistently been unable to service debt due to low traffic volumes; in June 2012, its private operator wrote off the entire value of its investment in a 99-year concession, and eventually transferred the lease to a new operator. SH-130, a 90-mile, four-lane toll road near Austin, TX, has had much lower traffic volumes than forecast when it opened in 2012, and the Texas Department of Transportation ended up subsidizing truck tolls in an effort to help make the privately owned project viable. Despite the subsidy, in March 2016 the toll road operator, SH 130 Concession Co., and two affiliates filed for Chapter 11 bankruptcy protection. Other toll roads that have sought bankruptcy protection include the South Bay Expressway in San Diego, CA, and the Indiana Toll Road. All of these financial failures were public-private partnerships (P3s) that were formed based, at least in part, on overly optimistic forecasts of the revenue that would be provided by tolls. Their widely publicized difficulties have made investors more cautious about projects reliant on toll revenue. In some cases, private-sector investors have conditioned their participation in P3s on "availability payments," regular payments from the sponsoring government entity to the private entity. This reduces the risk to the private entity, but leaves the public entity at risk if toll revenue falls short of expectations. Using tolls to support transportation expenditures may be a comparatively inefficient form of funding because of high administrative costs. Collecting federal motor fuels taxes is estimated to cost about 1% of the amount collected. The process is administratively simple, because nearly all the federal fuels taxes are collected at the terminal "rack" from only 850 registered taxpayers nationwide, rather than at a large number of retail gasoline stations. The small number of collection points also facilitates enforcement. The administrative costs of toll collection appear to be significantly higher than the cost of fuel-tax collection. Determining the true cost of toll collection is difficult because, as noted in a 2007 report for the Transportation Research Board, some costs are not readily identified in agencies' financial reports, such as a portion of general administrative costs and pension expenses attributable to tolling. Published figures thus likely understate true collection costs. Even so, at the seven agencies examined, the study estimated that toll collection cost from 16.5% to 92.6% of the amount collected. Most toll facilities now collect a majority of their tolls from customer accounts that are debited when an electronic sensor detects a transponder in a vehicle passing beneath a gantry. In principle, the cost of operating an electronic tolling system should be much lower than the cost of manual collection, due to obvious personnel savings. However, many toll facilities continue to employ collectors to receive cash tolls. Those with no provision for collecting cash tolls normally bill drivers without transponders by mail at the address associated with the license plate on the vehicle, often at a higher rate to cover the cost of mailing the bill. Recent financial reports from public agencies indicate that even with extensive use of electronic tolling, collecting highway tolls costs between 8% and 11% of the amount collected (see Table 2 ). The annual report of the New Hampshire turnpike system breaks out some of the costs of electronic tolling in detail, including bank and credit card fees (2.7% of revenue collected from the electronic system), fees paid to process electronic transactions (7.3%), and the in-vehicle transponders furnished to drivers (0.7%). The agency's total operating costs for electronic tolling in FY2015, not including enforcement costs and depreciation of the electronic tolling infrastructure, were 10.6% of revenues collected electronically. Highway toll revenue nationwide came to $14.35 billion in FY2014, according to FHWA. While the amount of toll revenue has grown significantly in recent years, toll revenue as a share of total spending on highways has been relatively steady for more than half a century, in the range of roughly 5% to 6%. On average, facility owners collected $2.36 million per mile of toll road or bridge in FY2014, but revenue per mile varies greatly among toll facilities. All revenue from tolls flows to the state or local agencies or private entities that operate tolled facilities; the federal government does not collect any revenue from tolls. However, a major expansion of tolling might reduce the need for federal expenditures on roads. There are three possible means of increasing revenue from tolling: Increase the extent of toll roads. FHWA statistics identify 6,088 tolled miles of roads, bridges, and tunnels as of January 1, 2015, a net increase of 1,367 miles, or 29%, over 1990. These figures indicate that the extent of toll roads has been growing by 54.7 miles per year, on average, adjusting for the fact that some previously tolled roads have become toll-free. Toll-road mileage comprises only 0.6% of the 1,016,964 miles of public roads eligible for federal highway aid. While there may be many existing roads on which tolling would be financially feasible, proposals to place tolls on existing roads have encountered strong opposition in several states, including Missouri, North Carolina, Texas, and Virginia. The vast majority of mileage on the federal-aid system probably has too little traffic to make toll collection economically viable. Increase toll-road usage . In the aftermath of the recession that began in 2007, the number of vehicle miles traveled in the United States fell below pre-recession levels until 2014. In 2015, vehicle miles traveled increased by 3.5% over 2014. Despite this recent growth in travel, demographic trends and social changes, such as the increased popularity of center-city living among young people, suggest that personal motor vehicle use may grow more slowly in future years than it did in 2015. If that proves to be the case, higher traffic volume may contribute little to increased toll revenues in the long run. Increase the average toll per mile. Toll rates are often significant political issues at the state and local levels, especially when toll revenue is used for purposes other than building and maintaining the toll facility. Trucking interests frequently raise opposition to rate changes that increase truck tolls relative to automobile tolls. On publicly owned facilities, political concerns may lead to toll reductions, as occurred on bridges operated by the Delaware River Port Authority and the Maryland Transportation Authority in 2015. Where roads are operated by private concessionaires, the operators' contracts with state governments typically specify the maximum rate at which tolls can rise. Additionally, large increases can encourage motorists to use competing non-tolled routes. These factors suggest that imposing tolls on individual transportation facilities is likely to be of only limited use in helping states overcome reductions in federal grants should Congress deal with the shortfall in motor fuels tax revenue by reducing the size of the federal surface transportation program. Further, some states, particularly those with low population densities, may have few or no facilities suitable for tolling. Tolls may be an effective way of financing specific facilities, especially major roads, bridges, or tunnels that are likely to be used heavily and are located such that the tolls are difficult to evade, but they seem likely to be less effective in providing broad financial support for surface transportation programs. One way of estimating the revenue that could be raised by tolling the Interstate Highways is to assume that the public would pay the same average annual amount per mile, $2.35 million, as is raised on existing U.S. toll roads and bridges. In this case, tolling all Interstate Highways would be expected to raise roughly $112 billion per year. Of this, approximately $8 billion is already captured by existing toll facilities, leaving around $104 billion of new revenue. This would be more than enough to maintain and operate the proposed toll network. However, it is doubtful that this average could be supported over the entire length of the Interstate system. This is because a large proportion of current toll revenue is collected on heavily traveled roads and bridges in urban areas. The rural Interstates that account for a majority of Interstate Highway mileage carry far less traffic, and may be unable to produce so much revenue per mile. In addition, excessively high tolls could lead users to seek alternative routes. In cases where an Interstate carries little traffic, the costs of building and maintaining the toll collection system might be large relative to the revenue that could be realized. One option for expanding tolling on the Interstates would be for Congress to require tolling only as Interstate system roads and bridges are rebuilt with federal assistance. As many of these roads are not in need of near-term reconstruction, the evolving Interstate system toll network would expand over time. The corresponding reduction in federal-aid highway program spending would also be gradual. To accelerate the conversion, bonds might be issued to fund construction costs up-front, with toll revenues from the newly rebuilt facilities then used to pay for the interest and bond retirement costs. A less ambitious alternative would be to convert only the urban Interstates. Approximately 8.4% of the roughly 18,500 miles of urban Interstate Highways are tolled already, leaving over 17,000 miles of road available for conversion to toll roads. Assuming tolls would be imposed at rates that generate the current average of $2.35 million per mile, tolling the currently free urban Interstates might produce nearly $40 billion in annual revenue, nearly as much as the highway account of the HTF now receives from motor fuels taxes. However, it is doubtful that such a large sum could be realized once operating and collection costs are covered. Also, it is likely that some urban Interstate Highways will not generate sufficient revenues to pay for all their costs. There could, again, be concerns about cross-subsidization if tolls paid on urban roads were used to build and maintain toll-free roads elsewhere. In recent years, federal funds obligated for projects on the 47,662-mile-long Interstate system have accounted for 27% to 32% of total annual federal-aid highway obligations, or about $11 billion to $12 billion annually (in 2014 dollars). Hypothetically, if all Interstate Highways could be instantly converted to a self-sustaining toll network and received no further federal funding, expenditures under the remaining federal-aid highway program would fall from an average of about $42 billion per year to around $30 billion. This would bring federal highway program spending more in line with motor fuels tax revenues. This assumes, however, that tolls could be set high enough to support all the physical infrastructure and operating costs of such a massive toll network, and also that drivers continued to pay federal motor fuels taxes for fuel used while driving on toll roads that do not receive federal funds. Costs of establishing tolling across the Interstate system are likely to be great. States would need to construct gantries above roads and entrance and exit ramps at thousands of locations to hold toll-collection equipment and cameras to identify toll violators, in addition to building communications infrastructure. If tolling were introduced in conjunction with reconstruction of Interstate Highway segments, estimates of the road building costs involved range from $1 trillion to $3 trillion. The use of bond financing would add interest expense. However Congress chooses to proceed, the conversion of a significant portion of the Interstate Highway system from free roads to toll roads would take a number of years. Studies would need to be conducted to identify the best locations to collect tolls, equipment would have to be ordered, and physical infrastructure such as road-spanning gantries and communications structures would need to be designed and constructed. Increased use of tolling would therefore be unlikely to have a significant impact on the need for taxpayer funding over a 5- or 10-year time frame. The revenue stream provided by tolling can be used to support highway projects that rely on debt finance and private equity investment, both of which have long histories in toll road construction. In recent years, Congress has encouraged the use of innovative financing mechanisms such as public-private partnerships (P3s), which may use toll revenues in several ways. Toll revenues can be used to service municipal bonds that state and local agencies have issued to pay for highway projects. The federal government supports this spending by providing a tax exclusion of the interest paid on the bonds. The tax exclusion results in a loss of revenue to the federal government. Private activity bonds, in which a state or local government acts as a financial conduit for a business or individual (such as a P3), can also be serviced with toll revenues. The Transportation Infrastructure Finance and Innovation Act (TIFIA) provides federal credit assistance, including loans, to leverage nonfederal funding, which may include investment from the private sector. Under the FAST Act, TIFIA is authorized to spend $1.44 billion over five years to cover the federal government's cost of providing the subsidized credit. Each $1 of budget authority can support approximately $10 in loans. TIFIA requires that each proposed project have a dedicated revenue stream to repay the loan. For highway projects, toll revenues are the most commonly proposed revenue source. Toll revenues could also support loans for highways and bridges provided from a National Infrastructure Bank, should one be established. The creation of a well-funded National Infrastructure Bank could thus lead to an expansion of toll roads. Any expansion of tolling due to increased use of innovative financing for highway construction, maintenance, and operation would occur over an extended period of time. In any event, toll-supported innovative financing is likely to provide only a small proportion of highway spending needs unless Congress requires its use in large-scale reconstruction of Interstate Highways. The current federal-aid highway program is essentially a state-run federal grant program, and states have ownership of the federal-aid highways within their borders. Any immediate conversion of highways to toll roads would necessarily be at individual states' discretion, with federal participation limited to technical assistance and a suggested conversion schedule. This would likely lead to a piecemeal outcome, as some states might convert quickly, some slowly, and some not at all. Congress could insist on a much stronger federal role by making the provision of federal highway grants to a state contingent on the state implementing a program of converting Interstate Highways to toll roads. FHWA might then take the lead in determining the sequence of reconstruction and conversion of Interstate Highways. This paradigm would have the advantage of assuring that all states would begin imposing tolls at roughly the same time, and federal leadership would likely not allow the outbreak of "toll wars" among the states, whereby states attempt to impose toll rates in a way that shifts the burden of the toll to their neighbors or interstate travelers generally. Under federal oversight, the operation of the converted highways might still be under the auspices of the states, which could operate them directly, through a toll authority, or perhaps under contract to a private operator. Whether or not implementation of tolls were linked to reconstruction of existing roads, creation of tolling systems would require up-front investments in gantries, equipment to read transponders in vehicles, communications infrastructure, software to process toll payments, and enforcement. This would have to be done before the tolls are collected. Under current law, FHWA approval is needed for initial implementation of tolls on roads and bridges that have received federal aid, but the federal government has no jurisdiction over toll rates. The Surface Transportation and Uniform Relocation Assistance Act of 1987 ( P.L. 100-17 ; H.Rept. 100-27) requires only that bridge tolls "shall be just and reasonable." More widespread use of tolls is likely to raise significant questions about equity. These might arise in a variety of contexts. Motorists from states with comparatively low tolls might find it unfair that other states charge comparatively high tolls. Some existing facilities offer preferential toll rates to residents of particular jurisdictions; if that practice were to become widespread, it could burden interstate travel and commerce. States may be tempted to collect tolls at state borders rather than at internal locations where more residents would be affected, effectively taxing interstate travel at higher rates than in-state travel and in some cases putting out-of-state companies at a competitive disadvantage against local companies. Truck tolls are invariably higher than auto tolls, sometimes much higher: crossing the George Washington Bridge from New Jersey to New York at an off-peak hour costs $10.50 for a car with an electronic transponder, but $68.00 for a standard tractor-trailer rig. Trucking interests generally oppose additional tolling, largely out of concern that political considerations will make it easier to raise tolls on trucks than on cars; they generally prefer higher fuel taxes whose revenues are dedicated to highway improvement. One reason for the preference for fuel taxes is that studies have concluded that funding highways with motor fuels taxes provides trucks a cross-subsidy from automobile users' gas tax payments. Proposals for a major expansion of tolling of federal-aid highways are likely to lead to discussion of a federal role in rate-setting. The FAST Act involved the federal government in toll rates for the first time, mandating that intercity buses serving the public have the same access to and pay the same rates as public transportation buses, and requiring public authorities operating high-occupancy toll lanes on the Interstate system to consult with affected metropolitan planning organizations on the placement and amount of tolls. Deeper federal involvement might include a federal framework of regulatory standards or a more precise definition of the requirement in current law that tolls be "just and reasonable," along with provision for the enforcement of that requirement. In such a case, Congress would need to clarify which federal agency would be responsible for enforcing tolling regulations and overseeing toll rates. Proponents often advocate tolling as a means of increasing total spending on surface transportation infrastructure. It is possible, however, that any increase in toll revenue could be offset by declining spending on surface transportation at the local, state, and federal levels. Congress has at times sought to condition federal support for states' highway spending on "maintenance of effort" by state governments. Imposing similar requirements in conjunction with a large increase in the use of tolling would require increased federal monitoring of state and local transportation expenditures. An existing federal program, the toll credit program, has for many years allowed states to count expenditures of toll revenues on capital investments serving interstate travel as part of a state's required match for federal highway grants. Although the statute states that the credit "shall not reduce nor replace State funds required to match Federal funds for any program under this title," some states have come to rely heavily on toll credits to meet their matching share requirements. A major expansion of Interstate Highway tolling could also expand the use of toll credits nationwide. This raises the possibility that states could provide less taxpayer funding for their matching shares of federal formula grants, unless other changes are made in the law. A mileage-based road user charge would be a toll-like charge on each mile driven. It has been advanced as an alternative to the federal and state motor fuels taxes that now support highway spending. As generally proposed, a mileage-based charge would be imposed for the use of any road within a state or nationwide, whereas tolls are imposed only on specific highway segments. Most existing highway tolls are based on weight and distance traveled, and road user charges could be structured in a similar manner. Both electronic tolls and mileage-based road user charges could be used to implement congestion pricing, in which drivers are charged more for using a road at a busy time. However, a number of widely criticized aspects of mileage-based charges, such as the difficulty of accommodating drivers who lack credit card accounts to which the charges could be billed and concerns that the vehicle tracking system would invade drivers' privacy, have generally been less prominent in discussions of tolling.
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Toll roads have a long history in the United States going back to the early days of the republic. During the 18th century, most were local roads or bridges that could not be built or improved with local appropriations alone. During the tolling boom of the late 1940s and early 1950s, the prospect of toll revenues allowed states to build thousands of miles of limited-access highways much sooner than would have been the case with traditional funding. The imposition of tolls on existing federal-aid highways is restricted under federal law, and while new toll facilities have opened in several states, some of those projects have struggled financially. The failure of federal highway user taxes and fees to provide sufficient revenues to fund the surface transportation program authorized by Congress beginning in FY2008 renewed interest in expanded toll financing. The recently passed five-year surface transportation act, the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), made few changes in tolling policy. Nonetheless, the Congressional Budget Office (CBO) projects that annual highway revenues, mostly from motor fuels taxes, will fall an average of $20 billion short of the amount needed to sustain the current federal surface transportation program between FY2021 and FY2025. This impending shortfall could again revive congressional interest in tolling. Congress could achieve an expansion of tolling in several ways. At one extreme, it could simply encourage tolling pilot projects on federal-aid highways, of which relatively few have been implemented to date. At the other extreme, Congress might authorize states to toll federal-aid highways as they see fit, or even require that Interstate Highway segments be converted to toll roads as they undergo reconstruction in the future, eventually turning all Interstates into toll roads. Whatever policies Congress adopts, tolls are likely to play only a limited role in funding surface transportation projects. The costs of toll collection on many existing toll roads exceed 10% of revenues even if all tolls are collected electronically, not including the cost of toll collection infrastructure. This compares unfavorably to the cost of collecting the existing federal motor fuels taxes, estimated to be about 1% of revenues. Many roads may not have sufficient traffic willing to pay a high enough toll to cover construction, maintenance, and toll collection costs. The availability of competing non-tolled routes may allow motorists to evade tolls. In addition, political concerns often limit the ability of operators to raise toll rates. Beyond a requirement that bridge tolls "shall be just and reasonable" and a provision limiting tolls on over-the-road buses, current federal law provides no role for the federal government in regulating toll rates or practices. A number of states offer preferential tolls for in-state residents or residents of particular localities. Some states have attempted to collect tolls at borders rather than at internal locations where more residents would be affected, and in a number of places trucking interests have complained that truck tolls are excessive compared to auto tolls. More widespread use of tolls is likely to raise questions about the extent to which tolling should be subject to federal oversight.
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The combined efforts of the food industry and government regulatory agencies often are credited with making the U.S. food supply among the safest in the world. Nonetheless, public health officials have estimated that each year in the United States, many millions of people become sick and thousands die from foodborne illnesses caused by any of a number of microbial pathogens and other contaminants. At issue is whether the current food safety system has the resources, authority, and structural organization to safeguard the health of American consumers, who spend more than $1 trillion on food each year. Also at issue is whether federal food safety laws, first enacted in the early 1900s, have kept pace with the significant changes that have occurred in the food production, processing, and marketing sectors since then. In 2007 and again in 2009, the Government Accountability Office (GAO) placed food safety on its biennially published list of high-risk areas, one of 30 needing concerted attention by Congress and the Administration. GAO has identified 15 federal agencies collectively administering at least 30 laws related to food safety. The majority of both total funding and total staffing, however, is with the Food Safety and Inspection Service (FSIS) at the U.S. Department of Agriculture (USDA), which regulates most meat and poultry, and the Food and Drug Administration (FDA) at the U.S. Department of Health and Human Services (HHS), which regulates virtually all other foods. FSIS's annual budget in FY2010 was approximately $1.1 billion in appropriated funds, plus an estimated $131 million in industry-paid user fees. FDA's annual budget in FY2010 for its human foods program was $784 million, all of it appropriated. After discussing several recent food safety incidents and the systemic food safety problems that they illustrate, this report describes the existing food safety legal and regulatory landscape and presents an overview of efforts by the 111 th Congress to revise federal food safety authorities and activities, principally at FDA. It then provides a detailed overview of the major provisions in the newly enacted law—the FDA Food Safety Modernization Act (FSMA, P.L. 111-353 ). The report is organized around a number of selected food safety issues, describing how they are addressed in previously existing law and regulations, and describing their treatment in the newly enacted law. Finally, appendixes provide a crosswalk of all provisions in FSMA, followed by a side-by-side comparison of each of these provisions with previously existing law. Food safety-related incidents frequently heighten public and media scrutiny of the U.S. food safety system. Large recalls of FSIS-regulated meat and poultry products due to findings of E. coli O157:H7, Listeria , and other problems occur each year. In addition, in recent years, several large multi-state outbreaks have been linked to FDA-regulated foods. For example, in 2006 more than 200 confirmed illnesses and three deaths were linked to bagged fresh spinach grown in California and contaminated with E. coli O157:H7. In 2008, more than 1,400 persons were infected with an unusual strain of bacteria, Salmonella Saintpaul. Officials first suspected fresh tomatoes, but later tests found the pathogen in serrano peppers and irrigation water from a farm in Mexico. These incidents raised public concerns about the safety of all fresh produce and stimulated a number of industry and government initiatives to limit future incidents. Attention focused on the safety of food imports in 2007, when pet food ingredients imported from China, contaminated with the chemical melamine, sickened or killed an unknown number of dogs and cats and contaminated some livestock feeds. In 2008, melamine contamination of infant formula in China sickened thousands of children and raised concerns about the safety of infant formula in the United States. The melamine incidents highlighted the limited reach of FDA's oversight of imports, the difficulty in tracing the many pathways taken by a common food ingredient, and the frequent confluence of human and animal food ingredients. In late 2008 and early 2009, a multi-state outbreak of Salmonella Typhimurium was linked to an institutional brand of peanut butter and other peanut-based ingredients from a single firm. The outbreak sickened more than 700 people in 46 states, and may have contributed to the deaths of nine people. A series of expanding recalls was announced by FDA in early 2009, involving thousands of peanut-containing products from more than 200 companies. Again, the incident highlighted the broad reach of a common contaminated ingredient, and the resultant challenges in rapidly tracing products and removing them from commerce. In July 2010, health officials noticed a spike in cases of infection with Salmonella Enteritidis, a strain commonly associated with shell eggs, which are regulated by FDA. In August, FDA found the same pathogen on two egg farms in Iowa, leading to the nationwide recall by the companies of more than 500 million eggs. In July 2009, FDA had published a long-awaited egg safety regulation, which became effective in July 2010 as the outbreak was well underway. Although most observers believe that the rule, if enforced, will help to prevent shell egg contamination and outbreaks in the future, many remain concerned about the apparent lack of coordination between USDA's egg quality inspection activities and FDA's food safety activities, because both agencies have regulatory responsibility for egg products. Federal responsibility for food safety rests primarily with FDA and USDA. FDA is responsible for ensuring that most domestic and imported food products—except for most meats and poultry—are safe, nutritious, wholesome, and accurately labeled. FDA also has oversight of all seafood, fish, and shellfish products. USDA's FSIS regulates most meat and poultry and some egg products. State and local food safety authorities collaborate with federal agencies for inspection and other food safety functions, and they regulate retail food establishments. The division of food safety responsibility between FDA and USDA is rooted in the early history of U.S. food regulation. Congress created separate statutory frameworks when it enacted, in 1906, both the Pure Food and Drugs Act and the Meat Inspection Act. The former addressed the widespread marketing of intentionally adulterated foods, and its implementation was assigned to USDA's Bureau of Chemistry. The latter law addressed unsafe and unsanitary conditions in meatpacking plants, and implementation was assigned to the USDA's Bureau of Animal Industry. This bifurcated system has been perpetuated and split further into additional food safety activities under additional agencies (for example, the Environmental Protection Agency, the National Marine Fisheries Service, and others) by a succession of statutes and executive directives. The separation of the two major food safety agencies was further reinforced when, in 1940, the President moved responsibilities for safe foods and drugs, other than meat and poultry, from USDA to the progenitor of HHS, the Federal Security Agency. Meat inspection remained in USDA. There has been discussion over time regarding whether this dispersal of food safety responsibilities has been problematic, or whether a reorganization would divert time and attention from other fundamental problems in the system. In the 111 th Congress, major food safety legislation—the subject of this report—was passed, focusing on changes related to FDA, not USDA. The primary law authorizing FDA activities is the Federal Food, Drug, and Cosmetic Act (FFDCA; 21 U.S.C. §§ 301 et seq.). Some key FFDCA provisions that are discussed throughout this report are presented in the text box on the next page. Two of the basic statutory components of FFDCA are "adulteration" and "misbranding." FDA-regulated foods may be deemed adulterated or misbranded for a variety of statutorily prescribed reasons. For example, food may be deemed adulterated if it contains an added poisonous or deleterious substance or an unsafe food additive or if the food was prepared, packed, or held under insanitary conditions whereby it may have become contaminated or may have been rendered injurious to health. Persons who violate FFDCA by, for example, introducing an adulterated or misbranded product into interstate commerce, commit what is referred to as a prohibited act under FFDCA § 301 (21 U.S.C. § 331). Persons who commit prohibited acts are subject to criminal and civil penalties. The George W. Bush Administration issued several reports and studies calling for major changes in the food safety system. Two Bush Administration initiatives were unveiled in November 2007 and were critiqued and debated extensively during the 110 th Congress. They were the FDA's Food Protection Plan: An Integrated Strategy for Protecting the Nation's Food Supply , and the Interagency Working Group on Import Safety's Action Plan for Import Safety: A Roadmap for Continual Improvement , part of which dealt extensively with food product imports. Both reports generally called for a more preventive risk-based approach to food safety oversight, including more attention to imported foods, among numerous other recommendations. President Barack Obama, in a March 14, 2009, weekly radio address, called the food safety system a "hazard to public health." He announced a Food Safety Working Group (FSWG) of Cabinet secretaries and senior officials "to advise me on how we can upgrade our food safety laws for the 21 st century; foster coordination throughout government; and ensure that we are not just designing laws that will keep the American people safe, but enforcing them." In July 2009, the FSWG announced a number of steps the Obama Administration was taking, under existing authorities, to improve government safeguards. The group released a one-year progress report in July 2010. Also, the Administration announced that it had "taken steps to reduce the prevalence of E. coli, implemented new standards to reduce exposure to Campylobacter, and issued a rule to control Salmonella contamination," and that "FDA has conducted a pilot study on a tracing system, and HHS, in collaboration with USDA, has rolled out an enhanced and updated www.foodsafety.gov site to provide consumers rapid access to information on food recalls." The Obama Administration weighed in on the principal bills that were considered by the House and Senate during the 111 th Congress (and that are the subject of this report). The Administration declared its support for the primary food safety bill in the House of Representatives, H.R. 2749 , which had been passed in June 2009. Also, in a July 2010 statement, the Administration urged the Senate to complete its work on its principal food safety bill, S. 510 . In November 2010, the Administration expressed its continued support of the Senate's efforts on its bill. In addition, Administration officials testified on aspects of the legislation. Testimony regarding specific provisions of the House bill was given by FDA Commissioner Dr. Margaret Hamburg to the House Energy and Commerce Subcommittee on Health on June 3, 2009, and by FDA Senior Advisor Michael R. Taylor to the House Agriculture Committee on July 16, 2009. In October 2009 testimony on the Senate bill, FDA Commissioner Hamburg called S. 510 a "major step in the right direction." Provisions in the bill addressed a key policy concern by refocusing FDA's food safety system on prevention, the Commissioner stated. She added that the bill also generally met another key policy concern, the need for adequate FDA legal tools to implement the new requirements, although some additional provisions, such as effective enforcement mechanisms, should be added. Finally, the Commissioner stated, the legislation must provide or anticipate adequate resources, but it "does not provide a guaranteed consistent funding source to help FDA fulfill its new responsibilities." The Commissioner recommended the inclusion of registration fees, flexibility to adjust facility inspection frequencies, and the use of accredited third parties to ensure adequate resources. These issues are among those discussed later in this report. Perceived gaps in federal safeguards have been explored at more than two dozen congressional hearings since 2007. The 110 th Congress made several amendments to FDA's food safety authorities, and increased funding for the primary food safety agencies, but more comprehensive food safety legislation was not enacted. In the 111 th Congress, nearly a dozen food safety bills, several of them comprehensive, were introduced. The major vehicle in the House was H.R. 2749 , introduced by Representative John Dingell. This bill was amended and approved by the Subcommittee on Health of the House Energy and Commerce Committee on June 10, 2009; and by the full committee on June 17, 2009 ( H.Rept. 111-234 , July 29, 2009). After failing to reach the needed two-thirds majority under suspension of the rules on July 29, 2009, the bill passed the House under regular order, with a recorded vote of 283 to 142, on July 30, 2009. In the Senate, S. 510 was introduced by Senator Richard Durbin. The Senate Committee on Health, Education, Labor, and Pensions (HELP) amended and reported the bill (without a written report) on December 18, 2009. During 2010, a series of substitute amendments to the bill were offered and debated. On November 30, 2010, a substitute version of the bill ( S.Amdt. 4715 ) passed the Senate with a recorded vote of 73-25. However, a procedural issue held up final action on the legislation; it was resolved when the Senate inserted its version of the bill into an earlier House bill ( H.R. 2751 ) that was cleared by the House. This bill was signed by the President in January 2011 as the FDA Food Safety Modernization Act (FSMA, P.L. 111-353 ). FSMA generally expands or modifies existing FDA authorities under the Federal Food, Drug, and Cosmetic Act (FFDCA; 21 U.S.C. §§ 301 et seq.). Among its many provisions, the new law increases frequency of inspections at food facilities, tightens record-keeping requirements, extends more oversight to certain farms, and mandates product recalls if a firm fails to institute them voluntarily. FDA has identified five key elements to the new law. Preventive Controls . For the first time, FDA has a legislative mandate to require comprehensive, prevention-based controls across the food supply. FSMA requires food processing, manufacturing, shipping, and other regulated facilities to conduct an analysis of the most likely food safety hazards and to design and implement risk-based controls to prevent them. This provision is similar conceptually to the so-called hazard analysis and critical control point, or HACCP, plans required of meat and poultry establishments. The new law requires the establishment of science-based "performance standards" for the most significant food contaminants. To aid in determining such risks and hazards, the new law seeks to improve foodborne illness surveillance systems, aiming for better data reporting, analysis, and usefulness, with the CDC playing a lead role. Provisions in FSMA extend safeguards to the farm level, generally calling for new, science-based "performance standards" for safe production mainly of fruits, vegetables, and related products, and expanding enforcement and record-keeping authorities. The new law facilitates the establishment of science-based regulations for the most significant food contaminants. Inspection and Compliance . FSMA reflects the fact that inspection is an important means of holding industry accountable for its responsibility to produce safe food. FSMA seeks to increase the frequency of plant inspections, specifying how often FDA should inspect food producers, while taking into account the risks posed by specific foods or processes. To aid in such inspections, and to improve the ability to rapidly trace food products through the production and marketing chain in the event of a foodborne illness outbreak, suspected contamination, or other problems, the new law generally seeks to strengthen record-keeping requirements and food traceability systems. Food processing, manufacturing, shipping, and other regulated facilities are required to conduct an analysis of the most likely safety hazards and to design and implement risk-based controls to prevent them. FDA has said that it is "committed to applying its inspection resources in a risk-based manner and adopting innovative inspection approaches." Industry participants will be required to maintain records for certain time periods and in formats to be prescribed by FDA. The importance of adequate records has been demonstrated in recent food safety incidents, particularly in the case of outbreaks eventually linked to fresh produce. Food establishments, which are already subject to a one-time registration requirement under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act, P.L. 107-188 ; 21 U.S.C. § 350d), will need to re-register more frequently than they have previously. The new law also requires that additional registration information be submitted. Imported Food Safety . FSMA increases scrutiny of food imports, which account for a growing share of U.S. consumption; food import shipments must be accompanied by documentation that they can meet safety standards that are at least equivalent to U.S. standards. Such certifications may be provided by foreign governments or other so-called third parties accredited in advance. FSMA also contains provisions for certifying or accrediting laboratories, including private laboratories, to conduct sampling and testing of food, among other provisions. For example, for the first time, importers must verify that their foreign suppliers have adequate preventive controls in place to ensure safety, and FDA will be able to accredit qualified third party auditors to certify that foreign food facilities are complying with U.S. food safety standards. Response . For the first time, FDA has mandatory recall authority for all food products, if a firm with suspect products fails to recall them voluntarily. FDA had lacked such authority for food, except for infant formula. FDA has said that it expects that "it will only need to invoke this authority infrequently since the food industry largely honors our requests for voluntary recalls." Enhanced Partnerships . FSMA directs FDA to improve training of state, local, territorial, and tribal food safety officials. The law strengthens existing collaboration among all food safety agencies—federal, state, local, territorial, tribal, and foreign—to achieve its public health goals. Certain food processing operations are exempt from the proposed HACCP requirements, and some farms are also exempt from the new produce standards. Specifically, farms and food facilities that qualify for an exemption are those businesses with an "average annual monetary value" of less than $500,000 for all food sold during the previous three-year period, provided that the food is sold directly to "qualified end users" such as consumers, restaurants, or retail food establishments located in the same state where the facility sold the food or within 275 miles of the facility, among other requirements. In addition, among the types of businesses that are considered to be "retail food establishments" and therefore generally not subject to the facility registration requirements, FSMA also exempts roadside stands, farmers' markets, and foods sold through a community-supported agriculture (CSA) program. FSMA is explicit in maintaining the separate jurisdictions between FDA and USDA. The Congressional Budget Office (CBO) has estimated that implementing the new law will increase net federal spending subject to appropriation by about $1.4 billion over a five-year period (FY2011-FY2015). Although the law authorized appropriations when it established the new food safety system, it did not provide the actual funding needed for FDA to perform these activities. The law provides for limited amounts of fees and other offsets; its implementation will depend largely on discretionary appropriations. Some have already questioned whether an expanded investment in this area is appropriate in the current budgetary climate. FDA's deputy commissioner for foods, Michael Taylor, has indicated that FDA has "already done a lot of work in anticipation of the new law," but that funding will continue to be an issue and that building a new preventive system will require new resources and investment. For a comprehensive listing of all sections and topics addressed in the new law, see the two appendix tables at the end of this report. The first table, Appendix A , provides a snapshot of each section and topic covered by the new law. The second table, Appendix B , contains a side-by-side comparison of FSMA's provisions with previous law. The following sections provide a discussion of the key provisions in the FDA Food Safety Modernization Act (FSMA, P.L. 111-353 ). Unless otherwise noted, references to "the Secretary" mean the HHS Secretary. Prior to passage of FSMA, the FFDCA required domestic and foreign food facilities to register with FDA. Excepted were farms, restaurants, retailers, and certain types of nonprofit food establishments and fishing vessels. Renewal was not required on any periodic basis, but registrants were required to notify the HHS Secretary in a timely manner of relevant changes in their status. The FFDCA (§ 801(l); 21 U.S.C. § 381(l)) provided that imported food may not be delivered to the importer, owner, or consignee of the article unless the foreign facility is registered. FSMA Provisions. FSMA (§ 102) amends FFDCA § 415 to require domestic and foreign facilities to register every two years, and to provide some additional types of contact information, with an abbreviated renewal process available to facilities with no change in status. It provides for new procedures for the suspension of registration if the HHS Secretary "determines that food manufactured, processed, packed, received, or held by a facility registered under this section has a reasonable probability of causing serious adverse health consequences or death to humans or animals." FSMA also provides for procedures for vacating such a suspension. Importing or introducing such food into commerce is prohibited, and subject to possible civil and criminal penalties and other enforcement actions. FSMA does not change existing exemptions from the registration requirement for farms, restaurants, retailers, and certain types of nonprofit food establishments and fishing vessels. It also does not impose new registration fees for food facilities. FSMA clarifies the types of facilities included as a "retail food establishment" and therefore generally not subject to the registration requirements. It requires the HHS Secretary to amend the definition of "retail food establishment" to include food sold directly to consumers by a roadside stand or farmers' market, food sold through a community-supported agriculture (CSA) program, or sale and distribution of food at any other such direct sales platform as determined by the Secretary (§ 102(c)). Prior to passage of FSMA, the FFDCA authorized the HHS Secretary to impose record-keeping requirements on domestic and foreign food facilities (except farms and restaurants), and to inspect and copy such records "[i]f the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals." The Secretary must take appropriate measures to ensure that unauthorized disclosure of any trade secret or confidential information is prevented. Through rulemaking, the Secretary has required facilities to maintain records that allow for the identification of the immediate previous sources and immediate subsequent recipients of food. Prior to passage of FSMA, advocates of food safety reform argued that record-keeping requirements needed to be strengthened to help regulators determine whether firms are complying with the law, and to facilitate outbreak investigations and product recalls. Among their concerns has been that records do not have to be maintained in electronic format, which, these advocates assert, delays outbreak response. Related concerns have included the types and level of detail of records to be kept, how long they should be retained, and access to and use of these records by authorities. Concerns about increased record-keeping requirements and access authority often involve concerns about the intrusiveness of government, as well as about privacy and the protection of sensitive commercial information (trade secrets), for example. FSMA Provisions. FSMA (§ 101) amends FFDCA § 414 to expand the Secretary's authority to inspect and copy relevant records of a food facility in two ways. It requires that access be provided to the HHS Secretary if he or she "has a reasonable belief that an article of food, and any other article of food that the Secretary reasonably believes is likely to be affected in a similar manner, is adulterated and presents a threat of serious adverse health consequences or death to humans or animals," or if the Secretary "believes that there is a reasonable probability that the use of or exposure to an article of food, and any other article of food that the Secretary reasonably believes is likely to be affected in a similar manner, will cause serious adverse health consequences or death to humans or animals." The Secretary has greater flexibility under the second provision, no longer needing a reasonable belief that food is adulterated in order to access records. The Secretary may allow access to records regarding foods likely to be affected in a similar manner, but will need to believe there is at least a risk of harm. Farms and restaurants (as under previous law) remain fully exempt from this provision. For other facilities, written notification is still required to gain access. (See the subsequent section on " Notification of Contaminated Products and Product Tracing " for additional provisions relating to record-keeping and documentation.) Prior to passage of FSMA, a broad consensus of policymakers agreed that FDA's system of food safety safeguards should be more proactive in addressing the nation's complex food supply. By and large, the agency's statute and regulations spell out the reasons a food article is to be considered adulterated or misbranded and therefore unfit for consumption. In effect, industry players had been expected to abide by the rules; generally it was only when a problem was detected—often after an illness outbreak was reported or testing found a contaminant in a product—that officials would step in to correct it, or order the industry to do so. A recurring theme in these discussions was the need for prevention. Virtually all stakeholders, including regulators, the regulated industries, consumer advocates, and food safety scientists agreed that the foundations of any new program should be an understanding of what, and how, hazards can enter the food supply, followed by implementation of measures to prevent these hazards. A popular version of this approach is the so-called Hazard Analysis and Critical Control Points (HACCP) system, which was incorporated in the 1990s by FSIS as a regulatory requirement for all meat and poultry slaughtering and processing establishments. Variations of the HACCP system also had been required by FDA in the processing of seafood, juices, and low-acid canned foods, but not other product categories. In a number of reports, the committees of the National Academy of Sciences' National Research Council (NAS-NRC) recommended the HACCP approach for food safety. The National Advisory Committee on Microbiological Criteria for Foods, established to offer ongoing advice to the FDA and USDA, agreed with the NAS-NRC recommendations, which dated at least to the early 1990s. The advisory committee also noted that HACCP principles should be standardized to provide uniformity in training and applicability, but also must be developed by each food establishment so they can be tailored to individual products, processing, and distribution conditions. FSMA Provisions. FSMA (§ 103) creates new FFDCA requirements for each owner, operator, or agent of a food facility to evaluate the hazards that could affect food manufactured, processed, packed, transported, or held there; to identify and implement preventive controls to significantly minimize, prevent, or eliminate such hazards; and to monitor and maintain records on these controls once they are in place. It further specifies the types of hazards that should be evaluated, and requires facilities to conduct a re-analysis at specified intervals, and to maintain at least two years of records to document and verify their control measures, among other details. FSMA requires written HACCP-type and/or broader written food safety plans containing certain requirements as part of its so-called Hazard Analysis and Risk-Based Preventive Controls. FSMA also contains requirements regarding available FDA guidance documents for seafood (see § 114 and § 103; also see section of this report titled " Targeting of Inspections "). Some facilities are exempt from the requirements under certain conditions, as discussed in more detail in the section below titled " Mitigating Effects on Small Business and Farming Operations ." Performance standards typically are specific, quantitative measurements of a property of, or a substance in, food that are selected to serve as benchmarks for whether the food is safe in a broader sense. For example, a microbial performance standard could be used to determine whether a product is contaminated with microbes in general, and whether a problem with the product's processing should be investigated and corrected. The NAS-NRC standards committee reported that a common theme of regulatory performance standards is "to provide clear articulation of what is and is not acceptable in the process or system being regulated." The committee added that regulators like FDA, USDA, and the Environmental Protection Agency (EPA) have employed specific standards for diverse reasons and conditions, based on numerous scientific, legal and practical constraints. FFDCA authorizes FDA to promulgate standards for certain hazards, such as tolerances (or legal limits) for pesticide or drug residues in foods, but had not granted explicit authority to develop standards solely as a means to verify that processing is done in a manner that ensures safe food. FSMA Provisions. FSMA (§ 104) amends FFDCA to require the HHS Secretary to, at least every two years, review and evaluate epidemiological data, health data, or other information to identify the most significant hazards and to issue guidance or regulations on science-based performance standards to significantly minimize, prevent, or eliminate such hazards. Such standards must be specific to products or product classes, not individual facilities. It places conditions on the issuance of standards, requiring them to be "[b]ased on such review and evaluation, and when appropriate to reduce the risk of serious illness or death to humans or animals or to prevent the adulteration of food" under FFDCA. It further requires that this review and evaluation of "health data and other relevant information" be conducted in coordination with USDA. Food safety experts agree that an effective, comprehensive food safety system should include consideration of potential hazards at the farm level. Viewpoints diverge on whether this should be mandatory or voluntary. Should farmers and ranchers be subject to mandatory safety standards, enforced through certification of their practices, periodic inspections, and penalties for noncompliance? Or should public policy continue to encourage voluntary strategies for producing safe foods on farms and ranches, through education, cooperation, and market-based incentives? Historically, the federal government and states have largely relied on the latter approach. In addition, numerous existing laws and regulations already impose restrictions, both direct and indirect, on producers of food commodities; these restrictions involve compliance costs and are intended to meet certain food safety objectives. They include requirements on the use of animal drugs, feed additives, and pesticides. FDA's "current good manufacturing practice" (CGMP) requirements (at 21 C.F.R. Part 110) apply to manufacturing, packing, or holding human food, but establishments engaged solely in harvesting, storing, or distributing raw agricultural commodities generally are excluded. Farms are among those exempted from a requirement that food facilities be registered with FDA, pursuant to the Bioterrorism Act. Further, FFDCA specifically exempts farms (and restaurants) from requirements to maintain records for up to two years for purposes of identifying "immediate previous sources and the immediate subsequent recipients of food, including its packaging, in order to address credible threats of serious adverse health consequences or death to humans or animals," and to permit officials access to these records if a food is suspected of being adulterated and presents a serious health threat. Historically, FDA's general approach has been not to impose mandatory on-farm safety standards or inspections of agricultural facilities. Rather, the agency has tended to rely on farmers' adoption of so-called good agricultural practices to reduce hazards prior to harvest. Such practices are issued as FDA guidance, not regulations. For example, in July 2009, the Obama Administration released new draft guidances on three specific types of produce: tomatoes, melons, and leafy greens. However, FDA's final rule (effective July 2010) requiring shell egg producers to implement on-farm safety measures to prevent contamination of eggs by Salmonella Enteritidis (SE) is one example of FDA regulatory activity on-farm. FSMA Provisions. FSMA (§ 105) creates new FFDCA requirements for farms as well as food processors. The provision that could have the most direct effect on on-farm activity—particularly growers of fresh produce—is the establishment of new standards for produce safety. The law requires within one year proposed regulations for the safe production, harvesting, handling, and packing of those fruits and vegetables (that are raw agricultural commodities) for which the HHS Secretary has determined that such standards minimize the risk of serious adverse health consequences or death. Coordination with USDA is encouraged, along with coordination with state agricultural agencies when enforcing standards, as appropriate. Enforcement could be in the form of audit-based verification systems or other inspection methods. FSMA also includes language to enable a state or foreign government to request a variance from HHS if needed to account for local growing conditions. It requires that any standards address growing, harvesting, sorting, and storage; soil amendments; hygiene; packaging; temperature controls; animal encroachment; and water; and that the Secretary convene at least three public meetings to seek input on the proposals. FSMA exempts some farms from the requirements under certain conditions, as discussed in the next section, " Mitigating Effects on Small Business and Farming Operations ". Concerns among farm and rural groups about the potential effects of new food safety requirements on farms and food processors surfaced early in the food safety legislative debate. Most vocal were small farms and processors; organizations representing small, organic, direct-to-market, and sustainable farming operations; and small livestock operations. At issue was whether numerous proposed requirements would be more costly and burdensome to small farms and other small businesses than could be justified by the potential public health protections such requirements are intended to provide. For more detailed information, CRS Report RL34612, Food Safety on the Farm . Among the options considered during the debate were waiving certain requirements, providing additional time for compliance, providing grants and/or technical assistance to aid in compliance, and exempting certain types of businesses from meeting the requirements. FFDCA exempts some types of businesses from certain food safety requirements. For example, farms, restaurants, other retail food establishments, and certain nonprofit food establishments and fishing vessels are exempt from facility registration requirements under FFDCA § 415. FSMA Provisions. As discussed, some provisions in FSMA will directly affect farms and food processors (§§ 105 and 103, respectively). Other provisions that could potentially affect farms and food processors include facility registration requirements (§ 102); records access and/or inspection requirements (§§ 101 and 204); food traceability requirements (§ 204); and targeting of inspection resources (§ 201). FSMA, however, provides extensive consideration of the needs of small businesses and provides for coordination of enforcement and education activities with others such as USDA and state authorities. FSMA explicitly exempts certain food processors from the newly enacted HACCP-type requirements and also exempts certain farms from the new produce standards. Food facilities would qualify for an exemption from the HACCP requirements under § 103 if they are either a "very small business" as defined by FDA in rulemaking, or if the facility's "average annual monetary value" of all food sold during the previous three year period was less than $500,000, provided that the food is sold directly to "qualified end users" such as consumers, restaurants, or retail food establishments located in the same state where the facility sold the food or within 275 miles of the facility. Such a facility must demonstrate that it either has "identified potential hazards associated with the food being produced," and is implementing and monitoring these preventive controls, or that it is "in compliance with State, local, county, or other applicable non-Federal food safety law." Foods produced from such a facility will also need to provide the facility's name and address on a food packaging label or at the point of purchase. Farms that are exempt from the produce standards under § 105 also include those with a three-year average monetary value of the food they sold of less than $500,000, provided that the food is sold directly to the similarly defined "qualified end users" and if the farm provides similar notification to consumers. The exemption for both facilities and farms may be revoked in the event that a foodborne illness outbreak is directly linked to an exempted facility or farm, or based on a determination by the HHS Secretary. In addition, as discussed in the " Facility Registration " section, FSMA clarifies the types of businesses that should be considered to be "retail food establishments" and specifies that roadside stands, farmers' markets, and foods sold through a community-supported agriculture (CSA) program also are not subject to the requirements. It is difficult to estimate what share of all food processing operations might be exempt from the new HACCP requirements, how many farms might be exempt from the new produce standards, or how other small business considerations might possibly mitigate the effects of these and other requirements in the new law. In part, this is because the definition of small and very small business would be determined by HHS in future agency rulemaking and subject to other requirements specified in the measures (see, for example, §§ 103, 105, and 204). Even though farms would continue to be exempt from the facility registration requirements, some farms that also engage in food processing might be affected, but data are not available on what share of farms also engage in food processing. In addition, other stipulations in FSMA require that the foods sold from exempted facilities and farms be sold locally and to certain qualified end-users. Data are not available to determine what share of grower-processors might qualify for such an exemption; such a determination will likely be made on a case-by-case basis. Reform advocates had long argued that many recent problems leading to illness outbreaks and recalls might have been avoided if inspectors were more frequently present in plants to monitor sanitary conditions and processes. Due to the differing laws and circumstances that apply to FSIS, for example, the agency's inspectors are in meat and poultry slaughter and processing plants every day, where they must organoleptically (by the senses) examine every live animal and every carcass for defects, and must pass every item before it can enter commerce. Prior to FSMA, FFDCA authorized but did not require FDA to inspect food facilities. Therefore, periodic inspection frequencies were not stipulated, although nothing appeared to prohibit FDA from setting an inspection frequency, or prioritizing inspections based on risk. Leading up to passage of FSMA, some, including former and current FDA officials, argued that the agency lacked sufficient resources to conduct the number of inspections required to ensure the safety of the food supply, particularly in light of the increasing number of registered food facilities. (See Table 1 .) According to FDA budget documents, while the number of registered facilities increased each year from FY2004 to FY2010, the number of food inspectors decreased by about 15% from FY2004 to FY2008. Due in part to the resource arguments, appropriations for the agency's field activities and full-time equivalents (FTEs) rose each fiscal year from FY2007 to FY2010. The number of inspections of food facilities increased each year between FY2008 and FY2010, but remained below FY2004 levels. A related issue raised during the food safety debate in the 111 th Congress was how FDA could best target its available inspection resources to protect the public health. Different facilities might not merit the same frequency of inspection. For example, facilities that process and package food might create a greater opportunity for contamination than warehouses that merely store foods. Companies and facilities that have a record of meeting all FDA requirements might present less of a risk than those that do not. Foods produced in countries with food processing and handling standards at least as rigorous as those of the United States might present less of a health risk than those with less rigorous standards. FSMA Provisions. FSMA requires the HHS Secretary to increase the inspection rate for any food facility required to register under FFDCA § 415. In addition, the Secretary is required to identify high-risk facilities and to allocate resources to inspect facilities according to known safety risks. Risks include the type of food, the facility's history of food recalls, the facility's hazard analysis and preventive controls, and others. The new law requires the Secretary to inspect domestic high-risk facilities not less than once in the five-year period following enactment, and not less than once every three years thereafter. The Secretary is required to inspect domestic non-high-risk facilities not less than once in the seven-year period following enactment, and not less than once every five years thereafter. Also, the Secretary is required to inspect at least 600 foreign facilities in the year following enactment, and in each of the subsequent five years to double the number of foreign facilities inspected. In meeting the inspection requirements, the Secretary is authorized to rely on inspections conducted by other federal, state, or local agencies. For foreign food facilities registered under FFDCA § 415, FSMA permits the Secretary to enter into arrangements and agreements with foreign governments to facilitate the inspection of those facilities. The Secretary is required to direct resources for inspection of such foreign facilities, suppliers, and food types, particularly those identified as high-risk, to help ensure the safety of the U.S. food supply. Notwithstanding any other provision of law, foreign foods are to be refused entry into the United States if inspectors are refused entry to a facility, warehouse, or other establishment by the owner, operator, or agent in charge, or the government of the foreign country. The new law requires the Secretary to allocate resources to identify and inspect imported foods at ports of entry, according to the known safety risks of the article of food, based on certain factors. It requires the Secretary to submit to Congress not later than February 1 of each year, and to make available to the public via FDA's website, a report including certain information about food facilities, food imports, and FDA foreign offices. With regard to seafood and other fish products, FSMA includes three specific provisions: establishing interagency agreements to improve seafood safety (§ 201); assessing changes to regulations for post-harvest processing of raw oysters (§ 114); and sending inspectors to assess production of seafood imported into the United States (§ 306). The scope of interagency agreements identified in § 201 includes examining and testing seafood; coordinating inspections; standardizing data; modifying existing processes; sharing enforcement and compliance information; and conducting joint training and outreach. Section 114 requires that two reports (one by the Secretary of HHS and one by the GAO) be submitted to Congress and published when the Secretary issues guidance, regulation, or suggested amendments related to post-harvest processing of oysters. The requirement for the Secretary's report is waived if a consensus agreement is reached among federal and state regulators and the oyster industry, acting through the Interstate Shellfish Sanitation Conference. Section 306 permits the Secretary of Commerce, in coordination with the Secretary of HHS, to send inspector(s) to a country or facility of an exporter of seafood imported into the United States to assess practices and processes used in farming, cultivation, harvesting, preparation for market, and transportation of seafood. Inspectors also may provide technical assistance related to these activities. For each inspection, the Secretary of HHS must prepare and deliver a report to the subject of the inspection, which may then provide a rebuttal or other comments as specified. Prior to passage of FSMA, FDA lacked express statutory authority to regulate private laboratories that sample or test imported foods, nor did it have authority to accredit food laboratories or use others to certify the safety of imported foods. Laboratory accreditation was voluntary, and several domestic and international accreditation organizations could accredit laboratories. FDA may conduct voluntary, on-site assessments of private accredited laboratories. FDA's own laboratories are accredited and, according to FDA, "the laboratory industry favors accreditation." Industry participation in third-party certification programs, such as those that help foreign and domestic producers meet FDA requirements through certification, has been voluntary, although FDA has indicated that participation in such programs may "be beneficial." FDA has also indicated that "there is extensive support for certification programs that audit to determine compliance with internationally recognized criteria," and that domestic suppliers use third-party certification programs "in part because of customer demand." GAO testified in 2008 that private laboratory accreditation "could leverage outside resources while providing FDA greater assurance about the quality of the laboratories importers use to demonstrate that their products are safe." In January 2009, FDA issued draft guidance on accreditation standards for private laboratories and the test data that such labs should submit to the agency for imported FDA-regulated products that were either detained or subject to an FDA Import Alert. The guidance document encouraged importers to notify the FDA in advance of their submission of a sample to an accredited laboratory, so as "to discourage importers from withholding bad test results, re-testing, or re-sampling." In January 2009, FDA also issued a final guidance document on voluntary third-party certification programs for foods and animal feeds, which set forth attributes for third-party certification programs and procedures for preventing conflicts of interest. The use of third parties has been promoted as a method for helping FDA to carry out its responsibilities and target enforcement and inspections while better using existing personnel. Concerns have been expressed regarding testing and certification by third parties, and there has been criticism regarding the autonomy given to the importers and private laboratories. Such criticism varies from the manner in which the samples are collected for testing, to the reporting of test results by the importers to FDA, to whether test results accurately reflect all information obtained, such as evidence of FFDCA violations, to potential or actual conflicts of interest. Additionally, critics have contended that although third-party certification may be useful as a commercial marketing tool, it does not necessarily ensure safety, as manufacturers involved in recent foodborne illness outbreaks have passed private third-party and state inspections. For example, in two of the most publicized recent recalls—the recall of 380 million eggs by a single company and the recall of over 3,900 peanut products associated with another—both companies had used outside labs and reportedly knew of positive test results for Salmonella in their products prior to the recalls. FSMA Provisions. FSMA addresses various ways to curb the potential for such problems through laboratory accreditation and third-party certification programs. FSMA (§ 303) creates a system of accreditation of third-party auditors and audit agents, who certify that importing entities are meeting applicable FDA requirements. Foreign governments, foreign agricultural cooperatives, and other third parties can apply to an accreditation body to be a third-party auditor or audit agent, after the accreditation body performs certain reviews. Accreditation bodies cannot accredit a third-party auditor unless it agrees to issue a written food or facility certification to accompany each food shipment for import into the United States from an eligible entity. Accredited third-party auditors or audit agents are required to issue audit reports and to immediately notify the Secretary of discoveries during an audit of "a condition that could cause or contribute to a serious risk to the public health." The new law also contains language regarding revocation of accreditation and avoidance of conflicts of interest. The question remains as to whether industry will opt to use third parties. FSMA (§ 202) also includes provisions that require the Secretary to establish a program for testing of food by accredited laboratories and to recognize accreditation bodies to accredit laboratories, including state and local government laboratories. It requires the development of model accreditation standards, as well as re-evaluation of accreditation bodies at least every five years, and it requires that laboratory test results be sent to FDA unless the Secretary exempts the submission of test results after making a determination that the results "do not contribute to the protection of public health." Prior to passage of FSMA, neither FDA nor FSIS had explicit statutory authority to mandate a recall of most adulterated foods, or to impose penalties if recall requirements were violated. FDA could order food recalls only for infant formula. GAO and others contended that these gaps increased the possibility that unsafe food would not be recovered, and would be consumed. Reversing their earlier opposition, many major food industry groups endorsed legislative proposals to grant FDA mandatory recall authority for food. FSMA Provisions. FSMA (§ 206) requires the HHS Secretary, if he/she has information "that there is a reasonable probability that an article of food (other than infant formula) is adulterated ... or misbranded ... and the use of or exposure to such article will cause serious adverse health consequences or death to humans or animals," to provide an opportunity to the responsible party to cease distribution and recall the food. If the party does not do so "within the time and in the manner prescribed by the Secretary," authority is provided to require such person to cease distribution, or to immediately notify everyone involved in handling or receiving the food. The Secretary is required to provide specified notifications to the public of any recall orders, and to establish an incident command or similar operation within the department to assure coordinated communications during a recall. The law provides for the assessment of civil penalties as well as criminal penalties for failure to comply with or follow a recall order. The assessment of civil penalties for failure to comply with a recall order may preclude the assessment of criminal penalties. If the FDA assesses a civil penalty, the agency would not be able to seek seizures or injunctions for the adulterated food. Notification and traceability are viewed as tools to make recalls more effective. Some had argued that improved notification and traceability capabilities would enable either FSIS (in the case of meat and poultry products) or FDA (in the case of other foods) to determine more quickly a product's source and whereabouts, in order to prevent or contain foodborne outbreaks. Traceability was also debated in connection with defense against agroterrorism, and for verifying the origin of live animals and their products for marketing, trade, and/or animal health purposes, for example. In some recent highly publicized outbreaks, it appears that food company representatives were aware of a food safety problem for a prolonged period of time before notifying FDA. The 110 th Congress responded to some of these concerns by including a provision in the Food and Drug Administration Amendments Act of 2007 ( P.L. 110-85 ) requiring the responsible party for a food facility (i.e., one registered under FFDCA § 415) to notify the Secretary of any food "for which there is a reasonable probability that the use of, or exposure to, such article of food will cause serious adverse health consequences or death to humans or animals," and requiring the Secretary to establish a Reportable Food Registry of such reports. Also, the enacted 2008 farm bill ( P.L. 110-246 ) amended the meat and poultry laws to require an establishment to notify USDA if it has reason to believe that an adulterated or misbranded product has entered commerce. (See also the earlier discussion of record-keeping requirements under FFDCA § 414.) FSMA Provisions. FSMA (§ 211) amends current authority for the Reportable Food Registry to allow the Secretary to require the submission by a responsible party of additional types of information about a reportable food in order to improve consumers' ability to identify it. It also requires grocery stores to conspicuously post one-page information sheets about reportable foods, to be developed by FDA and made available for copying on the agency's website. A store's failure to comply would be prohibited. FSMA (§ 204) also provides for an enhanced food tracing system that requires the Secretary, through rulemaking, to impose enhanced record-keeping requirements (under FFDCA § 414) for foods that the Secretary determines to pose a higher food safety risk. Low-risk foods may be exempted. A number of limitations of such requirements are stipulated, especially with respect to farms and agricultural commodities. Effective dates for the record-keeping requirements are delayed for small businesses. The Secretary is also required to conduct pilot studies and assessments of food tracing systems to inform the rulemaking process. Foodborne illness surveillance is carried out by the states, with assistance from CDC. States also investigate foodborne disease outbreaks, in coordination with CDC, either or both FDA or FSIS (depending on implicated or suspected foods), and other federal agencies, if appropriate. A foodborne disease outbreak is not defined in law or in regulations. In practice, a foodborne disease outbreak is "the occurrence of two or more cases of a similar illness resulting from the ingestion of a common food." As a practical matter, particularly for less serious hazards, outbreak investigations are rarely launched when only two people are affected. (There are exceptions for serious illnesses such as botulism.) The nation's public health capacity for foodborne illness surveillance and outbreak response is a mix of significant strengths and significant gaps. The ability to link seemingly unrelated illnesses through genetic "fingerprinting" has revolutionized the identification of large multistate outbreaks. However, the epidemiological approaches used to identify the food associated with an outbreak can be labor-intensive and time-consuming. Also, especially for FDA-regulated foods, information about common contaminants that may be present in foods during production and in commerce, as well as how to test for them, is limited. As a result, "attribution"—identifying the types of foods that cause foodborne illnesses—remains a significant challenge. The outbreaks of the past few years underscore the problem, but are not the only evidence. Based on data from FoodNet, its active surveillance system, CDC reported that as of 2009, the incidence of several of the foodborne diseases under surveillance had reached a plateau, instead of declining, and that national 2010 health targets for three out of four targeted pathogens— Campylobacter , Listeria , and Salmonella —may not be met. FSMA Provisions. FSMA (§ 205) contains provisions that, for purposes of surveillance, define a foodborne illness outbreak as two or more cases of a similar illness resulting from the ingestion of a food. The law requires the Secretary, acting through the CDC, to enhance foodborne illness surveillance systems, including coordinating federal, state, and local systems; facilitating timely sharing of agency findings; ensuring early notification of the food industry when a particular food is suspected in an outbreak; developing improved epidemiological tools; and other prescribed methods. It also contains provisions to establish a working group to improve foodborne illness surveillance and outbreak investigations, and to reauthorize food safety capacity-building grants to states and Indian tribes under the PHS Act. It authorizes the appropriation of $24 million for each fiscal year for FY2011-FY2015 for efforts to enhance foodborne illness surveillance. Under pre-existing law, the concepts of "adulteration" and "misbranding" are two basic statutory components of FFDCA. FDA-regulated foods may be deemed adulterated or misbranded for a variety of statutorily prescribed reasons. For example, food may be deemed adulterated if it contains an added poisonous or deleterious substance or an unsafe food additive, or if the food was prepared, packed, or held under insanitary conditions whereby it may have become contaminated or may have been rendered injurious to health. Persons who violate FFDCA by, for example, introducing an adulterated or misbranded product into interstate commerce, commit what is referred to as a prohibited act under FFDCA § 301. Persons who commit prohibited acts are subject to criminal and civil penalties. The penalties vary, depending on the offense. Most criminal liability provisions are found in the "Penalties" section of FFDCA, § 303. Injunctions and seizures may also be sought for adulterated or misbranded products. In light of a number of deaths that appear to have resulted from contaminated food, such as nine deaths linked to tainted peanut butter products, some have called for stronger criminal penalties than the current fines and maximum of three years' imprisonment. Upon conviction for a misdemeanor violation of the prohibited acts section, a person faces the penalties authorized in FFDCA § 303(a). These are presented in Table 2 . The maximum criminal penalty for individuals (as adjusted by 18 U.S.C. §§ 3559 and 3571) is imprisonment for one year and/or either $100,000 if the misdemeanor does not result in death, or $250,000 if the misdemeanor results in death. The maximum criminal penalty for organizations (as adjusted by 18 U.S.C. §§ 3559 and 3571) is $200,000 if the offense does not result in death and $500,000 if the offense results in death. There are exceptions to the misdemeanor penalty provisions in FFDCA § 303(a)(1). A person could avoid being subject to penalties for certain violations of the prohibited acts section under the good faith exception, and persons may also avoid liability for violations of certain prohibited acts if they receive a guaranty from the manufacturer or the person from whom they received the product. A violation of FFDCA's prohibited acts section is a felony offense if it occurs after a prior conviction for violating FFDCA's prohibited acts section or if it is committed with the intent to defraud or mislead. The maximum criminal penalty for individuals convicted of a felony violation of FFDCA (as adjusted by 18 U.S.C. §§ 3559 and 3571) is imprisonment for not more than three years or a fine of not more than $250,000, or both. The maximum criminal penalty for organizations (as adjusted by 18 U.S.C. §§ 3559 and 3571) is a fine of not more than $500,000. Criminal liability may also extend to persons who aid and abet criminal violations of FFDCA, or who conspire to violate FFDCA, as federal criminal law generally makes it a separate crime to aid or abet any criminal offense against the United States or to conspire to commit a criminal offense against the United States. The decision to seek criminal sanctions against individuals and corporations suspected of violating FFDCA is within FDA's discretion. Prosecution may be more likely if the case involves "gross, flagrant, or intentional violations, fraud, or danger to health" or "a continuous or repeated course of violative conduct." FSMA Provisions. FSMA does not alter the criminal or civil penalties under FFDCA. During the food safety debate in Congress, another Senate bill, S. 3767 (the Food Safety Accountability Act of 2010, as introduced by Senator Patrick Leahy), was considered for inclusion in the final Senate version of the food safety bill ( S. 510 ). The provisions of S. 3767 would have amended the penalties provisions of FFDCA § 303(a) to provide for fines and a maximum prison sentence of 10 years, if a person knowingly violated FFDCA's prohibited acts section. However, these provisions were not included in the final enacted law. FSMA creates a new FFDCA § 1012 prohibiting food businesses from discharging or otherwise discriminating against an employee who provides or causes to be provided information relating to violations of FFDCA. This would include employees who testify, assist, or participate in a proceeding on such a violation, or who refuse to participate in an activity reasonably believed to violate the FFDCA. The new law also contains extensive language on the procedures for treating and protecting whistleblowers. Survey data show that about half of American consumers report using dietary supplements. Supplements are subject to routine regulations for foods under FFDCA (including new requirements under FSMA, such as mandatory recall authority). Supplements are also subject to an additional set of regulations under the Dietary Supplement Health and Education Act of 1994 (DSHEA), as amended. Among other things, DSHEA requires that manufacturers and distributors who wish to market supplements that contain "new dietary ingredients" (those not marketed in the United States in a dietary supplement before October 15, 1994) notify FDA about these ingredients. Since passage of DSHEA, some confusion has existed regarding the criteria for defining new dietary ingredients and evaluating their safety. Also, there is growing concern about the illegal addition of anabolic steroids to certain performance enhancing supplements. FSMA Provisions. In addition to the general provisions of FSMA that apply to most foods, including supplements, FSMA includes two provisions specifically focused on supplements (both found in FSMA, Section 113). The first provision requires FDA to notify the Drug Enforcement Administration (DEA) if, when reviewing the safety of a new dietary ingredient, FDA determines that the ingredient may contain an anabolic steroid or its analogue. (DEA regulates anabolic steroids as controlled substances. ) The second provision requires that FDA publish guidelines, within 180 days of enactment, to clarify the definition of a new dietary ingredient, and explain how a product so categorized is to be evaluated for safety. A steady increase in food imports, a result of globalization and consumer desire for a wider variety of foods year-round, has generated growing concerns about whether current federal programs sufficiently ensure the safety of these imports. FDA import alerts in 2007 and 2008 targeting adulterated pet food ingredients, farmed seafood, and dairy products and ingredients, all from China, are among the incidents that have heightened interest in this issue. Most of the recent debate has included extensive discussion about how to improve current import safeguards, within resource constraints, and without unduly restraining free trade. Before enactment of FSMA, FFDCA (21 U.S.C. § 381(a)) empowered FDA to refuse entry to any food import if it "appears," based on a physical examination or otherwise, to be adulterated, misbranded, or otherwise in violation of the law. In exercising its oversight, under the provisions of the Bioterrorism Act, the agency relied on a system of prior notifications by importers and document reviews at ports of entry. Importers needed an entry bond and had to file a notification for every shipment. An FDA database, the Operational and Administrative System for Import Support (OASIS), helped inspectors to determine a shipment's relative risk and whether it needed closer scrutiny (i.e., a physical examination, and/or testing). In practice, import inspections were relatively infrequent. The agency recorded more than 8.2 million imported food "lines" in FY2007 (compared with fewer than 2.8 million entry lines in FY1997), of which approximately 1% were physically examined and/or tested. Among the cited reasons for this low incidence of inspections were limited and declining resources, including too few inspectors to cover the more than 360 U.S. ports of entry despite ever-increasing import volumes. Prior law did not explicitly authorize, or require, import verification. FSMA Provisions. FSMA provisions on food imports (Title III) place tighter controls over imports, and use certification or verification systems involving so-called third parties. FSMA (§ 303) authorizes the HHS Secretary, based on public health considerations, including risks associated with food or its place of origin, to require food imports to be accompanied by "certification or such other assurances as the Secretary determines appropriate" that the food complies with some or all requirements of the act. Among other provisions, certifications are to be used for designated food imported from countries where FDA has an agreement for a certification program. Certifying entities include an agency or representative from the originating country or other persons accredited elsewhere (see section titled " Use of Third Parties for Imports and for Laboratory Accreditation "). FSMA (§ 301) authorizes a "Foreign Supplier Verification Program," generally requiring each importer to perform foreign supplier verification activities in accordance with regulations the Secretary may issue to ensure compliance with relevant FFDCA provisions. Each importer's program will be able to assure that each of its foreign suppliers produces the imported food employing processes and procedures, "including reasonably appropriate risk-based preventive controls," that are documented in a written plan and equivalent in preventing adulteration and reducing hazards to requirements of other relevant provisions of FFDCA. Verification activities include monitoring records, lot-by-lot certification of compliance, annual on-site inspections, checking the preventive control plan of the foreign supplier, and periodically testing and sampling shipments. Importers are required to maintain import verification program records for at least two years and to make them available to the Secretary upon request. Other FSMA provisions include specific authorizations for the Secretary to review the equivalence of a foreign country's safety standards, regulations, statutes, and controls and to conduct audits to verify their implementation; and to enter into arrangements with foreign countries to facilitate inspection of foreign facilities. The law also requires the establishment of a program to expedite imports from those who voluntarily agree to certain higher safety standards under the "Voluntary Qualified Importer Program" (§ 302). Some have questioned whether FSMA will provide FDA with so-called "equivalence authority," such as that governing U.S. imports of meat and poultry products under USDA's FSIS jurisdiction. "Equivalency" refers to the requirement that all imported meat and poultry products meet all safety standards applicable to similar products produced in the United States. Foreign meat and poultry food regulatory systems may apply "equivalent sanitary measures to eliminate or abate food safety hazards" if those measures provide the same "level of public health protection" achieved by U.S. measures. Under laws governing meat inspection, no foreign establishment can ship its products to the United States until FSIS has determined that the establishment's country has a meat and/or poultry safety program that provides a level of protection at least equivalent to the U.S. system. FSIS visits the exporting country to review its rules and regulations, meets with foreign officials, and accompanies them on visits to establishments. In addition, FSIS operates a reinspection program at 150 import houses located near approximately 35 border entry points. FDA does not have a program like that of FSIS. Some have suggested that the FDA program should operate more like that of FSIS, although they acknowledge the difficulties and resource demands of attempting to regulate many more different types of foods from many countries of origin. How FDA is able to exercise its new authority under FSMA regarding food imports under the agency's jurisdiction remains to be seen. Many critics have argued that a fundamental problem has been FDA's lack of sufficient funding and staff to carry out congressionally mandated (and existing) responsibilities to ensure a safe food supply. Responding to a request from Democratic leaders of the House Energy and Commerce Committee, a subcommittee of the FDA Science Board estimated that, in order to address these deficiencies, the food-related portion of FDA's appropriation should be increased. In fact, congressional appropriators increased funding for FDA food activities each year from FY2005 to FY2010. (See Table 3 .) Proposed increases in program spending raise a variety of policy issues. Requests for higher appropriations compete with other priorities throughout the federal discretionary budget. The programs do not operate as mandatory authorizations, as do farm support programs, for example, and currently are being made during a period of budget deficits. An alternative approach to direct appropriations is to fill perceived shortfalls through user fees on the regulated industry. For several years before the introduction of FMSA, such user fees related to foods had been proposed in legislation and in budget requests. For example, the President's FY2011 budget request proposed $6.467 million for reinspection fees, $4.307 million for export certification fees, and $182.783 million in inspection and registration fees. Before FSMA added the authority for FDA to collect food-related user fees, the agency already had the authority to collect user fees related to human and animal prescription drugs and human medical devices (21 U.S.C. 379g - 379j-12); human biologics (42 U.S.C. 262 note); and tobacco products (21 U.S.C. 387s). Some of these user fees are paid annually, and some are paid when submitting certain applications to FDA. The fees collected are intended to fund approval-related activities; with the exception of tobacco fees, they cannot be used to fund enforcement or inspection activities for products on the market, except to a very limited extent. (Unlike foods and some food additives, prescription drugs, medical devices, and animal drugs require FDA's advance permission before they can be legally marketed.) The user fee programs have generally been authorized in five-year increments (except for tobacco fees, which are permanently authorized). Each authorization specifies the fee amounts FDA may collect annually, among other legislative direction. Since before the FMSA was enacted, FDA has also been explicitly authorized to collect export certification fees for drugs, animal drugs, medical devices, and biological products (21 U.S.C. 381(e)(4)). A person who exports any of these products may request that the Secretary certify in writing that the product meets FFDCA requirements. If the Secretary issues a written export certification, a fee of up to $175 may be charged. The introduction of user fees for these FDA-regulated products has added to the agency's budget. Fees have provided additional resources for the agency to hire reviewers to conduct premarket reviews; to hire support personnel and field investigators to speed up the application review process for drugs, biological products, and medical devices; and to acquire and support critical information technology infrastructure. The introduction of fees raises several issues. First, proposals for new user fees typically meet with resistance, both from the companies that would have to absorb such costs and from consumer advocates, who argue that industry funds might cause conflicts of interest by having industry pay the salaries of some of its regulators. To help address the issues that underlie this resistance, clear conflict-of-interest guidelines, as well as certain restrictions on how funds may be expended, have been established. Second, concerns are sometimes expressed that user fees, once authorized, comprise an ever-increasing proportion of the budget, and may supplant rather than supplement funding for the agency. For that reason, certain fees carry the requirement that direct appropriations meet a certain threshold before user fees can be collected. Third, the funding generated by some types of fees—those that are periodic and associated with external events such as the submission of marketing applications—can be difficult to predict. However, FDA's highly trained staff cannot easily be increased or trimmed to conform to short-term activity levels and associated available funds. One example of the dilemma of unpredictable fee funding comes from the area of medical device user fees. In FY2002, when they were initially authorized, the fees were all periodic, which led to unpredictable funding for the device program and caused some budgetary shortfalls. In FY2007, in order to make user fee funding more consistent and reliable, certain annual fees (such as annual registration fees) were enacted to help resolve the issue. A fourth set of concerns has been raised by small businesses. In the area of drugs and devices, small businesses claim to be drivers of innovation, and caution that fees imposed on them have a disproportionate and chilling effect on their work. For that reason, many of the drug- and device-related user fees have reductions for small businesses. FSMA Provisions. FSMA funds some FDA food safety activities through the collection of user fees. (See Table 4 .) It establishes one annual fee (for participants in the voluntary qualified importer program (VQIP)), and three fees for periodic activities (a reinspection fee, a recall fee, and an export certification fee). Details of these annual and periodic fees are presented in Table 5 , including, where specified, who pays the fee, the fee amount, restrictions on the fee amount, the result of nonpayment, how funds may be used, required reports and meetings, authorizations, appropriations-related restrictions on fee collection, and expiration dates. FSMA does not impose new facility registration fees. Regarding fees, the Congressional Budget Office (CBO) estimated that over five years, the new requirements would collect $241 million (based on an assessment of the August 2010 manager's amendment of the Senate version of the food safety bill). CBO also estimated that covering the five-year cost of new requirements, including more frequent inspections, would require additional outlays of $1.1 billion. Appendix A. FDA Food Safety Modernization Act (P.L. 111-353) Provisions Appendix B. Comparison of Provisions in the FDA Food Safety Modernization Act (FSMA, P.L. 111-353), with Previously Existing Law
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The 111th Congress passed comprehensive food safety legislation in December 2010 (the FDA Food Safety Modernization Act, or FSMA, P.L. 111-353). Although numerous agencies share responsibility for regulating food safety, this newly enacted legislation focused on foods regulated by the Food and Drug Administration (FDA) and amended FDA's existing structure and authorities, in particular via the Federal Food, Drug, and Cosmetic Act (FFDCA; 21 U.S.C. §§ 301 et seq.). The new law does not directly affect activities at the U.S. Department of Agriculture (USDA), which oversees the safety of most meat and poultry. FSMA generally expands or modifies existing FDA authorities rather than creating a new food safety structure or authorities. Among its many provisions, the new law will increase frequency of inspections at food facilities, tighten record-keeping requirements, extend more oversight to certain farms, and mandate product recalls if a firm fails to institute them voluntarily. The new law will require food processing, manufacturing, shipping, and other regulated facilities to conduct an analysis of the most likely safety hazards and to design and implement risk-based controls to prevent them. FSMA also will facilitate the establishment of science-based "performance standards" for the most significant food contaminants. Other provisions in the new law are also intended to improve the nation's foodborne illness surveillance systems. FSMA also mandates increased scrutiny of food imports, which account for a growing share of U.S. consumption; food import shipments will have to be accompanied by documentation that they can meet safety standards that are at least equivalent to U.S. standards. Such certifications might be provided by foreign governments or other so-called third parties accredited in advance. FSMA also contains provisions for certifying or accrediting laboratories, including private laboratories, to conduct sampling and testing of food, among other provisions. This report provides a detailed overview of these and other major provisions in the newly enacted law. The 112th Congress will likely provide oversight and scrutiny of how the law is implemented, including FDA's coordination with other federal agencies. Implementation of the law will depend largely on the availability of discretionary appropriations, and some have questioned whether funding should be provided in the current budgetary climate. In addition, the 112th Congress may consider changes to other food safety laws and policies that continue to be actively debated in Congress. Continued congressional interest in reforming the nation's food safety laws and in monitoring food safety issues is expected, given other perceived problems with the current food safety system.
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The National Strategy for the Physical Protection of Critical Infrastructures and Key Assets details a major part of the Bush administration's overall homeland security strategy. Implementing this strategy requires government agencies and private sector partners to identify and prioritize assets most essential to the United States' economic and social well-being. A key implementation requirement, therefore, is clear definition of what the administration considers to be critical infrastructures and key assets. While the Strategy provides the administration's definitions, along with its rationale for including specific infrastructures on the critical list, the meaning of "critical infrastructure" in the public policy context has been evolving for decades and is still open to debate. This report reviews the concept and definition of "critical infrastructure" as it has appeared in federal reports, legislation and regulation since the early 1980s. The report highlights the changes and expansion of that definition as the focus of public policy debates shifted from infrastructure adequacy to infrastructure protection. Finally the report summarizes current policy issues associated with critical infrastructure identification by federal agencies and the private sector. The report is intentionally limited to definitional issues and categorization of infrastructure. For a more general discussion of national policy regarding critical infrastructure protection, including its evolution, implementation, and continuing issues, see CRS Report RL30153, Critical Infrastructures: Background, Policy, and Implementa t ion , by [author name scrubbed]. The American Heritage Dictionary, defines the term "infrastructure" as The basic facilities, services, and installations needed for the functioning of a community or society, such as transportation and communications systems, water and power lines, and public institutions including schools, post offices, and prisons. This definition, however, and others like it, are broad and subject to interpretation. As a practical matter, what is considered to be infrastructure depends heavily upon the context in which the term is used. In U.S. public policy, the definition of "infrastructure" has been evolutionary and often ambiguous. Twenty years ago, "infrastructure" was defined primarily in debates about the adequacy of the nation's public works—which were viewed by many as deteriorating, obsolete, and of insufficient capacity. A typical report of the time, issued by the Council of State Planning Agencies, defined "infrastructure" as "a wide array of public facilities and equipment required to provide social services and support private sector economic activity." According to the report, infrastructure included roads, bridges, water and sewer systems, airports, ports, and public buildings, and might also include schools, health facilities, jails, recreation facilities, electric power production, fire safety, waste disposal, and communications services. In a 1983 report, the Congressional Budget Office (CBO) defined "infrastructure" as facilities with "the common characteristics of capital intensiveness and high public investment at all levels of government. They are, moreover, directly critical to activity in the nation's economy." The CBO included highways, public transit systems, wastewater treatment works, water resources, air traffic control, airports, and municipal water supply in this category. The CBO also noted that the concept of infrastructure could be "applied broadly to include such social facilities as schools, hospitals, and prisons, and it often includes industrial capacity, as well." In a subsequent report, however, CBO narrowed this definition of "infrastructure" to exclude some facilities often thought of as infrastructure–such as public housing, government buildings, private rail service, and schools–and some environmental facilities (such as hazardous or toxic waste sites) where the initial onus of responsibility is on private individuals. Congress, itself, has often enacted legislation defining or affecting one or more infrastructure sectors, but has rarely done so comprehensively. In 1984, Congress did enact a bill that established the National Council on Public Works Improvement with a mandate to report on the state of public works infrastructure systems ( P.L. 98-501 ). Analysis required by that act was to include "any physical asset that is capable of being used to produce services or other benefits for a number of years" and was to include but not be limited to "roadways or bridges; airports or airway facilities; mass transportation systems; wastewater treatment or related facilities; water resources projects; hospitals; resource recovery facilities; public buildings; space or communication facilities; railroads; and federally assisted housing." The Council established by P.L. 98-501 provided yet another definition of "infrastructure." The Council's report characterized "infrastructure" as facilities with high fixed costs, long economic lives, strong links to economic development, and a tradition of public sector involvement. Taken as a whole, according to the Council, the services that they provide "form the underpinnings of the nation's defense, a strong economy, and our health and safety." Under this definition of "infrastructure," the Council included highways, streets, roads, and bridges; airports and airways; public transit; intermodal transportation (the interface between modes); water supply; wastewater treatment; water resources; solid waste; and hazardous waste services. The Council's report was one of the last significant federal initiatives during the 1980s to consider the definition of "infrastructure." By the early 1990s, policy makers' attention had largely moved away from infrastructure issues broadly. Instead, legislative proposals tended to address the needs of individual infrastructure sectors. The growing threat of international terrorism in the mid-1990s renewed federal government interest in infrastructure issues. Unlike the previous period, which was focused on infrastructure adequacy, federal agencies in the 1990s were increasingly concerned about infrastructure protection. This concern, in turn, led policy makers to reconsider the definition of "infrastructure" in a security context. On July 15, 1996, President Clinton signed Executive Order 13010 establishing the President's Commission on Critical Infrastructure Protection (PCCIP). This Executive Order (E.O.) defined "infrastructure" as The framework of interdependent networks and systems comprising identifiable industries, institutions (including people and procedures), and distribution capabilities that provide a reliable flow of products and services essential to the defense and economic security of the United States, the smooth functioning of government at all levels, and society as a whole. This definition of "infrastructure" is consistent with the broad definitions from the 1980's. E.O. 13010 went further, however, by prioritizing particular infrastructure sectors, and specific assets within those sectors, on the basis of national importance. E.O.13010 stated that "certain national infrastructures are so vital that their incapacity or destruction would have a debilitating impact on the defense or economic security of the United States." The Commission's final report to the President echoed the E.O.'s definition of vital infrastructure. The general concept of "vital" or "critical" infrastructure in E.O. 13010 was not entirely new, having appeared in some form in many of the policy debates in the 1980s. The Order did break new ground, however, in listing what it considered to be critical infrastructures. According to E.O. 13010, these critical infrastructures were: telecommunications; electrical power systems; gas and oil storage and transportation; banking and finance; transportation; water supply systems; emergency services (including medical, police, fire, and rescue); and, continuity of government. The list of critical infrastructure sectors in E.O. 13010 was much broader than that reported by the National Council on Public Works Improvement. In addition to transportation, water systems, and public services—sectors with "a tradition of public sector involvement"—E.O. 13010 included infrastructures predominantly owned by private companies: telecommunications, energy, and financial services. In response to the President's Commission on Critical Infrastructure Protection final report, President Clinton signed Presidential Decision Directive 63 (PDD-63) on May 22, 1998. The Directive's goal was to establish a national capability within five years to protect "critical" infrastructure from intentional disruption. According to PDD-63, "critical" infrastructures were "those physical and cyber-based systems essential to the minimum operations of the economy and government." This definition expanded little on that in E.O. 13010, but was noteworthy for its specific mention of "cyber" infrastructure. To help achieve its goal, PDD-63 directed certain federal agencies to lead the government's security efforts and identify private sector liaisons in specific critical infrastructure sectors. These lead agencies and associated critical infrastructures are summarized in Table 1 . PDD-63 also identified certain "special functions" related to critical infrastructure protection to be chiefly performed by federal agencies: national defense, foreign affairs, intelligence, law enforcement. The first version of a National Plan for Critical Infrastructure (also called for by PDD-63) defined "critical infrastructures" as "those systems and assets—both physical and cyber—so vital to the Nation that their incapacity or destruction would have a debilitating impact on national security, national economic security, and/or national public health and safety." While the Plan concentrated on cyber-security of the federal government's critical infrastructure, the Plan refers to those infrastructures mentioned in the Directive. Following the terror attacks of September 11, 2001, President Bush signed new Executive Orders relating to critical infrastructure protection. Executive Order 13228, signed October 8, 2001, established the Office of Homeland Security and the Homeland Security Council. Among the duties assigned the Office was to coordinate efforts to protect: energy production, transmission, and distribution services and critical facilities other utilities telecommunications facilities that produce, use, store, or dispose of nuclear material public and privately owned information systems special events of national significance transportation, including railways, highways, shipping ports and waterways airports and civilian aircraft livestock, agriculture, and systems for the provision of water and food for human use and consumption. The list in E.O. 13228 is noteworthy for its specific inclusion of nuclear sites, special events, and agriculture, which were not among the sectors identified in PDD-63. In a separate Executive Order 13231, signed October 16, 2001, President Bush established the President's Critical Infrastructure Protection Board. Although the name of the Board implied a broad mandate, its duties focused primarily on information infrastructure. However, the E.O. made reference to the importance of information systems to other critical infrastructures such as "telecommunications, energy, financial services, manufacturing, water, transportation, health care, and emergency services." In response to the terror attacks of September 11, 2001, Congress passed the USA PATRIOT Act of 2001( P.L. 107-56 ). The PATRIOT Act was intended to "deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and for other purposes." In its findings, P.L. 107-56 states that Private business, government, and the national security apparatus increasingly depend on an interdependent network of critical physical and information infrastructures, including telecommunications, energy, financial services, water, and transportation sectors (Sec. 1016(b)(2)). The act goes on to define "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 (Sec. 1016(e)). This definition was adopted, by reference, in the Homeland Security Act of 2002 ( P.L. 107-296 , Sec. 2(4)) establishing the Department of Homeland Security (DHS). The Homeland Security Act also formally introduces the concept of "key resources," defined as "publicly or privately controlled resources essential to the minimal operations of the economy and government" (Sec. 2(9)). Without articulating exactly what they are, the act views key resources as distinct from critical infrastructure, albeit worthy of the same protection (Sec. 2(15)(A)). The President's National Strategy for Homeland Security (NSHS), issued in July 2002, restates the definition of critical infrastructure provided in the PATRIOT Act. The Strategy expands on this definition, however, summarizing its rationale for classifying specific infrastructure sectors as critical. Our critical infrastructures are particularly important because of the functions or services they provide to our country. Our critical infrastructures are also particularly important because they are complex systems: the effects of a terrorist attack can spread far beyond the direct target, and reverberate long after the immediate damage. America's critical infrastructure encompasses a large number of sectors. Our agriculture, food, and water sectors, along with the public health and emergency services sectors, provide the essential goods and services Americans need to survive. Our institutions of government guarantee our national security and freedom, and administer key public functions. Our defense industrial base provides essential capabilities to help safeguard our population from external threats. Our information and telecommunications sector enables economic productivity and growth, and is particularly important because it connects and helps control many other infrastructure sectors. Our energy, transportation, banking and finance, chemical industry, and postal and shipping sectors help sustain our economy and touch the lives of Americans everyday. The National Strategy listed the following critical infrastructure sectors: Agriculture Food Water Public Health Emergency Services Government Defense Industrial Base Information and Telecommunications Energy Transportation Banking and Finance Chemical Industry Postal and Shipping This list of critical infrastructures encompasses those of E.O. 13228, but adds chemicals, and postal and shipping services due to their economic importance. While there may be some debate, in particular, about why the chemical industry was not on earlier lists that considered military and economic security, it seems to have been added also because individual chemical plants could be sources of materials that could be used for a weapon of mass destruction, or whose operations could be disrupted in a way that would significantly threaten the safety of surrounding communities. While not identifying it as such in this list, the National Strategy also discusses "cyber infrastructure" as closely connected to, but distinct from, physical infrastructure. The Strategy states that DHS "will place an especially high priority on protecting our cyber infrastructure." In addition to identifying critical infrastructure, the Strategy also introduces the concept of "key assets" as a subset of nationally important key resources. The Strategy defines "key assets" as individual targets whose destruction would not endanger vital systems, but could create local disaster or profoundly damage our Nation's morale or confidence. Key assets include symbols or historical attractions, such as prominent national, state, or local monuments and icons. In some cases, these include quasi-public symbols that are identified strongly with the United States as a Nation.... Key assets also include individual or localized facilities that deserve special protection because of their destructive potential or their value to the local community. The Strategy also mentions "high profile events ... strongly coupled to our national symbols or national morale" as worthy of special federal protection. The Bush Administration's National Strategy for the Physical Protection of Critical Infrastructures and Key Assets (NSPP), released in February, 2003, reaffirms the critical infrastructure sectors identified in the National Strategy for Homeland Security . The 2003 Strategy also defines three categories of what it considers to be "key assets." One category of key assets comprises the diverse array of national monuments, symbols, and icons that represent our Nation's heritage, traditions and values, and political power. They include a wide variety of sites and structures, such as prominent historical attractions, monuments, cultural icons, and centers of government and commerce.... Another category of key assets includes facilities and structures that represent our national economic power and technological advancement. Many of them house significant amounts of hazardous materials, fuels, and chemical catalysts that enable important production and processing functions.... A third category of key assets includes such structures as prominent commercial centers, office buildings, and sports stadiums, where large numbers of people regularly congregate to conduct business or personal transactions, shop, or enjoy a recreational pastime. The Strategy specifically identifies nuclear power plants and dams as key assets. On December 17, 2003, President Bush issued Homeland Security Presidential Directive 7 (HSPD-7) clarifying executive agency responsibilities for identifying, prioritizing and protecting critical infrastructure. The Directive requires that DHS and other federal agencies collaborate with "appropriate private sector entities" in sharing information and protecting critical infrastructure (Par. 25). HSPD-7 supersedes PDD-63 (Par. 37). HSPD-7 adopts, by reference, the definitions of "critical infrastructure" and "key resources" in the Homeland Security Act (Sec.6). It also adopts the critical infrastructure and key asset categories in the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets. HSPD-7 does revise the list of lead federal agencies and associated critical infrastructures included in PDD-63 to reflect the role of the Department of Homeland Security as an independent cabinet department, as shown in Table 2 . Although HSPD-7 specifies a list of infrastructures, it leaves open the possibility that the list could be expanded. According to the Directive, DHS "shall ... evaluate the need for and coordinate the coverage of additional critical infrastructure and key resources categories over time, as appropriate" (Sec. 15). Nonetheless, the list of critical infrastructures in Table 2 appears to be the most recent and still in force. Identifying and prioritizing which assets of an infrastructure are most essential to its function, or pose the most significant danger to life and property if threatened or damaged, is necessary for developing an effective protection strategy. But the scope and complexity of critical infrastructure sectors can make it a daunting task to identify which specific assets are critical. For example, a recent report by the National Research Council (NRC) characterizes the extent of the U.S. domestic transportation system, one of the critical infrastructures, as follows: The U.S. highway system consists of 4 million interconnected miles of paved roadways, including 45,000 miles of interstate freeway and 600,000 bridges. The freight rail networks extend for more than 300,000 miles and commuter and urban rail system's cover some 10,000 miles. Even the more contained civil aviation system has some 500 commercial-service airports and another 14,000 smaller general aviation airports scattered across the country. These networks also contain many other fixed facilities such as terminals, navigation aids, switch yards, locks, maintenance bases and operation control centers. Left out of this description of the transportation system is a large maritime network of inland waterways, ports, and vessels. As the definitions of "critical infrastructure" and "key resources" have evolved in U.S. homeland security policy, responsible agencies have been seeking greater refinement and prioritization within these categories. In 1999, for example, the Critical Infrastructure Assurance Office (CIAO), which was established to support President Clinton's National Infrastructure Protection Plan, determined that many federal agencies responsible for critical infrastructure protection lacked a clear understanding of what constituted a "critical asset" within an infrastructure. As a result, the CIAO instituted a new program by which an agency could identify and assess its critical assets, identify the dependencies of those assets on other systems, including those beyond the direct control of the agency, and prioritize. The Homeland Security Act implies some type of critical asset differentiation as well by requiring DHS to "identify priorities for protective and support measures" within the nation's critical infrastructure sectors (Sec. 201(d)(3)). President Bush's National Strategy for Homeland Security explicitly adopts critical asset differentiation. The Strategy states: The assets, functions, and systems within each critical infrastructure sector are not equally important. The transportation sector is vital, but not every bridge is critical to the Nation as a whole. The Strategy formally introduces the concept of "critical assets" as a way for the federal government to "focus its efforts on the highest priorities" in critical infrastructure protection. The Bush Administration's National Strategy for the Physical Protection of Critical Infrastructures and Key Assets reaffirms the requirement to prioritize critical assets. The Strategy calls for what amounts to a prioritized master list. To frame the initial focus of our national protection effort, we must acknowledge that the assets, systems, and functions that comprise our infrastructure sectors are not uniformly "critical" in nature, particularly in a national or major regional context... We must develop a comprehensive, prioritized assessment of facilities, systems, and functions of national-level criticality and monitor their preparedness across infrastructure sectors. While the Strategy calls for objective assessment of critical assets it acknowledges that the "criticality"of individual assets is potentially fluid. The Strategy states that, "as we act to secure our most critical infrastructures and assets, we must remain cognizant that criticality varies as a function of time, risk, and market changes." The requirements of HSPD-7 continue the policy of critical asset prioritization and protection in the Strategy. It is interesting to note, however, that HSPD-7 requires DHS to do so "with an emphasis on critical infrastructure and key resources that could be exploited to cause catastrophic health effects or mass casualties comparable to those from the use of a weapon of mass destruction." This emphasis on health and safety appears to imply yet another basis for prioritizing infrastructure protection. Private companies and federal agencies have shared responsibility for identifying critical assets since PDD-63 was issued in 1998. That Directive required each lead federal agency to work with "private sector entities" in their respective infrastructures to "contribute to a sectoral National Infrastructure Assurance Plan by ... assessing the vulnerabilities of the sector to cyber or physical attacks," among other tasks (Sec. IV). According to PDD-63 "these assessments shall ... include the determination of the minimum essential infrastructure in each sector" (Sec. VIII.1). The responsibility of the private sector to work with federal agencies in developing and maintaining lists of "minimum essential infrastructure," or critical assets, continues to be an essential part of the government's infrastructure protection strategy. Individual critical infrastructure sectors have implemented independent and often varying approaches for identifying their own critical assets. For example, the June 2001 security guidance issued by the National Petroleum Council (NPC) for oil and natural gas infrastructure stated the following: The first step in the risk management process is to identify and put a value on each of the key assets of the organization. These key assets can be people, facilities, services, processes, programs, etc. Next, the "impact of loss" for each of these assets is estimated. This is a measure of the loss to the company if the asset is damaged or destroyed. A simple rating system based on user-defined criteria can be used to measure the value of the asset (e.g., very low, low, moderate, high, extremely high) and the impact of its loss. In a more complex risk management system, the value of an asset and impact of loss can be calculated in monetary units. These values may be based on such parameters as the original cost to create the asset, the cost to obtain a temporary replacement for the asset, the permanent replacement cost for the asset, costs associated with the loss of revenue, an assigned cost for the loss of human life or degradation of environmental resources, costs to public/stakeholder relations, legal and liability costs, and the costs of increased regulatory oversight. While it acknowledged the need to identify critical assets, the NPC's guidance left it up to individual companies to determine the specific basis for "criticality" in their security assessments. It is important to note that the NPC initially defined a "key asset" with respect to a potential "loss to the company" rather than broader economic or social welfare impacts as called for in federal critical infrastructure strategies. This emphasis illustrates the practical challenge of relying on private companies to identify critical assets in the context of national infrastructure security. In an effort to establish and implement a more consistent standard for what constitutes a critical asset, the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets requires DHS to "develop a uniform methodology for identifying facilities, systems, and functions with national-level criticality ... [and] build a comprehensive database to catalog these critical facilities, systems, and functions." Under Section 201 of the Homeland Security Act ( P.L. 107-296 ), responsibility for this critical asset catalog lies with the DHS's Information Analysis and Infrastructure Protection Directorate (IAIP). Developing a uniform methodology for identifying critical assets, and compiling a critical asset list for the United States as whole, has been difficult for IAIP. In April 2004, IAIP reported that it had compiled a list of 1,700 critical assets, but confusion among private sector and state government partners about what constituted a critical asset cast doubt on the validity and completeness of that list. For example, among electric utilities, there was some question as to why certain assets were considered critical by IAIP, since some of those assets were not in use and others did not support significant electric loads. Similar inconsistencies emerged when IAIP's list was compared to critical asset lists developed by state agencies. As the Assistant Secretary for Infrastructure Protection in DHS testified before Congress "what we have done to identify critical assets in the United States and what the states and local municipalities and cities have done often do not reconcile." According to press accounts, subsequent classified briefings with Members of Congress to review lists of critical assets in their states have continued to raise concerns about IAIP's critical asset identification. The National Commission on Terrorist Attacks Upon the United States (known as the 9/11 Commission) made its final report public on July 22, 2004. Among other things, the Commission was chartered to report on the United States' preparedness for, and response to, the terror attacks of September 11, 2001. Many of the recommendations made in the 9/11 Commission's report deal indirectly with critical infrastructure protection, especially as the goals of critical infrastructure protection have evolved to include countering the type of attack that occurred on September 11. However, the Commission's report does not specifically address the definition or identification of critical infrastructure, although the report does call for using a systematic risk management approach to set priorities and allocate resources for critical infrastructure protection. Although the Commission discussed in more detail issues related to transportation security, none of its recommendations advocate a change in the direction of, or the organizational structures that have evolved to implement, existing infrastructure protection policies. Nevertheless, the Commission's recommendations could speed up implementation in some areas, given the attention and renewed urgency expressed by the Commission. The U.S. government's definition of "critical infrastructure" has evolved over the years, and at any given time has left considerable room for interpretation. Furthermore, since the 1980's, the number of sectors included under that definition has generally expanded from the most basic public works to a much broader set of economic, defense, government, social and institutional facilities, as illustrated in Table 3 . The list may continue to evolve and grow as economic changes or geopolitical developments influence homeland security policy. Should Congress care if the overall list of critical infrastructures remains fluid? One concern is that an unclear or unstable understanding of what constitutes a critical infrastructure (or key resource) could lead to inefficient security policies. At the very least, a growing list of infrastructures in need of protection implies growing attention from the federal government and, implicitly, a need for more resources devoted to protect them. Under the Homeland Security Act and other legislation, the federal government is required to interact with each critical infrastructure, to support and maintain a database of vulnerabilities, to integrate the database with threat analyses, to monitor incidents on each of the infrastructures, and to issue warnings as appropriate. These activities call for time and resources. The federal government also may choose to assist financially in effecting necessary protective measures, not only for infrastructure owned and operated at the state or local level, but also for privately owned and operated infrastructures. Allocating limited public resources across an excessively broad range of infrastructures may be an inefficient use of resources. However, arbitrarily limiting the number of critical infrastructures a priori due to resource constraints might miss dangerous vulnerabilities. Unclear or shifting criteria for identifying individual critical assets and key assets may also lead to protection inefficiencies, especially where private companies are responsible for security spending. These criteria may become particularly important if federal agencies intend to implement and enforce any potential future security regulations related to critical infrastructure. Various private sector representatives state that they need clear and stable definitions of asset criticality so they will know exactly what assets to protect, and how well to protect them. Otherwise, they risk protecting too many facilities, protecting the wrong facilities, or both. Either outcome would increase ultimate costs passed through to consumers without commensurate security benefits, and could potentially divert scarce private resources from better uses, such as public safety or environmental protection. As oversight of the federal role in infrastructure security continues, questions may be raised concerning the ongoing efforts of DHS to define and prioritize critical and key assets. In addition to this specific issue, however, Congress may wish to assess how critical infrastructure identification fits in the nation's overall strategy to protect critical infrastructure. For example, if asset criticality is not clearly defined, increasing resources for infrastructure security inspections by DHS officials could be of limited value. Likewise, diverting infrastructure resources away from safety to enhance security might further reduce terror risk, but not overall public risk, if safety programs become less effective as a result. U.S. infrastructure security necessarily involves many groups: federal agencies, industry associations, large and small asset operators, and critical and non-critical asset owners. Reviewing how these groups work together to achieve common security goals is an oversight challenge for Congress.
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The National Strategy for the Physical Protection of Critical Infrastructures and Key Assets (NSPP) details a major part of the Bush administration's overall homeland security strategy. Implementing this Strategy requires clear definition of "critical infrastructures" and "key assets." Although the Strategy provides such definitions, the meaning of "critical infrastructure" in the public policy context has been evolving for decades and is still open to debate. Twenty years ago, "infrastructure" was defined primarily with respect to the adequacy of the nation's public works.In the mid-1990's, however, the growing threat of international terrorism led policy makers to reconsider the definition of "infrastructure" in the context of homeland security. Successive federal government reports, laws and executive orders have refined, and generally expanded, the number of infrastructure sectors and the types of assets considered to be "critical" for purposes of homeland security. The USA PATRIOT Act of 2001(P.L. 107-56) contains the federal government's most recent definition of "critical infrastructure." The NSPP contains the most recent detailed list of critical infrastructures and assets of national importance. The list may continue to evolve, however, as economic changes or geopolitical developments influence homeland security policy. There is some debate among policy makers about the implications of an ambiguous or changing list of critical infrastructures. Ambiguity about what constitutes a critical infrastructure (or key resource) could lead to inefficient use of limited homeland security resources. For example, private sector representatives state that they need clear and stable definitions of asset criticality so they will know exactly what assets to protect, and how well to protect them. Otherwise, they risk protecting too many facilities, protecting the wrong facilities, or both. On the other hand, arbitrarily limiting the number of critical infrastructures a priori due to resource constraints might miss a dangerous vulnerability. Clear "criticality" criteria will also be important if federal agencies intend to implement and enforce any potential future security regulations related to critical infrastructure. This report will not be updated.
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The use of carbon monoxide (CO) in the packaging of meat and fish has generated considerable debate. Carbon monoxide, in combination with nitrogen and carbon dioxide, is used in a packaging process for fresh meat called Modified Atmosphere Packaging (MAP). In the MAP process, the meat is placed in a container with an "impermeable film similar to a vacuum package but ... the air [is evacuated] from the package and replac[ed] ... with a specified mixture of gases that provides for better control of product properties." The presence of CO results in the meat turning a bright red color that lasts longer than the color in untreated meat. Additionally, fish treated with CO (for example, as part of a gas mixture called "tasteless smoke") gain a fresher appearance and a red tint. Conflicting studies have shown that consumers rely primarily on the appearance, including the red color of meat or fish, when choosing which package to purchase, and alternatively, that consumers rely mostly on "sell by" dates. The meat industry, consumer groups, scientists, and policy makers disagree as to whether the use of CO in meat and fish packaging should be regulated by the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA), through labeling or otherwise, and whether CO should be a substance Generally Recognized As Safe (GRAS) under current and proposed FDA rules. The meat industry, some scientists, and other supporters argue that MAP reduces shrinkage of the meat, allows for a longer shelf life, "keep[s] meat fresh, protect[s] meat, [and] prevent[s] cross-contamination" because MAP packages are tamper resistant and leak-proof. One scientist believes that MAP offers "better flavor, greater tenderness, and suppression of bacterial growth." Supporters of MAP also assert that such products are more sustainable, less wasteful, and more flexible in terms of distribution because more packages can be transported per truck. Additionally, they note that consumers prefer the bright red color of meat achieved in MAP. Finally, MAP system supporters dispute the scientific basis for claims that the use of carbon monoxide is misleading or dangerous and declare the consumers use "sell by" dates when determining the freshness of many products. Opponents allege that the use of CO misleads consumers into thinking meat and fish are fresher than they are; that certain populations, such as those with a reduced sense of smell, will be at increased risk if they consume spoiled meat or fish that still appears fresh due to the use of CO; that consumers may eat undercooked meat because meat packed in MAP systems may brown faster when cooked than untreated meat; that "sell by" dates are not adequate to assist consumers in determining freshness; that consumers will be exposed to CO; that such MAP products are misbranded and adulterated under the Federal Food, Drug, and Cosmetic Act; and that the FDA is violating its own regulations on CO. Another concern of consumer groups and some scientists is that CO provides a cover for spoiled or "temperature abused" meat and fish, meaning that the use of CO conceals visual cues of decomposition caused in part by exposure to changes in temperature or storage or transport at improper temperatures. Fish, such as tuna, may develop toxic levels of scombrotoxin (histamine) through time and/or temperature abuse, which can make consumers ill. Opponents of the use of CO on meat and fish note that the European Union, Canada, Singapore, and Japan have prohibited or decided not to recognize or approve CO for use in fresh meat or fresh fish packaging. Additionally, certain grocery store chainsâincluding Giant, Safeway, Kroeger, and Publixâeither do not sell or have announced that they will no longer sell MAP products. Others have taken different steps. At a March hearing, a Target Corporation executive testified that its primary meat supplier had received approval from FSIS to add a label to its packaging that would state: "Color is not an accurate indicator of freshness. Refer to Use or Freeze By [date]." Both the FDA and USDA play a role in food safety and the types of substances that can be added to food. This section will focus on the FDA's regulation of food additives and GRAS substances, which the agency is responsible for under the Federal Food, Drug, and Cosmetic Act (FFDCA) and parts of Title 21, Code of Federal Regulations. FFDCA § 201(s) defines a food additive as: any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food (including any substance intended for use in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding food; and including any source of radiation intended for such use).... The latter half of the above definition includes "food contact substances," which the FFDCA defines as "any substance intended for use as a component of materials used in manufacturing, packing, packaging, transporting, or holding food if such use is not intended to have any technical effect in such food." The definition of food additive excludes certain classes of substances: (1) pesticide chemical residues in or on a raw agricultural commodity or processed food, (2) pesticide chemicals, (3) color additives, (4) substances used in accordance with their sanction or approval under FDA and USDA laws prior to 1958, (5) new animal drugs, (6) dietary ingredients in dietary supplements, and (7) substances GRAS under the conditions of the substances' intended use. These seven categories of substances are exemptions to FFDCA § 201(s) and do not have to obtain FDA approval as food additives before they can enter the market. If a food additive does not meet one of the exemptions under the FFDCA, a rule must be in place that details the circumstances under which the food additive can be safely used. GRAS substances must be "generally recognized, among experts qualified by scientific training and experience to evaluate [their] safety." FDA regulations recognize the difficulty of establishing the harmlessness of a substance and therefore define safety as "a reasonable certainty in the minds of competent scientists that the substance is not harmful under the intended conditions of use." The person seeking GRAS status for a substance has the burden of proving the substance is GRAS under conditions of the substances' use. A determination that a substance has GRAS status is not limited to FDA scientists. Experts may base their view of a general recognition of safety on either (1) scientific procedures or (2) common use of a substance in food prior to January 1, 1958. The first type of GRAS substances is those that have "been adequately shown through scientific procedures ... to be safe under the conditions of [their] intended use." Scientific procedures include published and unpublished human, animal, analytical, and other scientific studies that are "appropriate to establish the safety of a substance." A GRAS determination based on scientific procedures "require[s] the same quantity and quality of scientific evidence as is required to obtain approval of a food additive regulation for the ingredient." The GRAS determination must "ordinarily" be based on published studies, but can be corroborated by unpublished studies and other information. FDA regulations do not require a unanimous opinion from the scientific community that a substance is GRAS under the conditions of its intended use; rather, the person seeking GRAS status "must show that there is a consensus of expert opinion regarding the safety of the use of the substance." However, "a severe conflict among experts regarding the safety of the use of a substance, precludes a finding" that a substance is GRAS. The second type of GRAS substances is those that were "used in food prior to January 1, 1958, [and shown] through either scientific procedures or experience based on common use in food[] to be safe under the conditions of [their] intended use." FDA regulations define the phrase "common use in food" as "a substantial history of consumption of a substance for food use by a significant number of consumers." In this instance, a GRAS determination ordinarily turns on "generally available data and information." These substances are known as prior-sanctioned substances. They can include substances used in food where the use prior to January 1, 1958, "occurred exclusively or primarily outside of the United States if the information about the experience establishes that the use of the substance is safe." Published information regarding substances used outside the United States must be corroborated. The FDA lists some GRAS substances in 21 C.F.R. Part 182. However, this list of GRAS substances is not exhaustive as "[i]t is impracticable to list all substances that are [GRAS] for their intended use." The list of GRAS substances in 21 C.F.R. Part 182 includes spices, essential oils, natural extracts, synthetic flavoring substances, substances that migrate from dry food packaging and paper products, multipurpose substances, anticaking agents, chemical preservatives, emulsifying agents, stabilizers, sequestrants, and nutrients. The FDA Commissioner can affirm the GRAS status of a substance based on a petition from a manufacturer or others or on his or her own initiative. Substances affirmed as GRAS, listed in 21 C.F.R. Part 184, differ from the GRAS substances listed in Part 182 because their GRAS status has been sustained through a notice-and-comment rulemaking. The concept of affirming the GRAS status of substances began in 1969, when questions arose about whether cyclamate salts, a substance that had been considered GRAS, were safe because "they were implicated in the formation of bladder tumors in rats." The affirmation of GRAS status occurs through the notice and comment rulemaking process, in which the Commissioner publishes a notice of the substance proposed to be affirmed as GRAS in the Federal Register , allows 60 days for comments, evaluates the comments (and the petition, if one was filed), and either (1) publishes a notice in the Federal Register affirming the substance is GRAS if there is "convincing evidence" or (2) "concludes that there is a lack of convincing evidence that the substance is GRAS and that it should be considered a food additive" subject to premarket approval by the FDA under FFDCA § 409. If the agency affirms that the use of a substance is GRAS, the substance is added to a list in the Code of Federal Regulations as a substance affirmed as GRAS "for the purposes and under the conditions prescribed," allowing for the possibility that use of a substance under a condition other than the one specified in the regulation may not be GRAS. The FDA has reviewed the direct food substances on the list in Part 184 and determined that they are GRAS "for the purposes and under the conditions prescribed." These ingredients are also GRAS as indirect food ingredients, also known as food contact substances, within certain limitations. Part 186 of Title 21, Code of Federal Regulations, lists the indirect food substances/food contact substances affirmed as GRAS, such as wrappers, containers, and other food-contact surfaces. If the Commissioner reviews a food ingredient and finds that it is a GRAS substance, under 21 C.F.R. § 184.1, the final rule approving the GRAS substance for the purposes and under the conditions prescribed may contain limits on the application and use of the substance. First, the regulation identifies the characteristics of the ingredient in such a way that it can be differentiated from other versions of the ingredient that the FDA has not affirmed as GRAS. Second, the substance affirmed as GRAS "must be used in accordance with current good manufacturing practices." Third, a FDA regulation affirming GRAS status "when the safety of an ingredient has been evaluated on the basis of limited conditions of use" will specify the limited conditions of use. Use of the ingredient under a condition other than the one specified in the regulation may not be GRAS. In such a case, the manufacturer must "independently establish that that use is GRAS or shall use the ingredient in accordance with a food additive regulation." Fourth, the substance affirmed as GRAS for the purposes and conditions prescribed cannot be used "in a manner that may lead to deception of the consumer" or FFDCA violations. Finally, ingredients listed as GRAS cannot be combined, in order to achieve the same technological effect in a food, at levels greater than were permitted for a single ingredient. The procedure outlined in a FDA proposed rule from 1997 would eliminate the notice and comment rulemaking process described above for substances affirmed as GRAS. The proposed rule would also end the GRAS petition process and create a new GRAS notification procedure. Although the notice and comment rulemaking process for GRAS substances is still in effect in the FDA regulations, the FDA has effectively been using the GRAS notification procedure outlined in the proposed rule since 1998 without issuing a final rule. Since the FDA has not issued a final rule, it is important to note that the FDA's procedure set forth in the 1997 proposed rule is only guidance and not law. The agency has also issued guidance for industry in the form of frequently asked questions about GRAS that includes a discussion of the GRAS notification program. More than 250 GRAS notifications have been submitted under the procedure outlined in the 1997 proposed rule. The FDA has issued one of the three responses described below for most of these notices, and both a numerical and alphabetical list of notices received and agency responses can be found on the FDA's website. Under the notification procedure in the proposed rule, industry submits a GRAS notification to the FDA that states the company's view that the substance is GRAS. These notifications identify the notifier and describe the substance that is the subject of the notice, the applicable conditions of use, and the basis for the GRAS determination, including a summary of supporting information "that forms the basis for an exemption from a statutory requirement." The notifier "explicitly accepts responsibility for the GRAS determination," unlike the protocol in the current regulations, in which such responsibility falls on the agency because an interested person has petitioned the FDA to affirm a use of a substance as GRAS or the FDA itself has affirmed a substance's use as GRAS. Rather than requiring that the FDA affirm that a substance is GRAS through a notice-and-comment rulemaking, the 1997 proposed rule provides that the FDA does not make a finding that a substance in a GRAS notification made under the proposed rule process actually is a GRAS substance. Instead, the agency states that (1) it has "no questions" about the notifier's conclusion that a substance is GRAS, (2) the notice does not provide a basis for a GRAS status determination, or (3) the notifier has stopped the GRAS notification process. If the agency's review of a GRAS notification does not furnish appropriate information to find a basis for a GRAS determination, it will issue such a response, potentially in light of the following reasons to question the use of the substance: FDA may question the GRAS status of use of a substance if the information provided in a notice: (1) Does not adequately establish technical evidence of safety; (2) is not generally available; (3) does not convince the agency that there is the requisite expert consensus about the safety of the substance for its intended use; or (4) is so poorly presented that the basis for the GRAS determination is not clear. FDA also may be aware of information that is not included in the notice but raises important public health issues that lead the agency to question GRAS status of use of the substance. The FDA notes that notifiers "receive as a benefit a response that documents the agency's awareness of the [GRAS] determination" by the notifier. If, as in the majority of the FDA's responses to GRAS notification submissions, the FDA has no questions about the notification, this determination does not mean that the FDA has approved the substance in the notification as GRAS. In other words, none of the uses of the substances reviewed by the FDA through a GRAS notification are deemed to actually be GRAS by the FDA. Moreover, in contrast to the FDA's GRAS affirmation regulations, which allow the FDA to place potential limits on the use of a GRAS substance, the GRAS notification procedures in the FDA's proposed rule do not appear to allow this, as the FDA only responds in one of three ways noted above. Nonetheless, an FDA response of "no questions" could give a substance an imprimatur of safety from the federal government. Such a response may also give manufacturers confidence that the substance is acceptable, and they would be able to tell their suppliers and others of the FDA's response to the notification. Additionally, an FDA response of "no questions" may convey to manufacturers a feeling of less uncertainty and less potential liability about using such a GRAS substance that has been through the GRAS notification process, as the agency may not be as likely to seize a substance or find a product adulterated or misbranded if the FDA itself has said it has "no questions." As mentioned above, the agency has yet to issue a final rule on the notification procedure; however, the FDA has "invite[d] interested persons" to submit such notifications as described in the proposed rule on an "interim policy" basis until the publication of the final rule. The agency has accepted more than 250 notification submissions under the proposed rule procedures. In its proposal, the FDA has stated that it "will determine whether its experience in administering such notices suggests modifications to the proposed procedure." The agency's description and adoption of the new GRAS notification process (as delineated in the proposed rule) on an interim policy basis may be characterized as the equivalent of a guidance document. The chart below provides the number of FDA response letters in each of the three categories discussed above, as well as a fourth category for the number of GRAS notices that are awaiting a response from the FDA, and the percent of the total number of letters issued by the FDA under its procedure in the 1997 proposed rule. One GRAS notification, GRN No. 13, was counted twiceâonce in the "FDA has no questions" category and once in the "Notice does not provide a basis for a GRAS determination" categoryâbecause the FDA had no questions for three botanical substances in the notice (Chrysanthemum, Licorice, and Jellywort) but the FDA stated that the notice did not provide a basis for a GRAS determination for six other substances (Honeysuckle; Lophatherum; Mulberry leaf; Frangipani; Selfheal; Sophora flower bud). The FDA's response to GRAS notifications that were initially submitted, but then were either withdrawn or determined not to provide a basis for a GRAS determination, were only included for the resubmitted notices for the same substances. For example, Hawaii International Seafood, Inc. initially submitted its GRAS notification for tasteless smoke as GRAS Notice No. 5, but then at the company's request, the FDA ceased to evaluate the notice. Hawaii International Seafood, Inc. then resubmitted its GRAS notification for tasteless smoke as GRAS Notice No. 15, and the FDA had no questions. Only the FDA's response to the resubmitted notification is included on the chart below. There were 18 instances of GRAS notifications being resubmitted, which explains the difference in the chart's total number of notices (238) and the number of GRAS notifications listed on the FDA website (256). Under the current legislative and regulatory schemes, the FDA shares responsibility for some food safety issues with the United States Department of Agriculture (USDA). While the FDA is responsible for safety of the vast majority of food categories, the USDA is specifically authorized to regulate the safety and wholesomeness of meat and poultry products that are intended for use as human food. Under this authority, the USDA, and consequently the Food Safety and Inspection Service (FSIS), is required to provide a mark of inspection on meat and poultry products. The mark of inspection reflects a determination that the product is not adulterated or misbranded. There is a two-step process for approving the use of additive substances in meat and poultry products: (1) FDA determines the safety of substances and prescribes safe conditions of use, and (2) FSIS determines whether new substances or new applications of substances are suitable for use in meat and poultry products. In other words, FDA makes determinations based on the safety of the substance itself, while FSIS approves the substance's application to the meat or poultry product. In 2000, the roles of FDA and FSIS in this joint review process of substances used in meat and poultry products were laid out in a Memorandum of Understanding (MOU). The MOU provides for standard operating procedures regarding submissions to FDA or FSIS that, for example, petition for the approval of food and color additives intended for use in meat or poultry products, as well as GRAS notifications "regarding the use of a substance in the production of meat or poultry products." The MOU generally instructs the agency that receives a request for review of a substance used in meat or poultry products to seek review by the other agency regarding the substance as well. For example, when FSIS receives a request for an acceptability determination regarding the application of a substance in the production of meat or poultry products, it confirms the status of the substance's safety with FDA. Conversely, if FDA receives a request for a suitability determination regarding the use of a substance in meat or poultry products, the request must be transferred to FSIS. The MOU provides that when FDA receives a GRAS Notice regarding the use of a substance in the production of meat or poultry products, FDA and FSIS proceed jointly, as they would regarding requests for approval of a food or color additive intended for use in the production of meat or poultry products. FDA informs and consults with FSIS, and FSIS provides written comments to FDA within 60 days. FDA's response to the notifier includes information regarding the notifier's responsibilities under the Federal Meat Inspection Act and Poultry Products Inspection Act and "may include concerns about the suitability of the use of the substance in the production of meat or poultry products and, when applicable, any restrictions or conditions of use in the production of meat or poultry products that FSIS recommends in writing." Under the dual review process, if FDA approves a substance, such as a food or color additive, or lists the substance as GRAS for use in food, the substance is not automatically acceptable for use in meat and poultry products. If FDA's approval of a food or color additive, or if the FDA's GRAS listing does not specifically mention meat or poultry products, FSIS needs an affirmative written statement from FDA that it did consider the substance's use in meat or poultry or that it has no objections with regard to safety when the substance is used in meat or poultry. FSIS then needs to determine suitability and whether rulemaking is required. Whether a substance is suitable depends on "the effectiveness of the substance in performing the intended technical purpose of use, at the lowest level necessary, and the assurance that the conditions of use will not result in an adulterated product or one that misleads customers." To satisfy the requirement of suitability, FSIS needs certain data as evidence that the substance or use of the substance is suitable for its intended technical purposes. The data must show the effectiveness of the substance in achieving the intended purpose of its use. The data must show that the use is at the lowest level necessary to achieve the intended effect under the proposed conditions of use. The data must show that the use cannot result in adulteration or misbranding. FSIS regulations currently prohibit the use of substances that conceal damage or inferiority or make a product appear better or of greater value than it is. The regulations also provide that substances that are intended to be used to impart color in any meat or poultry product cannot be used unless approved as a color additive (under FDA regulations) or approved by FSIS regulations. This data must be provided for each separate product in which the use of the substance is intended. Based on the merits of these data, FSIS can permit the use of the substance or the new use of a substance under the proposed conditions of use and in conformance with standards and labeling requirements. With respect to whether rulemaking is required, if FDA has found or confirmed the safety of the substance, FSIS regulations are not amended. If rulemaking is not required, FSIS notifies the requestor in writing of its determination in what is known as an acceptability determination. If the use of the substance is prohibited or limited or if the substance is not normally found in the product, FSIS regulations may be necessary. If rulemaking is required, the substance is added to the current list of approved substances after the formal rulemaking process is completed. Because not all approved substances are listed in the published regulations under this process, FSIS maintains a directive system of all approved substances that are accepted as safe and suitable by FSIS on its website. As discussed above, a determination that a substance is GRAS may be made by the FDA, through the affirmation of the GRAS status of a substance, or by industry (including via a GRAS notification), based on scientific procedures or common use of a substance in food prior to January 1, 1958. FSIS cannot rely on the industry's determination of a substance as GRAS because of statutory requirements requiring USDA inspection of meat and poultry products. Meat and poultry products are required to have a mark of inspection that "reflects a determination by FSIS that the food product is not adulterated, and thus that all substances used to make the product are safe and suitable." As a result, "FSIS must have from FDA, at the very least, a written statement of no objection with regard to the safety of the use of the substance." Under the process outlined in the FDA's 1997 proposed rule, manufacturers have submitted GRAS notifications to the FDA that state their view that carbon monoxide is a GRAS substance. The FDA has responded that it has "no questions" about the conclusion that CO is GRAS. The FDA's responses to the GRAS notifications informed the industry that it had the continuing responsibility to ensure the substance's safety and compliance with other legal and regulatory requirements. The FDA first determined that it had no questions regarding a GRAS notification for the use of carbon monoxide in March 2000. The notifier, Hawaii International Seafood, Inc., stated its determination that the use of "tasteless smoke" (of which carbon monoxide is a component) on raw seafood is GRAS. The company defined its intended use as involving a procedure before the fish is frozen that would preserve the color, taste, aroma, and texture of raw seafood. In addition to determining that it had no questions, the FDA stated that the company's use of tasteless smoke constituted a preservative and noted that the fish must be labeled so that it complies with misbranding provisions of the FFDCA and the FDA's labeling regulations. The FDA next determined that it had no questions regarding the use of carbon monoxide as a GRAS substance in meat packaging in a letter to Pactiv Corporation in February 2002. The agency also stated that it had not made an independent determination of the GRAS status of the use of CO described in the notification. FDA noted the industry's conclusion that the use of carbon monoxide allows meat to maintain a desirable red color during storage but once the product was removed from storage, the color of the meat "deteriorates at a similar rate to that of meat that has not been exposed to CO." FSIS concluded that the use of carbon monoxide in the MAP system as it had been described by Pactiv in its GRAS notification "would be acceptable for packaging red meat cuts and ground meat." FSIS agreed with the company that "there is no lasting functional effect in the food and there is an insignificant amount of carbon monoxide present in the finished product under the proposed conditions of use." FDA restated that it had no questions regarding the industry's determination that carbon monoxide is GRAS in July 2004 and September 2005 in response letters to Precept Foods, LLC, and Tyson Foods, Inc., respectively. Currently, two additional GRAS notifications regarding carbon monoxide are pending. Although notifiers seeking a response from the FDA on GRAS notices for CO have submitted notices describing other conditions of use of CO, it appears possible that a manufacturer could potentially rely on a FDA response that the agency "has no questions" to use a GRAS substance in a manner other than the use described in the GRAS notice for which the FDA had no questions. For example, two of the CO GRAS notices, 83 and 143, discuss a level of CO that is 0.4 percent in a MAP system. Conceivably, a company could interpret the agency's lack of questions regarding the 0.4 CO level and use a CO level of 0.45 percent in a MAP system. However, if the FDA made a determination that the use of 0.45 percent CO, or even 0.4 percent CO, violated the FFDCA, the agency could attempt to seek criminal and civil penalties for violations such as adulteration and misbranding. The FFDCA also provides the FDA with other enforcement mechanisms such as seizure and injunctions. Two bills have been introduced in the House of Representatives regarding the use of carbon monoxide in meat and poultry products: H.R. 3115 (the Carbon Monoxide Treated Meat, Poultry, and Seafood Safe Handling, Labeling, and Consumer Protection Act) and H.R. 3610 (the Food and Drug Import Safety Act of 2007). Additionally, the discussion draft of the Food and Drug Administration Globalization Act of 2008, issued by Representatives Dingell, Pallone, and Stupak, similarly addresses the issue. Other bills also address GRAS substances: H.R. 2633 , H.R. 3290 , H.R. 3580 , H.R. 6635 , and S. 1342 . H.R. 3115 , H.R. 3610 , and the discussion draft propose to amend FFDCA § 201. Under the proposals, if carbon monoxide is used to treat meat, poultry or seafood that is intended for human consumption and if the conditions of that use would affect the color of the products, carbon monoxide must be treated as a color additive under FFDCA, unless the product's label includes a statement that is "prominently and conspicuously" placed to notify the consumer of the use of carbon monoxide and to warn the consumer of proper factors to judge the safety of the product. The bills and the discussion draft would allow the Secretary of Health and Human Services (HHS) to establish alternative labeling requirements five years after the effective date of the labeling requirement, if the Secretary finds that the labeling requirement is no longer necessary to prevent consumer deception. The discussion draft contains an additional provision related to GRAS determinations that would require the Secretary to publish, in the Federal Register , notice of receipt of a request for a substance to be determined by the Secretary to be GRAS. The Secretary would then have 90 days after publication of the notice to determine whether the substance is GRAS; the Secretary's determination would also be published in the Federal Register . It is unclear if the discussion draft is referring to a petition for affirmation of GRAS status under 21 C.F.R. § 170.35 as the "request for a substance to be determined by the Secretary to be a GRAS substance," or an alternate situation. (See page 5 in the PDF version of this report.) If the FDA Commissioner receives a petition to affirm the GRAS status of a substance "that directly or indirectly become[s] [a] component[] of food," the Commissioner must publish a notice of the filing of the petition in the Federal Register within 30 days after the date of filing of the petition. There is a 60-day comment period after the notice of filing in the current regulations. The current regulations state that the FDA Commissioner will publish an order listing the substance as GRAS if the petition and all available information "provide[s] convincing evidence that the substance is GRAS." Alternatively, if the Commissioner "concludes that there is a lack of convincing evidence that the substance is GRAS and that it should be considered a food additive subject to" FFDCA § 409, the Commissioner must publish a notice of this determination in the Federal Register .
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The use of carbon monoxide (CO) in the packaging of meat and fish has generated considerable debate. The presence of CO results in the meat turning a bright red color that lasts longer than the color in untreated meat. Additionally, fish treated with CO gain a fresher appearance and a red tint. The meat industry, consumer groups, scientists, and policy makers disagree as to whether the use of CO in meat and fish packaging should be regulated by the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA), through labeling or otherwise, and whether CO should be a substance Generally Recognized As Safe (GRAS) under current and proposed FDA rules. Two bills have been introduced in the 110 th Congress regarding the use of carbon monoxide in meat, poultry products, and seafood: H.R. 3115 and H.R. 3610 . The discussion draft of the Food and Drug Administration Globalization Act of 2008, issued by Representatives Dingell, Pallone, and Stupak, similarly addresses the issue. The bills and the discussion draft propose to amend section 201 of the Federal Food, Drug, and Cosmetic Act (FFDCA). Under the proposals, if CO is used to treat meat, poultry, or seafood that is intended for human consumption, and if the conditions of that use would affect the color of the products, CO must be treated as a color additive under FFDCA, unless the product's label includes a statement that is prominently and conspicuously placed to notify the consumer of the use of CO and to warn the consumer of proper factors to judge the safety of the product. The bills and the discussion draft would allow the Secretary of Health and Human Services (HHS) to establish alternative labeling requirements five years after the effective date of the labeling requirement, if the Secretary finds that the labeling requirement is no longer necessary to prevent consumer deception. The discussion draft contains an additional provision related to GRAS determinations that would require the Secretary to publish, in the Federal Register , notice of receipt of a request for a substance to be determined by the Secretary to be GRAS. The Secretary would then have 90 days after publication of the notice to determine whether the substance is GRAS; the Secretary's determination would also be published in the lain Federal Register . Other bills also address GRAS substances: H.R. 2633 , H.R. 3290 , H.R. 3580 , H.R. 6635 , and S. 1342 . This report provides an overview of the FDA's regulation of GRAS substances, which are exempt from the premarket approval process for food additives. The report next discusses the FDA's 1997 proposed rule, which would create a notification procedure for GRAS substances through which manufacturers can notify the FDA of their "determination that a particular use of a substance is GRAS." The FDA has been using this GRAS notification procedure since the publication of the proposed rule on an "interim policy" basis. The roles of the USDA and FDA are also discussed, including the 2000 Memorandum of Understanding regarding review of substances used in the production of meat and poultry products. Finally, the report examines GRAS notices regarding intended uses of carbon monoxide.
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In 2007, China overtook Canada to become the largest source of U.S. imports (at $322 billion). In 2008, U.S. imports from China totaled $338 billion. U.S. imports from China as a share of total U.S. imports rose from 6.5% in 1996 to 16.1% in 2008. Over the past few years, numerous recalls and warnings have been issued by U.S. firms over various products imported from China, due to health and safety concerns. This has led many U.S. policymakers to question the adequacy of China's regulatory environment in ensuring that its exports to the United States meet U.S. standards for health, safety, and quality; as well as the ability of U.S. government regulators, importers, and retailers to identify and take action against unsafe imports (from all countries) before they enter the U.S. market. The Food and Drug Administration (FDA) in March 2007 issued warnings and announced voluntary recalls on certain pet foods (and products used to manufacture pet food and animal feed) from China believed to have caused the sickness and deaths of numerous pets in the United States. In May 2007, the FDA issued warnings on certain toothpaste products (some of which were found to be counterfeit) found to originate in China that contained poisonous chemicals. In June 2007, the FDA announced import controls on all farm-raised catfish, bass, shrimp, dace (related to carp), and eel from China after antimicrobial agents, which are not approved in the United States for use in farm-raised aquatic animals, were found. Such shipments will be detained until they are proven to be free of contaminants. On January 25, 2008, the FDA posted on its website a notice by Baxter Healthcare Corporation that it had temporarily halted the manufacture of its multiple-dose vials of heparin (a blood thinner) for injection because of recent reports of serious adverse events (including an estimated 81 deaths and hundreds of complications) associated with the use of this drug. On February 18, 2008, the New York Times reported that a Chinese firm that produces an active ingredient used to produce heparin was not certified by the Chinese government to make the drug and had not undergone FDA inspection; many have speculated that the Chinese plant is likely the source of the problem. On September 12, 2008, the FDA issued a health information advisory on infant formula in response to reports of contaminated milk-based infant formula manufactured and sold in China, and later issued a warning on other products containing milk imported from China. On November 12, 2008, the FDA issued a new alert stating that all products containing milk imported from China would be detained unless proven to be free of melamine. The National Highway Traffic Safety Administration (NHTSA) in June 2007 was informed by Foreign Tire Sales Inc., an importer of foreign tires, that it suspected that up to 450,000 tires (later reduced to 255,000 tires) made in China may have a major safety defect (i.e., missing or insufficient gum strip inside the tire). The company was ordered by the NHTSA to issue a recall. The Chinese government and the manufacturer have maintained that the tires in question meet or exceed U.S. standards. The Consumer Product Safety Commission (CPSC) has issued alerts and announced voluntary recalls by U.S. companies on numerous products made in China. For example, in 2007, over four-fifths of CPSC recall notices involved Chinese products. Over this period, roughly 17.6 million toy units were recalled because of excessive lead levels. Recalls were also issued on 9.5 million Chinese-made toys (because of the danger of loose magnets), 4.2 million "Aqua Dots" toys (because beads contain a chemical that can turn toxic if ingested) and 1 million toy ovens (due to potential finger entrapment and burn hazards). In 2008, around 2.5 million toy units from China were recalled due to high lead content. From January 1 to June 3, 2009, about 1.1 million children's items (mainly toys and shoes) from China were recalled because of excessive lead. There have been a number media reports in 2009 about potential health and safety hazards of Chinese-made drywall products that have been installed in American homes in an number of states (including Florida, Louisiana, Mississippi, Texas, and Virginia) over the past few years. It has been claimed that these products emit sulfur gases that corrode copper coils and electrical and plumbing components. The CPSC reports that it has received over 365 reports from residents in 18 states and the District of Columbia who believe their health symptoms or the corrosion of certain metal components in their homes are related to the presence of drywall produced in China. The CPSC reportedly began an investigation of Chinese-made drywall in February 2009 to evaluate the relationship between the drywall and the reported health symptoms and electrical and fire safety issues and to trace the origin and distribution of the drywall. China's media reported in March that the government is also investigating these complaints. U.S. imports of plaster products, which includes drywall, from China rose from $3.6 billion in 2005 to $32.3 billion in 2006, then fell to $5.7 billion by 2008. In Congress, H.R. 1977 and S. 739 would require the CPSC to study and test drywall imported from China in 2004-2007, analyze its composition, determine the impact that chemicals and organic compounds in the drywall had on metal items in homes as well as potential health effects, and to issue an interim ban on drywall products deemed to constitute a substantial product hazard. In addition, S.Res. 91 would call on the CPSC to initiate a formal proceeding to investigate drywall imported from China in 2004-2007, prohibit the further importation of drywall and associated building products from China, order a recall of hazardous Chinese drywall, and to seek civil penalties against the drywall manufacturers in China that produced or distributed hazardous drywall and their subsidiaries in the United States to cover the cost of the recall effort and other associated remediation efforts. Table 1 lists various products imported from China in 2008 that have been the subject of U.S. health and safety concerns over the past few years, such as toys, seafood, tires, animal foods, organic chemicals and pharmaceuticals, and toothpaste. It shows that China was a major source of imports for many of these products. For example, China was the largest supplier of imported toys (91% of total) and tires (37%) and the 2 nd for seafood products (16%) and animal foods (26%). Despite health and safety concerns, U.S. imports of most of the products listed (with the exception of drywall and toothpaste) increased in 2008 over 2007 levels. Many analysts contend that China's health and safety regime for manufactured goods and agricultural products is fragmented and ineffective. Problems are seen as including weak consumer protection laws and poorly enforced regulations, lack of inspections and ineffective penalties for code violators, underfunded and understaffed regulatory agencies and poor interagency cooperation, the proliferation of fake goods and ingredients, the existence of numerous unlicensed producers, falsified export documents, extensive pollution, intense competition that often induces firms to cut corners, the relative absence of consumer protection advocacy groups, failure by Chinese firms to closely monitor the quality of their suppliers' products, restrictions on the media, and extensive government corruption and lack of accountability, especially at the local level. Chinese officials contend that most Chinese-made products are safe and note that U.S. recalls for health and safety reasons have involved a number of countries (as well as U.S. products). They also argue that some of the blame for recalled products belongs to U.S. importers or designers. They further contend that some U.S. products imported into China have failed to meet Chinese standards. However, they have acknowledged numerous product health and safety problems in China, as reflected in reports that have appeared in China's state-controlled media. For example, in June 2004, the Chinese People ' s Daily reported that fake baby formula had killed 50 to 60 infants in China. In June 2006, the China Daily reported that 11 people had died from a tainted injection used to treat gall bladders. In August 2006, Xinhua News Agency reported that a defective antibiotic drug killed seven people and sickened many others. China has announced a number of initiatives to improve and strengthen food and drug safety supervision and standards, increase inspections, require safety certificates before some products can be sold, and to crack down on government corruption: In May 2007, the Xinhua News Agency reported that former director of China's State Food and Drug Administration had been sentenced to death for taking bribes (equivalent to $850,000) in return for approving untested and/or fake medicines (he was executed on July 10, 2007). On the same day, the Xinhua News Agency reported that the Chinese government had announced that it would, by the end of 2007, complete regulations for setting up a national food recall system would ban the sale of toys that failed to pass a national compulsory safety certification. On June 27, 2007, the China Daily reported that a nationwide inspection of the food production industry had found that a variety of dangerous industrial raw materials had been used in the production of flour, candy, pickles, biscuits, black fungus, melon seeds, bean curd, and seafood. As a result, the government reportedly closed 180 food factories found to be producing unsafe products and/or making fake commodities. It also reported that in 2006, the government had conducted 10.4 million inspections, uncovering problems in 360,000 food businesses, and had closed 152,000 unlicensed food businesses. On July 4, 2007, the China Daily reported that the government had finished making amendments to all food safety standards and had established an emergency response mechanism among several ministries to deal with major problems regarding food safety. On August 9, 2007, China Daily reported that the government had pledged to spend $1 billion by 2010 to improve drug and food safety. On August 15, 2007, a spokesperson from the Chinese embassy in Washington, DC, said that China would require that every food shipment be inspected for quality by the government by September 1, 2007. On August 20, 2007, the Chinese government announced that it had created a 19-member cabinet-level panel to oversee product quality and food safety (headed by Vice-Premier Wu Yi) and would start a four-month nationwide campaign to improve the quality of goods and food. On December 5, 2007, the government stated that during the first 10 months of the year, it had shut down 47,800 food factories without operating licenses. On January 15, 2008, China announced it had inspected over 3,000 export-oriented toy manufacturers and had revoked licenses for 600 firms that failed to meet quality standards. On February 28, 2009, China's National People's Congress enacted a new food safety law (to take effect in June 2009) to enhance monitoring and supervision, toughen safety standards, provide recall substandard products, and increase punishment for offenders. The law bans all chemicals and materials other than authorized additives in food production, and will establish a new product identification and tracking system for nine product categories, including food. On March 6, 2009, China Daily reported that Chinese courts would accept lawsuits brought by parents who's children had been sickened by melamine-tainted milk products. On March 16, 2009, China Daily reported that the government had investigated 76,500 fake food cases in 2008. Despite these efforts, reports of tainted products persist. In January 2008, dozens of people in Japan reportedly became ill from eating dumplings imported from China that contained pesticide. In September 2008, the Chinese government reported that infant formula that was tainted with melamine had killed four children and sickened 53,000 others (13,000 of whom had to be hospitalized). The government announced on September 22, 2008, that China's chief quality supervisor had stepped down from his post over the incident. Other local and provincial officials have reportedly been sacked for trying to cover up incident. At least 22 Chinese baby formula companies have been found to have tainted products. Press reports indicate that other milk products made in China may have been contaminated as well. On October 15, 2008, the Chinese government ordered a blanket recall of all dairy products made before September 14, 2008. Several countries later banned the sale of Chinese-made milk products. On December 2, 2008, the Chinese government reported that melamine-tainted formula had killed six children and sickened 294,000 others (51,900 of whom had to be hospitalized and 154 were in serious condition). In October 2008, Hong Kong officials reported that some egg imports from China were contaminated with high levels of melamine. The United States and China reached a number of agreements in 2007 to address health and safety concerns: On September 11, 2007, the CPSC and its Chinese counterpart, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), signed a Joint Statement on enhancing consumer product safety. China pledged to implement a comprehensive plan to intensify efforts (such as increased inspections, efforts to educate Chinese manufacturers, bilateral technical personnel exchanges and training, regular meetings to exchange information with U.S. officials, and the development of a product tracking system) to prevent exports of unsafe products to the United States, especially in regard to lead paint and toys. On September 12, 2007, the NHTSA signed a Memorandum of Cooperation with its Chinese counterpart on enhanced cooperation and communication on vehicles and automotive equipment safety. On December 11, 2007, the U.S. Health and Human Services (HHS) announced that it had signed two Memoranda of Agreement (MOA) with its Chinese counterparts; the first covering specific food and feed items that have been of concern to the United States, and the second covering drugs and medical devices. Both MOAs would require Chinese firms that export such products to the United States to register with the Chinese government and to obtain certification before they can export. Such firms would also be subject to annual inspections to ensure they meet U.S. standards. The MOAs also establish mechanisms for greater information sharing, increase access of production facilities by U.S. officials, and create working groups in order to boost cooperation. On March 13, 2008, the FDA announced that it planned to place eight FDA staffers in China. Some members of Congress have proposed placing a CPSC official at the U.S. embassy in Beijing. Congressional concerns over the health and safety of imported products (including those from China) prompted the introduction of numerous bills to tighten U.S. health and safety rules and regulations (such as increased inspections, certification requirements, and mandatory standards for children's products, such as toys) and increased funding for U.S. product safety agencies (such as the CPSC). On August 14, 2008, President Bush signed into law the Consumer Product Safety Improvement Act of 2008 ( P.L. 110-314 ). Concerns over the health, safety, and quality of Chinese products could have a number of important economic implications. Both the United States and China have accused each other of using health and safety concerns as an excuse to impose protectionist measures and some observers contend that this issue could lead to growing trade friction between the two sides. International concerns over the safety of Chinese exports may diminish the attractiveness of China as a destination for foreign investment in export-oriented manufacturing, as well as for foreign firms that contract with Chinese firms to make and export products under their labels (such as toys). Efforts by China to restore international confidence in the health and safety of its exports through increased inspections, certification requirements, mandatory testing, etc., could have a significant impact on the cost of doing business in China, which could slow the pace of Chinese exports and hurt employment in the export sector (which has already been affected by the global economic slowdown). Moreover, international concerns over the safety of Chinese products could prove to be a setback to the government's efforts to develop and promote internationally recognized Chinese brands (such as cars), which it views as important to the country's future economic development. Thus, it is very likely the Chinese government will take this issue very seriously. However, it is unclear how long it will take for the central government to effectively address the numerous challenges it faces (especially government corruption and counterfeiting) to ensure that its exports comply with the health and safety standards of the United States and other trading partners. Additionally, a sharp decrease in purchases by U.S. consumers of Chinese products could negatively impact U.S. firms that import and/or sell such products and may raise prices of some commodities as firms attempt to rectify various safety problems. The number of lead-related U.S. recalls of imported Chinese toys declined sharply in 2008, which may in part reflect the Chinese government's efforts to regulate its domestic toy industry. However, the crisis in China over melamine-tainted food products has seriously challenged the government's assertions that most products made in China are safe and that an effective regulatory regime has been established. There have been allegations that Chinese company and local government officials knew about the problem and did nothing (despite numerous complaints by Chinese parents) until the extent of the problem was publicized by the media. This incident indicates that the central government continues to face numerous challenges in developing an effective health and safety enforcement regime.
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China is the largest source for U.S. imports, accounting for a 16% of total U.S. imports in 2008. China is a dominant supplier of many imported consumer products. For example, 90% of U.S. toy imports come from China. Numerous reports of unsafe products from China over the past few years, including seafood, pet food, toys, tires, drywall, and medicines have raised concern in the United States over the health, safety, and quality of imported Chinese products. The United States and China have sought to boost cooperation on health and safety issues. For example, China agreed to boost efforts to ensure that its toy exports to the United States did not violate U.S. regulations on lead content. This report provides an overview of U.S. concerns over the health and safety of Chinese products, identifies challenges China faces to develop an effective health and safety enforcement regime, summarizes U.S.-China cooperative efforts, and analyzes how this issue could impact China's economy and U.S.-China trade relations. This report will be updated as events warrant.
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T he Wilderness Act of 1964 (P.L. 88-577, 16 U.S.C. §§1131-1136) established the National Wilderness Preservation System as a system of undeveloped federal lands, which are protected and managed to preserve their natural condition. The act initially designated 54 wilderness areas containing 9.1 million acres of federal land within the national forests. Since then, Congress has passed more than 100 subsequent laws designating additional wilderness areas. As of September, 1, 2017, the National Wilderness Preservation System totaled 765 areas, spanning nearly 110 million acres. Many believe that certain areas should be designated to protect and preserve their unique value and characteristics, and bills are usually introduced in each Congress to designate wilderness areas. Others oppose such legislation because commercial activities, motorized access, and roads, structures, and facilities generally are prohibited in wilderness areas. Another area of concern is how prohibition of such activities can affect law enforcement in wilderness areas along U.S. national borders. This report presents information on wilderness protection and a discussion of issues in the wilderness debate—some pros and cons of wilderness designation generally; proposed legislation; and a discussion of wilderness study area designations and protections and related issues. This report is updated periodically to track the status of legislation introduced in the 115 th Congress to designate new wilderness (see Table 1 ) or to release wilderness study areas (WSAs; see Table 2 ). Tables of legislation from the 114 th Congress are provided in the Appendix of this report. In the Wilderness Act, Congress reserved for itself the authority to designate federal lands as part of the system. This congressional authority is based on the Property Clause of the Constitution, which gives to Congress the "Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States." Wilderness areas are part of existing units of federal land administered by the four federal land management agencies—the Forest Service (FS), in the Department of Agriculture; and the National Park Service (NPS); Fish and Wildlife Service (FWS); and Bureau of Land Management (BLM) within the Department of the Interior (DOI). Thus, statutory provisions for these agencies' lands, as well as the Wilderness Act and subsequent wilderness statutes, govern the administration of the designated wilderness areas. Wilderness designations can be controversial because the Wilderness Act (and subsequent laws) restricts the allowed uses of the land within designated areas. In general, the Wilderness Act prohibits commercial activities, motorized access, and roads, structures, and facilities in 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. This section thus prohibits most commercial resource exploitation (such as timber harvesting) and motorized entry (with cars, trucks, off-road vehicles, aircraft, or motorboats) except for "minimum requirements" to administer the areas and in emergencies. However, Section 4(d) provides numerous exceptions, including (a) possible continued use of motorboats and aircraft where uses are already established; (b) measures to control fires, insects, and diseases; (c) mineral prospecting conducted "in a manner compatible with the preservation of the wilderness environment"; (d) water projects; (e) continued livestock grazing; and (f) certain commercial recreation activities. Subsequent wilderness statutes have included additional provisions for administering those individual wilderness areas, including exceptions to the general Wilderness Act prohibitions. Existing private rights established prior to the designation of an area as wilderness remain in effect, unless expressly modified by the wilderness statute. The designation does not alter property rights, but does not suggest that all uses prior to the designation are allowed. There must be a property right, rather than a general right of use. Courts have consistently interpreted the phrase "subject to valid existing rights" to mean that the wilderness designation is not intended to take property in violation of the Fifth Amendment of the Constitution. Ownership of land within a wilderness area would confer existing rights. While most uses—timber harvesting, livestock grazing, motorized recreation—are not considered as rights to the lands and resources, the mining and mineral leasing laws do provide a process for establishing rights to the mineral resources. The Wilderness Act allowed implementation of these laws through 1983 for the original areas designated; many subsequent laws explicitly withdrew the designated areas from availability under these laws. Wilderness designations are permanent unless revised by law. Congress has statutorily removed lands from several wilderness areas, commonly to adjust boundaries to delete private lands or roads included inadvertently in the original designation. Lands do not have to be untouched by humans to be eligible for statutory designation as wilderness. Specific statutes designating wilderness areas may terminate or accommodate any existing uses or conditions that do not conform to wilderness standards (commonly referred to as nonconforming uses ). Many previous wilderness designations have directed immediate termination of nonconforming uses, whereas other bills have directed the agencies to remove, remediate, or restore nonconforming conditions or infrastructure within a specified time frame. Alternatively, many nonconforming uses and conditions have been permitted to remain in designated wilderness areas. The Wilderness Act explicitly allows continued motorized access by aircraft and motorboats in areas where such uses were already established. The Wilderness Act also permits motorized access for management requirements and emergencies, and for fire, insect, and disease control. Numerous wilderness statutes have permitted existing infrastructure (e.g., cabins, water resource facilities, telecommunications equipment) to remain and have authorized occasional motorized access to operate, maintain, and replace the infrastructure. A few statutes have also allowed new infrastructure developments (e.g., telecommunications equipment and a space energy laser facility) within designated wilderness areas. Although such authorizations are usually for a specific area, some statutes have provided more general exemptions, such as for maintaining grazing facilities or for fish and wildlife management by a state agency in all areas designated in the statute. Various existing wilderness statutes have included special access provisions for particular needs. For example, several statutes have included provisions addressing possible military needs in and near the designated areas, particularly for low-level military training flights. Similarly, statutes designating wilderness areas along the Mexican border commonly have allowed motorized access for law enforcement and border security. (See " Wilderness and U.S.-Mexican Border Security " below.) Other statutes have contained provisions allowing particular access for tribal, cultural, or other local needs. Several statutes have included provisions authorizing the agencies to prevent public access, usually temporarily and for the minimum area needed, to accommodate particular needs. Proponents of adding new areas to the National Wilderness Preservation System generally seek designations of specific areas to preserve them in their current condition and to prevent development activities from altering their wilderness character. Most areas protected as or proposed for wilderness are undeveloped, with few (if any) signs of human activity, such as roads and structures. The principal benefit of a wilderness designation is to maintain such undeveloped conditions and the values that such conditions generate—clean water, undisturbed wildlife habitats, natural scenic views, opportunities for nonmotorized recreation (e.g., backpacking), unaltered research baselines, and for some, the simple knowledge of the existence of such pristine places. Opponents of wilderness designations generally seek to retain development options for federal lands. The potential use of lands and resources can provide economic opportunities through extracting and developing the resources, especially in the relatively rural communities in and around the federal lands. The principal cost of a wilderness designation is the lost opportunity (opportunity costs) for economic activity resulting from resource extraction and development. While some economic activities—such as grazing and some recreation—are allowed to continue within wilderness areas, many are prohibited. The potential losses for some resources—such as timber harvesting—can often be determined with relative accuracy, since the quality and quantity of the resource can be measured. However, for other resources—particularly minerals—the assessments of the quality and quantity of the unavailable resources are more difficult to determine, and thus the opportunity costs are less certain. The potential benefits and opportunity costs of wilderness designation can rarely be fully quantified and valued. Thus, decisions about wilderness generally cannot be based solely on a clear cost-benefit or other economic analysis. Rather, deliberations commonly focus on trying to maximize the benefits of preserving pristine areas and minimize the resulting opportunity costs. However, individuals and groups who benefit from wilderness designations may differ from those who may be harmed by lost opportunities, increasing conflict and making compromise difficult. In general, Congress addresses several issues when drafting and considering wilderness bills. These issues include the general pros and cons of wilderness designation—generally and regarding identified areas of interest—and specific provisions regarding management of wilderness areas to allow or prohibit certain uses. The first step in developing legislation to designate wilderness areas is to identify which areas to designate. The Wilderness Act specified that wilderness areas are "at least 5,000 acres of land or … of sufficient size to make practicable its preservation and use in an unimpaired condition"; but no minimum size is required for designations made under new legislation. As a result, wilderness areas have taken all shapes and sizes; the smallest is the Pelican Island Wilderness in Florida, with only 5½ acres, and the largest is the Mollie Beattie Wilderness (Arctic National Wildlife Refuge) in Alaska, with 8.0 million acres. Many wilderness statutes have designated a single area, or even a single addition to an existing area. Others have designated more than 70 new areas or additions in a single statute. Some bills address a particular area, while others address all likely wilderness areas for a state or substate region (e.g., the California desert), usually for one agency's lands, although occasionally for two or more agencies' lands in the vicinity. Typically, the bill references a particular map for each area, and directs the agency to file a map with the relevant committees of Congress after enactment and to retain a copy in relevant agency offices (commonly a local office and/or the Washington, DC, headquarters). Numerous bills to designate wilderness areas usually are introduced in each Congress. For example, 33 bills that would have designated wilderness areas (plus 13 companion bills) were introduced in the 111 th Congress. One was enacted—the Omnibus Public Land Management Act of 2009, P.L. 111-11 . It included 16 subtitles (many of which had been introduced in individual wilderness bills in the 110 th and 111 th Congresses) designating over 50 new and expanding nearly 30 wilderness areas covering 2,050,964 acres in various states, as well as numerous other land, water, and other provisions. The 112 th Congress was the first in decades not to designate additional wilderness; the only wilderness law that was enacted reduced the size of a wilderness area in the State of Washington and transferred the land to the Quileute Indian Tribe. The 113 th Congress added five new areas and over 279,00 acres to the system in two enacted bills. In the 114 th Congress, more than 30 bills were introduced to designate new or add to existing wilderness areas, and one was enacted: P.L. 114-46 , which designated three new wilderness areas in Idaho. See Appendix for an alphabetical list of legislation introduced and the bill enacted into law in the 114 th Congress. In the 115 th Congress, as of the date of this report, more than 20 bills had been introduced to expand the National Wilderness Preservation System. See Table 1 for an alphabetical list of legislation introduced and the most recent action (as of the publication of this report). Some of these bills include proposals to designate more than one wilderness area or to designate several wilderness areas in different states. Most bills direct that the designated areas are to be managed in accordance with the Wilderness Act, meaning human impacts, such as commercial activities, motorized and mechanical access, and infrastructure developments, are generally prohibited. Some bills designating wilderness areas may terminate or accommodate any existing nonconforming uses or conditions, however. The Wilderness Act does allow some activities that affect the natural condition of the property, such as access for emergencies and for minimum management requirements; activities to control fires, insects, and diseases; livestock grazing; and some water infrastructure facilities. Subject to valid existing rights, wilderness areas are withdrawn from the public land laws and the mining and mineral leasing laws. The Wilderness Act specifies that "reasonable access" to nonfederal lands within a designated wilderness area must be accommodated. State jurisdiction over and responsibilities for fish and wildlife and water rights are unaffected. The Wilderness Act provides that the area will be managed, in part, for recreational use, but it does not specifically address hunting, fishing, or recreational shooting (although motorized vehicles, which may be helpful in removing big game from remote areas, are typically forbidden). Wilderness areas are generally open to hunting, fishing, and recreational shooting, subject to the management provisions of the underlying federal land. For example, hunting is prohibited in many NPS units; subsequently, hunting is also prohibited in any wilderness areas within those units. However, hunting, fishing, and recreational shooting are generally permitted on FS or BLM lands and, thus, on wilderness areas within those areas. Some wilderness designations authorize periods when or zones where the wilderness may be closed to hunting, fishing, and trapping for safety and administrative reasons. Legislation introduced in the 115 th Congress would alter management of wilderness areas for hunting, fishing, and recreational shooting activities. For example, S. 733 , the Sportsmen's Act, and H.R. 3668 , the Sportsmen's Heritage and Recreational Enhancement (SHARE) Act, both include provisions that would specify that wilderness areas managed by the FS and BLM would be open to recreational fishing, hunting, and recreational shooting, unless a land management agency had acted to close the land to the activity. The agencies would be permitted to close an area temporarily or permanently. H.R. 3668 specifies that closures must be determined to be necessary and reasonable and supported by facts and evidence. S. 733 would require specific public notice and comment periods prior to a closure. S. 733 also would prohibit the agencies from providing permits for recreational shooting ranges within designated wilderness areas. H.R. 3668 was reported by the House Committee on Natural Resources on September 18, 2017. S. 733 was reported by the Senate Committee on Energy and Natural Resources on June 22, 2017. Similar bills were introduced in previous Congresses. One issue that has received attention from some Members of Congress in recent years is the impact of the Wilderness Act and other federal laws governing land and resource management on border security. Many are concerned that wilderness areas abutting and near the Mexican border are conduits for illegal immigration and drug trafficking because limitations on motorized access may restrict apprehension efforts. There are 15 designated wilderness areas within about 20 miles of the Mexican border, and 5 wilderness areas abut the border (for a total of approximately 96 linear miles). As noted above, the Wilderness Act authorizes motorized access for emergencies and administrative needs, but does not describe what is meant by "administrative needs." The act is silent on access specifically for border security, but some actions related to controlling drug trafficking and illegal immigration might be considered administrative needs or emergencies. Specific enabling statutes may contain more specific language or provisions. The enabling statutes for two of the five border wilderness areas contain specific language authorizing access for border security reasons. The first explicit language on the issue of wilderness access for border security was in Title III of the Arizona Desert Wilderness Act of 1990 ( P.L. 101-628 ). Section 301(g) directs that Nothing in this title, including the designation as wilderness of lands within the Cabeza Prieta National Wildlife Refuge shall be construed as (1) precluding or otherwise affecting continued border operations ... within such refuge, in accordance with any applicable interagency agreements in effect on the date of enactment of this Act; or (2) precluding … new or renewed agreements ... concerning ... border operations within such refuge, consistent with management of the refuge for the purpose for which such refuge was established. The California Desert Protection Act of 1994 ( P.L. 103-433 ) also contains explicit guidance on border security for all designated areas, including one abutting the Mexican border and six others within about 20 miles of the border. Section 103(g) directs that Nothing in this Act, including the wilderness designations ... may be construed to preclude Federal, State, and local law enforcement agencies from conducting law enforcement and border operations as permitted before the date of enactment of this Act, including the use of motorized vehicles and aircraft, on any lands designated as wilderness by this Act. The most recent statute designating a border wilderness area, the Otay Mountain Wilderness Act of 1999 ( P.L. 106-145 ), also addresses border security. The act requires the southern boundary of the wilderness to be at least 100 feet from the border. Also, Section 6(b) allows border operations to continue consistent with the Wilderness Act: Because of the proximity of the Wilderness Area to the United States-Mexico international border, drug interdiction [and] border operations ... are common management actions throughout the area.... This Act recognizes the need to continue such management actions so long as such management actions are conducted in accordance with the Wilderness Act and are subject to such conditions as the Secretary considers appropriate. Concerns about access limitations to wilderness areas (and other legal constraints that apply more broadly to federal lands) have persisted through several Congresses. In 2010, the Government Accountability Office (GAO) noted that most border officials reported that any delays and restrictions reported in border security operations did not affect security: [D]espite the access delays and restrictions experienced by these [Border Patrol] stations, 22 of the 26 patrol agents-in-charge reported that the overall security status of their jurisdiction had not been affected by land management laws. Instead, factors such as the remoteness and ruggedness of the terrain have had the greatest effect on their ability to achieve operational control in these areas. Four patrol agents-in-charge reported that delays and restrictions had affected their ability to achieve or maintain operational control, but they either had not requested resources for increased or timelier access or their requests had been denied by senior Border Patrol officials because of higher priority needs of the agency. In August 2017, the Trump administration issued notice that the Secretary of Homeland Security used the authority provided in the Illegal Immigration Reform and Immigrant Responsibility Act (IIRAIRA, as amended) to waive all laws—including the Wilderness Act and the Otay Mountain Wilderness Act—in order to expeditiously implement border security measures in California. This includes the construction of border infrastructure and other operational improvements along a 15-mile segment of the border. The 115 th Congress is considering legislation to reduce the potential restrictions of the Wilderness Act and other federal statutes on border security activities. For example, H.R. 3593 , the Securing Our Borders and Wilderness Act, would amend the Wilderness Act to permit U.S. Customs and Border Protection to perform border security measures as needed, including operating motor vehicles and aircraft and building infrastructure, including roads (upon approval of the Secretary of the Interior), within designated wilderness areas. H.R. 3548 , the Border Security for America Act of 2017, and S. 1757 , the Building America's Trust Act, would amend IIRAIRA and explicitly waive any provisions in the Wilderness Act (among others) that would impede, prohibit, or restrict activities of U.S. Customs and Border Protection on federal lands on both the southern and northern international borders. Similar bills were introduced in previous Congresses. Congress directed FS and BLM to initially evaluate the wilderness potential of their lands at different times, and these wilderness reviews have been controversial. Congress directed FS to review the wilderness potential of the National Forest System (NFS) in the 1964 Wilderness Act, and directed BLM to do so for public lands in the Federal Land Policy and Management Act of 1976 (FLPMA). BLM and FS also have different requirements to assess the wilderness characteristics and potential of their lands for future wilderness designation by Congress, described below. Once identified, BLM and FS also have different requirements on how to manage the wilderness potential of those lands. Some believe that these wilderness study areas (WSAs, for BLM) and inventoried roadless areas (for FS) are improperly managed as wilderness, restricting development opportunities, despite lacking congressional designation as wilderness. Others note that FLPMA and regulations dictate that certain areas must be managed to preserve their wilderness potential. The Wilderness Act directed the FS to evaluate the wilderness potential of NFS lands by September 3, 1974. In the 1970s and 1980s, the FS conducted two reviews, known as the Roadless Area Review and Evaluation (RARE) I and II that resulted in some, but not all, of the inventoried roadless areas being recommended to Congress for a wilderness designation. Congress designated some of these areas as wilderness areas and released others from further consideration, although many remain pending before Congress. Congress also directed the FS to continue to evaluate the wilderness potential of NFS lands during the development and revision of land and resource management plans (also known as forest plans), approximately every 15 years. These reviews may lead to the recommendation of new wilderness areas, or potentially may lead to the modification of an existing recommendation. Management of the inventoried roadless areas has been controversial. The George W. Bush and William Clinton Administrations each proposed different roadless area policies. Both were heavily litigated; however, the Clinton policy remains largely intact after the Supreme Court chose not to review a lower court's decision in 2012. Under the Clinton Nationwide Roadless Rule, certain activities—such as road construction and timber harvesting—are restricted or prohibited in certain inventoried roadless areas, with some exceptions. Section 603(a) of FLPMA required BLM to review and present its wilderness recommendations to the President within 15 years of October 21, 1976, and the President then had two years to submit wilderness recommendations to Congress. Starting in 1977 through 1979, BLM identified suitable wilderness study areas (WSAs) from roadless areas identified in its initial resource inventory. BLM presented its recommendations within the specified time frame, and Presidents George H. W. Bush and William J. Clinton submitted wilderness recommendations to Congress. Although these areas have been reviewed and several statutes have been enacted to designate BLM wilderness areas based on them, many of the wilderness recommendations for BLM lands remain pending before Congress. 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 is sometimes referred to as a nonimpairment obligation. Section 201 of FLPMA directs BLM to identify and maintain an inventory of the resources on its lands, giving priority to areas of critical environmental concern. It is unclear, however, whether BLM is required to conduct any future assessments of the wilderness potential of its lands. In contrast to the FS, 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, although the FS is directed to include wilderness reviews in the planning process, FLPMA is silent on wilderness in the guidance for the BLM planning process. FS is required to conduct reviews of its lands and resources at regular intervals, and an assessment of the wilderness potential is a required part of those reviews. In contrast, BLM is not required to conduct reviews of its lands and resources at regular intervals, and when BLM does do a review, an assessment of the wilderness potential is not required. Previous Congresses have considered legislation to more broadly release WSAs. For example, the Wilderness and Roadless Area Release Act of 2011 ( H.R. 1581 / S. 1087 , 112 th Congress) would have released certain BLM WSAs—those not designated as wilderness by Congress and those identified by the BLM as not suitable for wilderness designation—from the nonimpairment requirement of Section 603(c) of FLPMA. The bill also would have terminated the William Clinton and George W. Bush Forest Service roadless area rules. The 114 th Congress also considered similar legislation. For example, S. 193 , the Inventoried Roadless Area Management Act, proposed to terminate the Clinton roadless area rule on national forests in Wyoming but did not broadly address WSAs. Congress also regularly considers legislation to release specific WSAs. See Table 2 for an alphabetical list of WSA release legislation in the 115 th Congress (See Appendix for 114 th Congress legislation). The 114 th Congress added 275,665 acres to the wilderness system by either adding new wilderness areas or expanding existing areas. Many other bills to designate additional wilderness areas were introduced and considered (see Table A-1 ). See Table A-2 for 114 th Congress legislation that would have released BLM WSAs.
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The Wilderness Act of 1964 established the National Wilderness Preservation System and, in it, Congress reserved for itself the authority to designate federal lands as part of the system. The act initially designated 54 wilderness areas containing 9.1 million acres of national forest lands. Since then, more than 100 laws designating wilderness areas have been enacted. As of September 2017, the system consisted of 110 million acres over 765 units, owned by four land management agencies: the Forest Service (FS), in the Department of Agriculture; the National Park Service (NPS); Fish and Wildlife Service (FWS); and Bureau of Land Management (BLM) within the Department of the Interior (DOI). The act also directed the Secretaries of Agriculture and the Interior to review certain lands for their wilderness potential. Free-standing bills to designate wilderness areas are typically introduced and considered in each Congress; such bills are not amendments to the Wilderness Act, but typically refer to the act for management guidance and sometimes include special provisions. The 114th Congress considered many bills to add to the wilderness system, and one was enacted into law—P.L. 114-46—designating three additional wilderness areas totaling 275,665 acres. To date, several bills have been introduced in the 115th Congress to designate additional wilderness areas. Wilderness designations can be controversial. The designation generally prohibits commercial activities, motorized access, and human infrastructure from wilderness areas; however, there are several exceptions to this general rule. Advocates propose wilderness designations to preserve the generally undeveloped conditions of the areas. Opponents express concern that such designations prevent certain uses and potential economic development in rural areas where such opportunities are relatively limited. The potential benefits or costs of wilderness designations are difficult to value or quantify. Thus, wilderness deliberations commonly focus on trying to maximize the benefits of preserving pristine areas while minimizing potential opportunity costs. Wilderness debates also focus on the extent of the National Wilderness Preservation System and whether it is of sufficient size or whether lands should be added or subtracted. Most bills direct management of designated wilderness in accordance with the Wilderness Act. However, proposed legislation also often seeks a compromise among interests by allowing other activities in the area. Preexisting uses or conditions may be allowed to continue, sometimes temporarily, with or without halting or rectifying any associated nonconforming uses or conditions. Wilderness bills also often contain additional provisions, such as providing special access for particular purposes, for example, border security. Water rights associated with wilderness designations have also proved controversial; many statutes have addressed water rights in specific wilderness areas. In some cases, Congress has statutorily removed lands from several wilderness areas, commonly to adjust boundaries to delete private lands or roads included inadvertently in the original designation. Controversies regarding management of existing wilderness areas also have been the subject of legislation. In previous Congresses, bills have been introduced to expand access to wilderness areas for border security; to guarantee access for hunting, fishing, and shooting; to release wilderness study areas (WSAs) from wilderness-like protection; and to limit agency review of the wilderness potential of their lands. The latter two issues have been contentious for BLM lands because BLM is required by law to protect the wilderness characteristics of its WSAs until Congress determines otherwise.
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A number of economic factors influence U.S. trade policy: domestic economic conditions;growing trade deficits; the impact of trade (exports and imports) on various states, regions, andindustries; the importance of trade to the U.S. economy; and the geographical distribution of U.S.exports and imports; among other factors. It is also influenced by political factors, such as the roleand concerns of Congress in trade policy, the role and agenda of the President, and the differentperspectives that the two branches bring to the trade debate and foreign policy considerations. Thesefactors influence the climate in which the issues emerge and are debated by the Congress. Domestic economic conditions can influence the trade policy agenda. Poor economicgrowth or recession that is coupled with escalating unemployment often causes policymakers todirect their attention to trade. For example, the structural adjustments that the steel industry hadbeen experiencing led to presidential measures to restrict steel imports in 2002. (1) Rapidly growing U.S. trade deficits also generate interest in foreign trade and reassessmentsof trade policies. Economists assert that trade deficits are themselves not the results of trade policybut are the products of broader economic conditions. Nevertheless, large trade deficits have causedthe Congress, in many cases, to give priority to trade on its agenda especially when U.S. tradedeficits with one or more trading partners are increasing rapidly. Large deficits are often perceivedas an indication that the trade relationship is unbalanced or unfair. Table 1 below shows U.S. tradein goods and services from 1996-2005. Table 1. U.S. Trade in Goods and Services,1996-2005 (Billions of Dollars) Source: U.S. Department of Commerce. Bureau of the Census. In 2005, the U.S. trade deficit in goods and services hit a record $725.8 billion, a 17.5%increase over the previous record of $617.6 billion in 2004. During the 10-year (1996-2005) period, the U.S. trade deficit increased over 600%, from $102.9 billion to $725.8 billion. Most economistsattribute the deficits, especially the broader current account deficits, to macroeconomic factors,including relative real economic growth rates of the United States and its major trading partners, realexchange rates, and savings and investment balances in the United States and other countries. (2) Trade policy and trade policytools have little effect on trade balances, especially in the long run. However, they affect thecomposition of trade. But trade deficits, by definition, translate into more U.S. firms and workersbeing hit by import competition thereby increasing the pressure for protection. Related to U.S. trade deficits is the value of the U.S. dollar in terms of other majorcurrencies. Over time, the U.S. dollar has fluctuated in value. Recently, the dollar has beenappreciating against major currencies despite record-breaking U.S. current account deficits. (3) A stronger dollar makes U.S.domestic goods more expensive compared to imports exacerbating U.S. trade imbalances. Whileconsumers benefit from lower import prices, import-sensitive manufacturers must make adjustmentsto match the competition. These adjustments might include using labor-saving technology and/ormoving some production offshore and may lead to protectionist trade policy actions. Along with the growing U.S. trade deficits and the value of the U.S. dollar, the increasing importance of foreign trade in the U.S. economy plays a role in setting the congressional tradeagenda. It creates more "winners" and "losers" from trade, thus, increasing the potential salience ofthe trade issues. In 1960, the ratio of exports plus imports of goods and services to U.S. grossdomestic product (GDP), a measure of openness, was 9.5%. By 2005, the ratio increased to26.6%. (4) As the UnitedStates has become more integrated with the rest of the world economy, a larger range of economicactivities is affected by trade and raises policy issues. For example, advances in telecommunicationstechnology now allow some services to be imported or "outsourced" from India and other countriescreating competition for some U.S. domestic providers. However, these same advances also lowercosts to consumers of those services. The geographical distribution of U.S. trade has shifted. In particular, the role of advanceddeveloped countries has declined while the role of less developed countries has expanded. In 1990,63.9% of U.S. exports went to the industrialized countries while 35.1% went to developingcountries. By 2005, the share of U.S. exports accounted for by developing countries had increasedto 47.0%. Similarly, in 1990 58.8% of U.S. imports came from industrialized countries and 40.9%from developing countries. In 2005, 54.9% of U.S. imports came from developing countries. (5) The rise of the newlyindustrializing economies of East Asia (Hong Kong, Singapore, South Korea, Taiwan) and theemergence of Mexico as a significant U.S. trading partner account for part of this surge; however,much of the increase in developing countries' share of U.S. trade derives from China. Between1990-2005, China's share of U.S. imports grew from 3.1% to 14.6% and its share of U.S. exportsrose from 1.2% to 4.7%. Shifts in trade patterns have coincided with rising concerns about theability of U.S. workers to compete with countries with low wages and the impact of globalizationon U.S. employment, wages, and living standards. The relative share of the United States in world trade has declined over the years. U.S.exports accounted for 15.7% of world exports in 1960 (when Japan and Europe were still recoveringfrom the devastation of World War II) and 9.0% in 2004. The decline can be attributed to, amongother things, the emergence in the international trading system China and other developing countries,as they have opened up their economies to the rest of the world. It can also be attributed to theemergence market economies in the former communist states in Central and Eastern Europe and theformer Soviet Union. (6) Congressional concerns and responsibilities in U.S. trade and trade policy are extensive. The Constitution assigns trade responsibility to the Congress. Article I, Section 8, states in part thatthe Congress shall have the authority "to lay and collect taxes, duties, imposts and excises... [and]regulate commerce with foreign nations, and among the several states..." For most of U.S. historythis responsibility largely meant setting tariffs on imports into the United States. With the enactment of the Reciprocal Trade Agreements Act (RTAA) of 1934, the Congressdelegated for limited periods of time the authority to the President to negotiate trade agreements toreduce tariffs reciprocally. It also delegated to the President the authority to reduce tariffs byproclamation within certain parameters. The RTAA was a congressional and executive branchreaction to the growing political burden on the Congress from tariff administration, to the politicalreality that it was easier for Congress to raise tariffs than lower tariffs given the political imperativeof constituent interests, and to the largely adverse economic results of the Smoot-Hawley Tariff Actof 1930. (7) Over time, trade negotiations have become more complex as trade negotiations have movedbeyond tariffs to nontariff trade barriers, investment, labor, environment, and other issues. Theyhave moved from the bilateral frameworks under the original RTAA to the multilateral negotiationsunder the General Agreement on Tariffs and Trade (GATT) and its successor organization, theWorld Trade Organization (WTO). In 1974, the trade negotiating authority was granted in the formof expedited (or fast-track) congressional consideration (limited debate and no amendments) ofimplementing legislation for proposed agreements. While delegating negotiating authority to the President, the Congress maintains much controlover trade policy. It does so by placing time limits on the authority, thus requiring the President toreturn to Congress to request its renewal. The Congress establishes negotiating objectives that mustbe adhered to in any agreement eligible to receive expedited (fast-track) treatment. The Congressrequires that the executive branch notify the Congress when it intends to enter trade agreementnegotiations and when it intends to sign trade agreements. It also requires the executive branch toconsult the Congress during the negotiations. The Congress most recently granted the authority in2002, initially until July 1, 2005, but was extended until July 1, 2007, as provided by law, upon thePresident's request and after the Congress did not pass a resolution disapproving the request. An overall concern of Members of Congress is that the President remains mindful ofCongress's constitutional authority over trade. In addition, Members want to make sure theAdministration consults the Congress as its pursues negotiations in the bilateral and multilateral foraand conducts other aspects of U.S. trade policy. Members are also concerned that U.S. trade policynot unduly harm their constituents. Some want to make sure that the United States will preserve itsability to protect U.S. industries from dumped imports and other unfair foreign trade practices andthat foreign countries allow U.S. exports to compete fairly. Members also want to ensure the UnitedStates holds its trade partners accountable for adhering to trade agreement obligations. Each presidential administration conducts trade policy based on its own priorities andstrategy. During the Bush Administration's first term, the United States pursued an activist tradeagenda. It took the lead with the European Union (EU) and other trade powers in launching a newround of multilateral negotiations in the WTO; pursued negotiations with individual countries andgroups of trade partners to establish bilateral and regional free trade agreements (FTAs); and usedother initiatives to forge closer economic ties that could lead to free trade agreements. The BushAdministration's priorities in its second term appear to include completing FTA negotiations;launching negotiations with other trading partners; completing of Doha Development Agenda(DDA) round of negotiations in the WTO; and ensuring U.S. trade partners' compliance with theirobligations under bilateral and multilateral agreements. In order for U.S. trade policy to be implemented successfully, the legislative and executivebranches must work in tandem. As with many policy issues , conflicts on trade matters may arisebetween some Members of Congress and the Administration because of positions taken by theirrespective political parties. However, the Congress and the President bring different institutionalperspectives that can place the two branches in conflict over trade matters regardless of their partyaffiliation. In general, Members of Congress are most concerned for the interests of their respectiveconstituencies -- workers, firms, agriculture, and industries -- and the impact of trade on them. ThePresident, as national leader, must weigh the positions of various groups against other nationalobjectives (such as national security and foreign policy concerns and broad economic gains) inmaking trade policy. The 109th Congess has already faced some trade issues, and will likely confront more,requiring consideration and debate during the second session. How Congress addresses these issuescould have long-term implications for U.S. trade policy. The President's trade promotion authority (TPA), that is, the authority to negotiate tradeagreements that receive expedited (set deadlines, limited debate, and no amendments) congressionalconsideration, will expire on July 1, 2007. The expiration date has become a virtual deadline forU.S. negotiations on multilateral, regional, and bilateral trade agreements that require congressionalapproval. The deadline constrains the presidential and congressional trade agendas, especiallyregarding trade negotiations. The TPA statute stipulates that agreements entered into by July 1,2007, would be eligible for expedited congressional consideration if all other conditions under theauthority are met. However, the statute also requires that the President notify the Congress of hisintention of entering into (signing) an agreement at least 90 calendar days prior to doing so. Therefore, any U.S. agreement would have to be concluded by April 2, 2007, in order to meet theTPA criteria. While the Congress could choose to renew the authority briefly, as was done in 1993to cover the completion of the Uruguay Round agreements, it is by no means certain that the 110thCongress would choose to do so. Also, congressional debate on the issue would likely be divisive,if the debate over the original extension of TPA in 2002 is an indicator. Since its founding in 1995, the WTO has embodied the international trade system. Itprovides the basic set of principles and rules by which its 149 members conduct trade amongthemselves and also provides a mechanism for those members to settle disputes over adherence tothe rules. The WTO is evolving: The membership is now negotiating expansion and revision of itsrules in the Doha Development Agenda (DDA) round, and countries are negotiating their entry intothe WTO as new members. For some Members of Congress and for some interest groups, the WTOis controversial. They view the organization's rules as impinging on U.S. sovereignty, especiallywhen WTO trading partners are able to challenge U.S. trade remedy laws for being contrary to WTOrules and principles. On the other hand, others assert that the WTO provides stability andpredictability to the international trading system by ensuring that member countries' trade regimesmeet basic standards and by providing a forum to encourage other countries to remove trade barriers. During its first session, the 109th Congress had the opportunity to weigh in on the issue ofU.S. participation in the WTO as it does every five years under U.S. law. The Congress did not passa resolution that would have called for the withdrawal of the United States from the World TradeOrganization (WTO), thus agreeing to U.S. participation, at least for another five years. (8) The Doha Development Agenda Negotiations. In November 2001, the United States and the other members of the WTO launched what has becomeknown as the Doha Development Agenda (DDA) round of negotiations. The failure early on to reachagreement on some basic ground rules, such as the modalities for negotiations on agriculture, madethe end of 2005 deadline unachievable. The negotiations have continued with an emphasis onagriculture, non-agriculture market access (NAMA), and services. Trade ministers from the 149members met in December 2005 in Hong Kong for the biannual ministerial meeting andrecommitted their countries to completing the round of negotiations by the end of 2006, keeping inmind the April 2007 deadline on trade promotion authority (TPA) within which the BushAdministration is operating. (9) Although the Congress has no direct involvement in the negotiations, legislation establishingthe trade promotion authority (TPA) requires the executive branch to consult continually with theCongress during trade negotiations. The Congress could also conduct oversight hearings on theprogress of the negotiations. The DDA covers a broad range of issues that have been of particularinterest to Members, including agricultural subsidies and market access; trade remedy laws (such asantidumping laws); and intellectual property rights protection. If and when agreements are completed in the WTO, implementing legislation would haveto be submitted to the Congress and would be subject to congressional approval. Under the tradepromotion authority, the Congress would consider the implementing legislation for the agreementson an expedited basis. U.S. Compliance with WTO Decisions. TheWTO has ruled against the United States in several cases brought to the Dispute Settlement Body(DSB) against U.S. trade actions, most of which involve U.S. trade remedy laws. In some cases, theWTO has determined that U.S. implementation of its trade remedy laws does not comply with WTOrules. In some cases, compliance requires just a change in administrative regulation or practice. Insome other cases, the determination was that the U.S. law itself violated U.S. WTO obligations and requires an act of Congress for the United States to come into compliance. Compliance with WTOrulings has generated debate, especially when the program in question has broad congressionalsupport. On the one hand, the program may benefit critical constituencies and be politically popular. On the other hand, failure to comply subjects the U.S. to possible WTO-authorized sanctions andmight encourage noncompliance by trading partners in cases where they lose. The 109th Congress passed legislation that addressed two outstanding adverse decisionsagainst the United States. In the first, the Congress repealed the so-called Byrd Amendment,the Continued Dumping and Subsidy Offset Act (CDSOA) of 2000 (Title X of P.L. 106-387 ). The law requires the Treasury Department to distribute revenues, collected from antidumping (AD)and countervailing duty (CVD) orders, to firms that had been successful petitioners in the AD andCVD cases. In 2002, the WTO had ruled against the United States in a challenge brought by 11WTO members. Of the 11, the EU, Canada, and Japan eventually imposed tariff sanctions,authorized by the WTO, against selected U.S. exports because the United States had failed to repealthe law by an established deadline. After much congressional debate, a provision to repeal the Byrdamendment was included in the conference report accompanying S. 1932 , the DeficitReduction Act of 2002. It passed the House on December 19, 2005, and the Senate on December21, 2005. (Because the House version did not include some language (language unrelated to therepeal), the House had to vote again on the Senate version, which it did on February 2, 2006.) However, under the provision the operation of the Byrd Amendment program continues untilSeptember 30, 2007. The EU, while acknowledging the repeal, has raised concerns about the delayof its effect. It is not clear whether U.S. trading partners will continue sanctions against U.S.exports. (10) The same conference report also included the elimination of the U.S. "Step 2" cottonsubsidies programs that the WTO had ruled illegal in a March 2005 Appellate Body ruling. Theruling came as the result of a case filed by Brazil. It is not clear at this point whether thecongressional action addresses all aspects of the WTO ruling. (11) Following the consideration and approval by 109th Congress of two free trade agreements --the DR-CAFTA and the U.S.-Bahrain FTA -- during the first session, the Bush Administration willlikely ask for consideration of several new bilateral and regional free trade agreements during thesecond session. Any FTA would be subject to congressional passage of implementing legislation. Furthermore, under the law granting trade promotion authority, the executive branch must consultwith the Congress as trade agreement negotiations proceed. Members of Congress will likelymonitor negotiations, mindful of the potential economic impact FTAs may have on their constituentsand the United States as a whole. The congressional debate on DR-CAFTA was highly contentious with differences fallingalong party lines principally over the degree to which the agreement protects labor rights in theDR-CAFTA partner countries. The Senate passed it 54-45 and the House passed the implementingbill 217-215 on June 30, and July 28, 2005, respectively. President Bush signed the legislation intolaw ( P.L. 109-53 ) on August 2, 2005. (12) Legislation implementing the U.S.-Bahrain FTA was far less contentious and passed easily,in the House (327-95) on December 7, 2005, and in the Senate (unanimous consent) on December13, 2005. President Bush signed the bill into law on January 11, 2006 ( P.L. 109-169 ). The FTAwith Bahrain is part of a larger Bush Administration initiative to create a Middle East Free TradeArea (MEFTA) by 2013. The United States had already concluded an FTA with Morocco thatentered into force on January 1, 2006. The United States and Oman signed an FTA on January 19,2006, and the President is expected to send implementing legislation to Congress sometime in 2006. Negotiations with the United Arab Emirates (UAE) continue. (13) On January 6, 2006, President Bush announced to Congress his intention to sign an FTA withPeru. The negotiations with Peru had been part of negotiations with Ecuador, Colombia, and Boliviaon a regional U.S.-Andean FTA, but the negotiations with Colombia and Ecuador have boggeddown, and Bolivia's continued participation is in doubt, following recent presidential elections. (14) The United States isconducting FTA negotiations with Panama, Thailand, and the members of the Southern AfricanCustoms Union (SACU). In addition, the United States and South Korea announced on February2, 2006, their intention to begin FTA negotiations. Debates over implementing legislation on completed FTAs and oversight of negotiations onnew FTAs in the 109th Congress will likely generate critical policy questions. For example, someMembers of Congress have questioned the criteria that the Bush Administration uses to choose FTApartner countries. They have argued that many of the recently completed FTAs are with countrieswith relatively small economies that do not offer significant new commercial opportunities to U.S.exporters and investors. The Bush Administration has countered that these FTAs are stepping stonesin building regional free trade areas that will offer greater opportunities to the United States whileencouraging economic growth and development in those regions. The Administration also contendsthat FTAs assist the United States in defending its foreign policy and national security interests bystrengthening ties with countries that have cooperated with the United States on the war on terrorismand the wars in Afghanistan and Iraq. Trade negotiations also raise concerns about the potential impact of pending agreements onthe U.S. economy as a whole and on specific sectors, particularly import-sensitive sectors such assome agricultural products and textiles. Economists have argued that FTAs can create new trade,boosting economic efficiency -- a positive contribution to the economy, but they can also divert tradefrom more efficient to less efficient producers by giving preferential treatment to the imports of thelatter, a negative contribution to the world economic welfare. Members of Congress must weigh thepolitical and economic gains of achieving increased access to foreign markets in exchange for greaterforeign access to U.S. markets. During the first session and continuing into the second session of the 109th Congress,Members have expressed great concern regarding the lack of compliance by U.S. trading partnerswith bilateral agreements with the United States and multilateral agreements in the WTO. Whilemuch of this concern derives from trade problems with China, they are also fed by longstandingissues with other major trading partners including Canada, Japan, and the EU. On July 27, 2005, theHouse passed H.R. 3283 , the "United States Trade Rights Enforcement Act," largelya China-focused bill (discussed further in the section on U.S.-China economic relations). Other billshave been introduced that would, among other things, augment U.S. government trade enforcementresponsibilities and capabilities. Congressional leadership on trade policy in both political partieshave indicated that trade enforcement will be a priority for the remainder of the 109th Congress. The 109th Congress will probably confront a spate of issues that relate to access of importsto U.S. markets. The issues pertain to treatment of imports from current and former communistcountries and to tariff preferences the United States grants to certain developing countries. Permanent Normal Trade Status. A number offormer communist and some nominally communist states remain subject to the so-calledJackson-Vanik amendment of the Trade Act of 1974, as amended. The amendment requires thatthe normal trade status (NTR, also called most-favored nation (MFN) status) of these countriesdepends on fulfilling specified freedom of emigration conditions and therefore must be renewedannually. A number of countries, including Russia, Kazakhstan, and Ukraine, that were part of theformer Soviet Union, and other communist states, such a Vietnam, are in this situation. Legislationmust be enacted for these countries to attain permanent normal trade status (PNTR). All of these countries have conditional NTR under Jackson-Vanik (tariffs on their exportsto the United States are lower than would be the case if they did not have it); therefore, not havingPNTR has had no immediate, practical impact on their trade with the United States. However, allfour countries, as well as others, are seeking accession to the World Trade Organization (WTO). Under WTO rules, the United States would have to grant them unconditional MFN (or PNTR) upontheir accession. If it does not, then the United States would have to invoke the WTO provision of"non-applicability," that is, it would declare that the WTO rules and other obligations would notapply in its trade relations with the other country. Therefore, the United States would not benefitfrom their accession to the WTO. The debate on whether to grant these countries PNTR will possibly include political, foreignpolicy, as well as foreign trade matters. For example, issues may arise over Russian President Putin'smoves to centralize political power in the Kremlin by eliminating direct elections for regionalgovernors and by putting political pressure on the domestic press and over his policies towardChechnya. The U.S. business community could raise concerns about the business climate in Russiain the wake of the arrest of Yukos Oil chairman Mikhail Khodorkovsky and the forced sale of Yukosassets. Concerns might also be raised regarding commitments in Ukraine and Vietnam towardseconomic reforms such as protection of intellectual property rights. (15) Tariff Preferences. The United States grantsunilateral trade preferences to groups of developing countries to encourage economic developmentby extending duty free treatment to their exports of eligible products to the United States. The mostgeographically comprehensive program, the Generalized System of Preferences (GSP), is due toexpire on December 31, 2006. (16) The more geographically targeted Andean Trade Preferences Act(ATPA) also expires on that date. Legislation to reauthorize these programs may be introducedduring the 109th Congress, and Congress might consider issues regarding the duration of theauthorization, conditions of country and product eligibility, and the impact of these programs on theU.S. economy. The 109th Congress might also monitor the implementation of other trade preferenceprograms such as the Caribbean Basin Initiative (CBI) and the African Growth and Opportunity Act(AGOA) that provide more favorable preferences to those regions than is the case under GSP. (17) Some Members haveproposed extending additional trade preferences to other poor developing countries. Trade Remedy Laws. U.S. trade remedy lawsare designed to alleviate the adverse impact on U.S. industries from some imports. Countervailingduty (CVD) statutes are used to alleviate the impact of imports that benefit by foreign governmentsubsidies. Antidumping duty (AD) laws attempt to counter the effects of imports that are dumped(sold at less than fair value). The escape clause (also called "Section 201" for the provision of theTrade Act of 1974) authorizes measures to restrict imports that are sold fairly but at such rapid ratesas to cause or threaten to cause serious injury to domestic producers of like products. There are also U.S. trade remedy laws (such as section 301 of the Trade Act of 1974)designed to address foreign barriers to U.S. exports and provisions to deal with the lack of foreignprotection of IPR (special 301). Some Members of Congress have questioned the effectiveness ofthese laws and/or the executive branch's effectiveness in implementing the laws. They haveproposed changes that would strengthen the protection of domestic producers. (18) Others have proposed thatU.S. CVD laws be amended to apply to non-market economies, such as China. Major U.S. trading partners have challenged (in some cases successfully) the legality of U.S.trade remedy laws in the WTO. For example, the Byrd amendment (discussed under the WTOissues) and the U.S. 1916 Antidumping Act (which was been repealed by the 108th Congress) werechallenged successfully. They have also challenged how the United States has implemented its traderemedy laws, arguing that the procedures the United States uses to make determinations in AD andCVD cases do not conform to rules under WTO agreements. Many U.S. trading partners haveclaimed that U.S. trade remedy laws are protectionist and are seeking tighter rules on the use of traderemedy laws in the Doha Development Agenda round negotiations in the WTO; however, many inthe Congress have expressed opposition to trade agreements that would weaken U.S. trade remedylaws. U.S. trade remedy laws could be the subject of oversight hearings and also legislation. Congress will probably closely monitor trade agreements that include changes in U.S. trade remedylaws. Outsourcing. For many years, U.S. multi-nationalfirms have dis-aggregated their production processes to allow them to take advantage of lower laborcosts and other attributes in foreign countries. At first they would import some parts to be assembledas final products in the United States. This was followed by investment in whole productionfacilities abroad for re-export back to the United States or to third markets. Recent reports indicatethat U.S. multi-nationals are subcontracting or "outsourcing" the actual design of computer hardware,software, and other electronics products to offshore firms. (19) This trend may raiseimportant policy issues for the 109th Congress as Members consider the impact on constituent firmsand workers and well as the impact on the U.S. economy as a whole. (20) For example, should theU.S. government support programs to keep jobs in the United States by discouraging outsourcingby U.S. firms? Under the Export Administration Act (EAA), the Congress has delegated to the Presidentthe authority to control U.S. exports of so-called dual-use goods and technologies, for examplehigh-speed computers, that can be used for both military and civilian purposes. Among other things,the authority permits the President to establish a licensing mechanism to ensure that dual-use goodsand technologies are not exported to recipients who would use them to threaten U.S. nationalsecurity. The authority also allows restriction on exports that are in short supply. The last EAA reauthorization expired in August 2001. The export control regime has beenmaintained under the International Emergency Economic Powers Act (IEEPA), which permits thePresident to control economic activities in response to a declared emergency. The Congress mightconsider legislation to reauthorize the EAA. In the past, the debate of export control authority hascentered around how restrictive U.S. controls should be. Many in the business community,especially those who export high technology goods and services, while understanding the need forcontrols, have argued that controls that are unnecessarily restrictive impeded their ability to competewith foreign firms in third markets, particularly when those firms do not face the same limits. Othersargue, on the other hand, export controls should be sufficiently effective to ensure that dual-usetechnology and goods not get into the hands of those who wish harm to the United States. (21) The 108th Congress passed and the President signed the Burmese Freedom and DemocracyAct ( P.L.108-61 ) that imposed a series of sanctions against economic ties with the military regimein Burma (Myanmar). The act contains a provision (Section 3 (a) (1)) that imposes a ban onimports products made in Burma until the government takes steps to promote democracy and humanrights. The import ban was to be in effect for one year from the time of enactment (July 28, 2003)and renewable annually for up to three years from the date of enactment. The import ban has beenrenewed by Congress for each of the three years. However, Congress would have to take action toamend the provision to permit the import ban to continue beyond July 28, 2006. Five individual and regional trading partners dominate U.S. foreign trade and therefore havea significant impact on U.S. trade policy and the trade agendas of the Congress and the President:the European Union, Canada, Mexico, China and Japan. Together these trading partners accountedfor close to 70% of U.S. merchandise trade in 2006. Table 2. U.S. Trade in Goods with Major Partners,2005 (Billions of Dollars) Source: U.S. Department of Commerce data In most cases, billions of dollars of trade flows between each partner without incident. Inaddition, the United States works closely with these trading partners in the WTO and othermultilateral institutions. However, trade disputes arise. Because of the size and importance of therelationships, these disputes raise concerns with the Congress and are often the subject of oversighthearings, if not legislation. Such has already been the case during the 109th Congress. The European Union. The economic relationshipbetween the United States and the European Union (EU) is the largest in the world. The modernU.S.-European economic relationship has evolved since World War II, broadening as thesix-member European Community expanded into the present 25-member European Union. The tieshave also become more complex and interdependent, covering a growing number and type of tradeand financial activities. In 2005, $495.1 billion flowed between the United States and the EU in merchandise trade. The EU as a unit is the largest merchandise trading partner of the United States. In 2005, the EUaccounted for $186.3 billion of total U.S. exports (or 20.6%) and for $282.6 billion of total U.S.imports (or 18.5%) for a U.S. trade deficit of $122.4 billion. U.S.-EU disputes have become increasingly complex. The issues in question are no longerjust border trade issues (tariffs and other customs regulations) but also differences over competitionpolicy and government regulations, disputes that impinge on the sovereign right of nations to runtheir economies in their national interests. Several issues in the relationship are simmering and could erupt into full blown disputes inthe next two years. The European Union is a party to the case in the WTO over the failure of theUnited States to comply with the adverse WTO ruling on the Byrd amendment. The EU will haveto decide whether the U.S. Congress's repeal the Byrd amendment (discussed earlier) is adequate orto maintain tariff sanctions on U.S. exports. Another perennial issue has been over alleged government subsidies for Boeing and AirbusIndustrie by their home governments. The United States had threatened to take the EU to the WTOover what it claims are WTO-illegal subsidies by the EU governments of a new large commercialairliner by Airbus Industrie. The EU counterclaims that the U.S. company Boeing, the only otherproducer of large commercial airliners, is subsidized by the U.S. government through defense andspace contracts and through other assistance. Having failed to work out their differences in bilateraldiscussions, the two parties independently filed complaints with the WTO in March 2005. TheWTO created two panels, one to study U.S. charges of illegal subsidies to Airbus, and the secondto study EU charges against Boeing. The cases are to be argued this year, but final decisions are notexpected until sometime in 2007. Another issue, thought to have been resolved, has re-emerged. In October 2004, theCongress repealed the Foreign Sales Corporation (FSC)-Extraterritorial Income (ETI), a programthat provided an export tax subsidy for certain firms. The repeal was in response to a WTO rulingthat the program conflicted with WTO rules on subsidies. Before the repeal, the EU had imposedtariff sanctions on selected U.S. exports because the United States had failed to repeal the programbefore a set deadline but lifted the sanctions after the Congress passed the repeal. Subsequently, theEU challenged certain provisions of the new law that allowed for a phase-out of the subsidies, andthe WTO upheld the challenge. The United States filed an appeal, and on February 13, 2006, theWTO Appellate Body ruled against the United States. (22) The EU has threatened to reimpose the tariff-sanctions. (23) On February 7, 2006, the WTO Dispute Settlement Body issued a preliminary decision thatruled in favor of the United States and other countries that challenged the EU ban on imports ofbio-engineered food products. A final decision is expected later in the year. Canada. Canada is the largest single-country U.S.trading partner. It is the largest market for U.S. exports and largest source of U.S. imports. The twocountries are also closely tied by stocks of foreign direct investment in each other's economies, withmany industries and sectors interlinked across the border. The tight relationship was institutionalizedon January 1, 1989, when the U.S.-Canada FTA went to effect. The FTA was superceded whenNAFTA entered into force on January 1, 1994. Agricultural trade is among the most potent disputes in U.S.-Canada trade given theimportance of the sector to both economies and has drawn a great deal of congressional attention. Two issues in particular are long-running and very divisive. The first pertains to the shipment of Canadian cattle into the United States. In 2003, theUnited States banned all Canadian beef imports because of the discovery of a case of "mad cow"disease. Subsequently, the Bush Administration allowed some types of beef products to be importedbut has still maintained tight restrictions on most beef imports, including live cattle. U.S. andCanadian agriculture officials had been discussing ways to establish procedures to reopen the U.S.border to live Canadian beef. (Trade in processed or packaged beef has already resumed.) OnJanuary 5, 2005, the U.S. Department of Agriculture issued a rule to go into effect on March 7, 2005that would permit additional beef imports from Canada including live cattle younger than 30 months. U.S. cattlemen opposed the rule, and the Ranchers Cattlemen Action Legal Fund brought a casewhich led to a ruling by the a U.S. District Court judge suspending the implementation of the rule. In addition, on March 3, 2005 the Senate passed a joint resolution to block the implementation ofthe rule. (24) However,U.S. meat-packers supported the rule and sought its implementation. On July 18, 2005, the UnitedStates began to import live cattle from Canada. A second issue concerns imports of softwood lumber from Canada. U.S. lumber producersclaim that low stumpage fees that provincial governments charge for lumber harvested from publiclands and other practices constitute illegal government subsidies to the Canadian lumber industry. After a five-year U.S.-Canadian lumber agreement that imposed tariffs on Canadian softwoodlumber expired in 2001, the U.S. lumber industry filed a series of countervailing duty andantidumping cases alleging the threat of material injury. The Department of Commerce and the U.S.International Trade Commission determined that injury and/or threats of injury existed fromdumping and subsidies. Canada has challenged the actions in the NAFTA dispute settlementmechanism and the dispute settlement mechanism in the WTO. Canada is awaiting a WTO paneldecision on obtaining compensation from the United States on measures the WTO determined to be illegal. (25) Canada hasprevailed in NAFTA dispute settlement proceedings, upholding Canadian claims that U.S. actionsviolate U.S. laws. However, the United States has prevailed in WTO proceedings, with a DisputeSettlement Body ruling that U.S. actions are congruent with WTO rules. Mexico. Mexico is the second largestsingle-country export market for U.S. exports (having surpassed Japan) and the third largest sourceof U.S. imports. In 2005, the United States incurred a trade deficit of $50.1 billion with Mexico. Bilateral trade had increased rapidly even before the North American Free Trade Agreement(NAFTA) went into effect on January 1, 1994. Several disputes have disturbed what on the wholehas been a harmonious trade relationship. On January 1, 2002, the Mexican Congress enacted a 20%tax on soft drinks made with high-fructose syrup. The U.S. exports high-fructose corn syrup and softdrinks that contain such syrup. The tax was in retaliation over a disagreement on how muchMexican sugar should be allowed to enter the United States under NAFTA. The United Statesclaims that the tax violates Mexico's obligations in the WTO. A dispute resolution panel requestedby the United States determined that the tax violated WTO rules, and Mexico has appealed thedecision in 2005. Another long-standing issue concerns the right of Mexican trucks to transport goodsthroughout the United States. Under NAFTA, Mexican trucks were to obtain that right in 2000, butthe Clinton Administration suspended that concession to Mexico alleging safety problems withMexican trucks. Mexico has been pressing the United States for full compliance with this provision. In June 2004, the U.S. Supreme Court ruled that Mexican trucks could operate in the United States. The two countries are now engaged in negotiations to resolve safety concerns. (26) China. China's relationship with the United Statesis the most dynamic and contentious at this time. Bilateral trade has soared. Total U.S.-China tradehas increased from $5.0 billion in 1980 to $285.3 billion in 2005. The U.S. trade deficit of $201.6billion with China in 2005 is the largest U.S. bilateral trade deficit, far exceeding the second largestwith Japan at $82.5 billion deficit with Japan. China is the second largest source of U.S. imports andthe 11th largest export market. China has become the second largest (next to Japan) foreign holderof a U.S. Treasury securities, thus helping to finance the increasing U.S. national debt. On November 10, 2005, the United States and China came to an agreement that restrictsChina's exports of wearing apparel and textiles to the United States. The agreement was in responseto surges in U.S. imports of textile and apparel after the multilateral quotas on these products expiredon January 1, 2005. The agreement was also in lieu U.S. unilateral safeguard actions on theseproducts from China which threatened more extensive restrictions. (27) The huge trade deficit has generated concerns about the effects of rapidly growing importson U.S. import-sensitive industries and workers. Some interest groups representing labor and certainindustries, for example, have focused on China's exchange rate regime that pegs the yuan to a basketof currencies including U.S. dollar. U.S. critics of China's policy charge that China deliberatelyundervalues the yuan/dollar exchange rate to underprice its exports and place them at a unfaircompetitive advantage over U.S. producers. U.S. policymakers and affected industries have alsoraised concerns about the effectiveness of China's intellectual property rights (IPR) protection, alongwith other issues. On July 27, 2005, the House passed (255-168) H.R. 3283 (English) that targetsChina's unfair trade practices by allowing U.S. countervailing duty orders to be applied to importsfrom non-market economies (including China), and increase monitoring China's compliance withWTO obligations and its commitments to the United States on intellectual property rights (IPR)protection, among other things. A companion bill, S. 1421 (Collins), was introducedin the Senate. A number of bills have been introduced that would target China's exchange ratepolicies. For example, the Senate is expected to vote during the second session of the 109th Congresson S. 295 (Schumer) that would impose 27.5% tariff surcharges on imports from China,if China does not revalue its currency to market levels. On November 16, 2005, the Senate hadagreed, per unanimous consent, to consider the bill no later than March 31, 2006. (28) Japan. The U.S.-Japan economic relationshipis very strong and mutually advantageous. The two economies are highly integrated via trade ingoods and services -- they are large markets for each other's exports and important sources ofimports. More importantly, Japan and the United States are closely connected via capital flows. Japan is the largest foreign source of financing of the U.S. national debt. It will likely remain so forthe foreseeable future, as U.S. national debt mounts and the stock of U.S. domestic savings remainsinsufficient to finance it. Japan is also a significant source of foreign private portfolio and directinvestment in the United States, and the United States is the origin of much of the foreign investmentin Japan. The United States has consistently run merchandise trade deficits with Japan. After decliningin 2003, the deficit has been rising, reaching $82.5 billion in 2005, the largest U.S. trade deficit withJapan. In 2005, the U.S. exports to Japan amounted to $55.4 billion and U.S. imports amounted to$138.1 billion. In the 1980s and the 1990s, the U.S.-Japan economic relationship was often a source of sharpfriction due to widespread Japanese trade barriers and the growing competition posed by Japaneseindustries (in autos, for example). The tone has softened considerably. Nevertheless, bilateraltrade disputes do arise. Japan is a party to the complaint against the United States in the WTOregarding the Byrd Amendment, and Japan imposed tariff sanctions against selected U.S. exports. Japan first imposed the ban on imports of U.S. beef in December 2003 due to concerns over a caseof bovine spongiform encephalopathy (BSE), also know as "mad cow disease," in Washington State. Japan lifted the ban on imports of beef from cattle 20 months or younger on December 12, 2005,but reimposed it on January 20, 2006, when Japanese meat inspectors discovered prohibited spinalbone material in a shipment. Some Members of Congress raised concerns over the Japanese originalban and the reimposed ban, even proposing legislation to retaliate against Japanese imports if the banwere not lifted. (29) The range of trade issues that the 109th Congress will likely face is very broad and diverse. Each issue or set of issues bears its own implications as Members of Congress weigh the merits anddisadvantages. In most cases, the 109th Congress will be considering and debating each issueseparately. However, the cumulative effect of each debate may have wider implications for U.S.trade policy. As the 109th Congress addresses these issues, its decisions may define U.S. trade policyin the long term. The history of U.S. trade policy since the 1930s is one of a movement toward tradeliberalization -- lowering of tariffs and other trade barriers -- and working in concert with other majortrading powers to create multilateral rules to promote freer trade. At the same time, U.S. tradepolicymakers have taken measures to restrict trade by crafting laws that make it easier for domesticU.S. industries to obtain relief from dumped and subsidized imports and from surges in fairly-tradedimports. While this debate over the direction of U.S. trade policy is sometimes framed as "free tradeor protectionism," the terms of the debate are more subtle -- more open trade or more restrictedtrade. The outcome of the trade issues before the 109th Congress will influence in which directionU.S. trade policy proceeds. Developing countries have emerged as significant players in U.S. trade and world trade asa result of globalization. This trend presents the United States with challenges. For example, howshould the United States respond to the increasing competition from less expensive labor in thedeveloping countries? Should labor rights be included in trade agreements? These questions cutacross the debates on each of the U.S. FTAs with developing countries, the Doha DevelopmentAgenda negotiations in the WTO, discussions and congressional proposals on trade remedy laws,the issue of "outsourcing," and the anticipated surge in textile and wearing apparel imports, amongother issues. A broader question that might be considered is whether on balance the United Stateswill consider trade with developing countries as a "race to the bottom" or as a "win-win" propositionfor both sides. The issues of workers rights and environmental protection, become significant points ofdebate in congressional consideration of many trade matters. More precisely, the question is to whatextent should workers rights, environmental protection, and other concerns be part of tradeagreements or other trade policy initiatives. The Congress included workers rights andenvironmental policy as principal negotiating objectives in the legislation granting trade promotionauthority. Some Members of Congress have argued that trade agreements should ensure that tradepartners' treatment of workers rights meet internationally accepted core labor standards or otherwiseface trade sanctions. Others contend that trade agreements should only ensure that countriesadequately enforce their own trade laws. A similar division of thought exists regarding tradeagreements and environmental protection. This underlying debate will likely emerge in congressional consideration of DR-CAFTA andother trade agreements involving developing country trading partners. It may also arise if and whenCongress considers renewal of the President's trade promotion authority and reviews U.S.participation in the WTO. The outcome of these debates might determine in which direction U.S.trade policy is moving on these issues. The trade issues that the 109th Congress faces and how the Congress deals with them couldhave an impact on the international trading system. The international system is becoming larger andmore complex. Lying at the foundation of the system is the WTO. Over the years, the rules theWTO (and its predecessor the GATT) administers have expanded from tariffs to such nontariffbarriers as government procurement practices, sanitary and phytosanitary measures, and IPRprotection. An objective of the Doha Development Agenda is to broaden the rules coverage evenmore. The 107th Congress helped set the agenda for the DDA round and U.S. negotiating positionsduring the round when it granted the President trade promotion authority and established negotiatingobjectives. The 109th Congress through oversight and the Administration's mandatory consultationscan continue to influence the agenda. The WTO is also expanding its membership. As of February 2006, the WTO has 149members with 29 more countries at various stages of attaining membership or accession. Congressdoes not vote on whether a country can join the WTO. Through oversight it can influence the U.S.position on negotiating a country's entry. The Congress could have a more direct impact when itconsiders PNTR for those countries, such as Russia, Ukraine, and Vietnam, whose NTR status is stillconditioned under the Jackson-Vanik amendment. Along with the WTO, the international trading system is populated by a web of regional andbilateral free trade areas based on FTAs. In some cases, these areas are interlinked, while in others,they are distinct. FTAs have become a significant and expanding part of the international tradingsystem. International trade observers and policymakers are divided on whether the two tracks of theinternational trading system -- the multilateral (the WTO) and bilateral/regional (FTAs) -- aremutually reinforcing or in conflict. The Bush Administration firmly bases its trade policy strategyon the two prongs being reinforcing. Former USTR Zoellick has argued that the FTAs he negotiatedare "cutting edge agreements [that] carry an importance beyond the size of newly opened markets,because they set high, enforceable standards in newer areas of importance to America -- such asservices, intellectual property, transparency and anti-corruption and e-commerce." (30) On the other hand, others contend that FTAs undermine the WTO and its principles becausethey promote discriminatory treatment in trade by limiting preferential treatment to the participantsin the FTA. Some critics have also asserted that bilateral and regional FTAs create a conglomerationof tariff-reduction schedules and rules of origin that are in conflict with one another and createconfusion in the trading system undermining trade efficiency. (31) In between these two groups are policymakers and observers who assert that FTAs and theWTO are not necessarily incompatible, but oppose the emphasis that bilateral and regional FTAshave been given by the Bush Administration. They argue that the Administration needs to devotethe limited available staff and other resources to WTO negotiations where, they claim, it can promoteU.S. trade policy goals more effectively. (32)
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The second session of the 109th Congress is expected to face an extensive trade agendaconsisting of a wide range of issues. In some respects these issues are distinct, each with its ownpolicy and economic implications. In other respects the issues are interrelated. They have emergedfrom common sets of domestic political, foreign policy, and economic factors and affect or areaffected by the concerns of Members of Congress, of other policymakers and of many interestgroups. These issues and how policymakers deal with them will define overall U.S. trade policy. During the first session, the 109th Congress dealt with a number of critical trade issues. TheBush Administration requested and received a two-year extension of its trade promotion authority. The Congress also debated U.S. participation in the World Trade Organization (WTO) as itconsidered, but did not pass, a congressional resolution to withdraw from the WTO. In addition, theAdministration sent and the Congress passed legislation to implement a free trade agreement withfive Central American countries plus the Dominican Republic, the DR-CAFTA, and passedimplementing legislation for a free trade agreement with Bahrain. Furthermore, the 109th Congressrepealed two trade programs that had been declared illegal by the WTO. During the second session,the 109th Congress may be called on to debate more free trade agreements, trade relations with China,and tariff preferences for developing countries, among other issues. The Congress might alsocontinue to monitor the Doha Development Agenda negotiations proceeding in the WTO. Each issue or set of trade issues bears its own implications as Members of Congress weighthe merits and disadvantages. In most cases, the 109th Congress will be considering and debatingeach issue separately. However, the trade issues as a whole have implications for a wider debate onU.S. trade policy. As the 109th Congress addresses these issues, its decisions will have implicationsfor key questions that help define U.S. trade policy in the long-term. This report will generally cover the trade issues as they unfold. However, it will not tracklegislation per se. The report will be updated as events warrant.
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Only federal employees hired before 1984 participate in the Civil Service Retirement System (CSRS). The CSRS is closed to new entrants and will expire with the death of the last CSRS annuitant sometime around the year 2075. Civilian federal employees who were hired in 1984 or later participate in the Federal Employees Retirement System (FERS), as do employees who voluntarily switched from CSRS to FERS during "open seasons" that were held in 1987 and 1998. The FERS program began operating on January 1, 1987. Cost-of-living adjustments (COLAs) for CSRS annuities are based on the average monthly percentage change in the CPI-W in the third quarter (July to September) of the current calendar year compared with the third quarter of the base year, which is the year in which the last COLA was applied. The base year for determining the COLA effective in December 2018 (paid out in 2019) is 2017. Adjustments are effective on the first day of the month preceding the month in which they are first paid. COLAs for benefits paid under FERS also are based on the percentage change in the CPI-W from third quarter to third quarter, but payment of COLAs under FERS is limited according to the eligibility category of the beneficiary and th e rate of inflation. COLAs are not paid to nondisabled FERS retirees as long as they are under the age of 62. COLAs are paid to survivors and disabled FERS retirees of any age after the first year of disability. All COLAs paid under FERS are limited if the rate of inflation exceeds 2.0%, according to the following formula: From the third quarter of 2017 (the current base year) to the third quarter of 2018, the CPI-W increased by 2.8%. Therefore, paid out beginning January 2019, the CSRS COLA is 2.8% and the FERS COLA is 2.0%. P.L. 87-793 (enacted in 1962) was the first law that provided for automatic adjustments in civil service retirement and disability benefits whenever the CPI in the current year exceeded the CPI in the base year (the year in which the last adjustment occurred) by 3.0% or more. In 1965, this was changed to require an adjustment in benefits whenever the CPI for a given month was at least 3.0% higher than in the month when the last adjustment was made, and remained at that level or higher for three consecutive months. P.L. 91-93 (enacted in 1969) added one percentage point to COLAs in addition to the percentage change in the CPI to offset the erosion of benefits that had occurred as a result of the time lag in the adjustment formula. (P.L. 91-179 did the same for COLAs paid to military retirees.) P.L. 94-440 (enacted in October 1976) repealed the one percentage point addition to COLAs. In addition, this law provided for automatic semiannual adjustments in benefits based on the change in the CPI from June to December (effective the following March 1) and December to June (effective the following September 1). P.L. 97-35 (Omnibus Budget Reconciliation Act of 1981) replaced semiannual COLAs with annual COLAs based on the December-to-December change in the CPI, payable in March of the following year. P.L. 97-253 (Omnibus Budget Reconciliation Act of 1982) delayed the implementation of COLAs by one month in FY1983, FY1984, and FY1985. The FY1983 COLA was effective April 1 rather than March 1. The FY1984 COLA was scheduled for May 1 and the FY1985 COLA was scheduled for June 1. This law also mandated that nondisabled retirees under the age of 62 would receive 50% of the projected CPI plus the full difference in the actual CPI over these projections. The law specified that the projected CPI was 6.6% for 1983, 7.2% for 1984, and 6.6% for 1985. This provision was repealed by the supplemental appropriations law that was passed in August 1984. COLAs for January 1985 and thereafter were to be the full amount for all retirees. P.L. 97-253 limited COLAs in certain cases. Under the restriction, an annuity could not be increased by a COLA to an amount that exceeded the greater of the maximum pay for a GS-15 federal employee or the final pay of the employee (or high-3 average pay, if greater), increased by the average annual percentage change (compounded) in rates of pay of the General Schedule for the period beginning on the retiree's annuity starting date and ending on the effective date of the adjustment. P.L. 98-270 (Omnibus Budget Reconciliation Act of 1983, enacted April 1984) delayed the COLA scheduled for May 1984 until December (payable in January 1985). Thereafter, all COLAs were to be effective in December and payable in January and were to be based on the change in the average monthly CPI-W from third-quarter to third-quarter. This formula and schedule are the same as those used to calculate COLAs in the Social Security program, as required by P.L. 98-21 (Social Security Amendments of 1983). P.L. 98-369 (Deficit Reduction Act of 1984) specified that civilian and military retirement COLAs are to be paid in checks issued on the first business day of the month following the month in which they are effective. (COLAs that are effective in December are to be paid in checks issued in January.) P.L. 99-177 (Balanced Budget and Emergency Deficit Control Act of 1981 [Gramm-Rudman-Hollings]). This law suspended all civil service retirement COLAs for FY1986 and for all subsequent years in which the specified deficit reduction targets for the year would not otherwise be met. P.L. 99-509 (Omnibus Budget Reconciliation Act of 1986). This law reinstated COLAs for programs in which they were subject to suspension under P.L. 99-177 for FY1987-FY1991. P.L. 100-119 (Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987). This law permanently exempted the programs subject to suspension of COLAs under P.L. 99-177 from the suspensions required by that law. P.L. 103-66 (Omnibus Budget Reconciliation Act of 1993). This law postponed the effective date of COLAs from December to March for FY1994-FY1996. The CPI measurement period was not changed.
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Cost-of-living adjustments (COLAs) for the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) are based on the rate of inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). COLAs for both CSRS and FERS are determined by the average monthly CPI-W during the third quarter (July to September) of the current calendar year and the third quarter of the base year, which is the last previous year in which a COLA was applied. The "effective date" for COLAs is December, but they first appear in the benefits issued during the following January. All CSRS retirees and survivors receive COLAs. Under FERS, however, nondisabled retirees under the age of 62 do not receive COLAs. Survivors and disabled retirees are eligible for COLAs under FERS regardless of age. CSRS pays a COLA that is equal to the percentage change in the CPI-W during the measurement period, but COLAs under FERS are limited if the rate of inflation is greater than 2.0%. If the rate of inflation during the measurement period is between 2.0% and 3.0%, the COLA under FERS is 2.0%. If inflation is greater than 3.0%, then the COLA for FERS benefits is equal to the CPI-W minus one percentage point. Congress passed the first law requiring automatic COLAs for federal civil service retirement benefits in 1962, and it has adjusted either the formula by which they are calculated or the date on which they take effect more than a dozen times since then. If consumer prices as measured by the CPI-W do not increase from the third quarter of the base year to the third quarter of the current calendar year, there is no COLA for annuities paid under CSRS or FERS. For example, from the third quarter of 2014 to the third quarter of 2015, the CPI-W fell by 0.4%. Therefore, no COLA was paid under either CSRS or FERS beginning January 2016. From the third quarter of 2017 to the third quarter of 2018, the CPI-W increased by 2.8%. Therefore, beginning in January 2019, the CSRS COLA is 2.8% and the FERS COLA is 2.0%.
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While some investigators disagree with the current risk assessments of climate science, most accept the findings of the U.S. National Academies that the Earth's climate has changed over the past century and that human activities—particularly emissions of greenhouse gases (GHG) through such activities as fossil fuel use, agricultural practices, and deforestation—have very likely caused most of the observed effects. Broadly agreed findings conclude that the world faces risks from the damaging effects of a changing climate unless GHG emissions are limited. There is some political consensus internationally to try to stabilize GHG concentrations in the atmosphere at approximately 450 parts per million by volume (ppm) carbon dioxide-equivalent (CO 2 e), a volume which is projected to limit global warming to around 2˚C above pre-industrial levels. Some people argue that a 2˚C target, if attained within a sufficient time frame, might prevent dangerous anthropogenic interference with the climate system, allow ecosystems to adapt naturally to climate change, ensure that food production is not threatened, and enable economic development to proceed in a sustainable manner. Others suggest different target levels of varying stringency. Large-scale financial investments are projected to be needed to meet the global demand for energy, water, transportation, heating, and other infrastructure services in countries with growing populations and rising incomes. Financial requirements would be increased if countries made such investments with the additional consideration of addressing climate change. Proponents maintain that climate-relevant investments would promote low-emissions, high-growth economic development while simultaneously protecting the more vulnerable countries and communities from the effects of climate change. Some countries have begun to make moderate adjustments focusing, in particular, on energy efficiency strategies, low-emissions energy infrastructure, and sustainable land use, land use change, and forestry practices. However, despite expressions of concern and commitment, the shift toward climate-relevant investment has been deemed slow by many. Further, while industrialized countries continue to contribute a disproportionally large share of global GHG emissions, and historically have contributed most of the global GHG emissions over the past two centuries, future emission growth is projected to arise mostly from the developing world, whose populations and economic aspirations continue to grow. Thus, even if developed country emissions are significantly curtailed, climate targets may not be met without the deployment of similar abatement efforts in the developing world. While there is little doubt that the most efficient GHG reduction strategy would require efforts from all countries, a fundamental dispute centers upon who should pay for them and how. Most, if not all, low-income countries have argued that their success in abating GHG emissions and curtailing deforestation would depend critically on receipt of international financial and other support. They argue that reducing their share of GHG emissions and adapting to the effects of climate change would incur costs above and beyond their normal economic growth trajectories. These costs are particularly challenging to countries that have low incomes compared to industrialized nations, consider alleviating poverty as their first priority, and conclude that they have contributed only a minor share of the historical GHG emissions that force climate change. Higher-income countries, including the United States, have pledged financial assistance to lower-income countries in such fora as the United Nations Framework Convention on Climate Change (UNFCCC, 1992). While vaguely defined, the UNFCCC pledges are not voluntary commitments, but treaty obligations, signed and ratified by the U.S. government. More recently, the Copenhagen Accord (2009) stipulated—and the UNFCCC Cancun Agreements (2010) restated—that the wealthiest countries in aggregate would commit to provide up to $30 billion "fast start" financing in the 2010-2012 period and to mobilize $100 billion annually by 2020 to promote mitigation, adaptation, technology transfer, and capacity building efforts in lower-income countries. The funding is to come from "a wide variety of sources, [both] public and private, bilateral and multilateral, including alternative sources of finance." The Copenhagen Accord is a non-binding political agreement among countries; the implementation of the Cancun Agreements, as a product of the UNFCCC Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA), is still under negotiation by Parties. This report aims to inform congressional decision-making on U.S. provisions for financial assistance to low-income countries to address climate change. It proceeds by first framing some perspectives on the U.S. role in international financial assistance for climate change. It then addresses the following questions: 1. How much funding might be needed to address the problem? 2. What might the funding be used for? 3. Where might the funding come from? 4. How might the funding be delivered? The final section of the report summarizes past and current U.S. contributions to international climate change initiatives. Calls continue domestically and internationally for high-income countries to increase financial assistance to low-income countries to address climate change. Many in Congress and the public at large may question why the United States should help finance other countries' efforts to reduce GHG emissions or to adapt to climate variability and change. Some claim that international financing would incur costs to the United States, or redirect funds that could be used for domestic purposes and send them overseas. Others, however, contend that international financing may offer potential benefits to the United States in terms of environmental protection, expanded commercial markets, and national security. Below is a brief outline of some of the arguments in support of and in opposition to the role of the U.S. government in foreign aid in general and international climate change assistance in particular. Fiscal Constraints: Some critics of international climate change assistance to lower-income countries argue that the United States needs to retain available funds for domestic priorities, such as fostering renewed economic growth and creating jobs. They contend that the United States should not be burdened with higher taxes or prices for investments abroad. The burden is exacerbated during times of economic downturns, when governments are hard-pressed to generate fiscal resources to adequately address domestic challenges and maintain basic levels of public services and quality of life. For those who support some form of international development assistance, they may argue that aid should be directed to country priorities other than climate change, such as improving public health systems, water and sanitation resources, or infrastructure. Misuse of Funds: Many critics have claimed that international financial assistance targeted to help average citizens in low-income countries often ends up supporting inefficient and bloated bureaucracies (e.g., recipient governments, donor-funded multilaterals, or non-governmental organizations). They argue that the national and international institutions that dispense financial assistance focus on "getting money out the door" to lower-income countries, rather than on delivering services; 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 put enormous administrative demands on lower-income country governments. Bilateral and multilateral development agencies have also been criticized for the fragmentation of foreign assistance across many small and uncoordinated bureaucracies, the lack of transparency about project procurement practices and operating costs, and the proportion of funds that is misused or lost through instances of graft, corruption, and other political inefficiencies. Poor Results: Some critics contest the overall effectiveness of foreign assistance in spurring economic development and reform in low-income countries. Many studies have examined the effects of international assistance provided to lower-income countries, including both bilateral and multilateral mechanisms, and have returned mixed results. Conclusions range from ineffective, to highly effective, to effective "in some countries under specific circumstances." The divergent results of these studies may make it difficult to reach firm conclusions and support continued contributions. Further, some commentators find that international environmental assistance poses even greater uncertainties than other forms of aid due to difficulties in assessing, measuring, reporting, and verifying environmental indicators. Some statistics have confirmed these perceptions, as the success rate for environmental projects is often far below those of education, health, or infrastructure. Development Inefficiencies: There is no satisfactory metric on the effectiveness of international financial assistance to lower-income countries. Some critics claim that it may do more harm than good. They assert that a reliance on foreign capital fosters an unhealthy economic dependence, making poor countries poorer and economic growth slower, and leaving recipients more debt-laden, inflation-prone, vulnerable to the vagaries of the currency markets, and unattractive to higher-quality investment. They claim that grant-based assistance as a platform for development is contradictory to sustainable economic growth and can squash private sector efforts in commercial markets. They claim debt-based assistance is worse, requiring loans to be repaid at the expense of recipient country's education, health, and infrastructure investments. Further, large inflows of foreign capital may have the effect of killing off a country's export sector by causing domestic currency to strengthen against foreign ones (referred to by economists as "Dutch Disease"). As a counter to the practice of international financial assistance, these commentators promote a strategy of development that emphasizes the role of entrepreneurship and private markets over an aid system based on cycles of transfer flows. Lack of Consensus on Climate Science: Some critics point to scientific uncertainties and ambiguities within the fields of atmospheric chemistry and climatology as reasons to postpone and/or reconsider international climate change assistance policies and programs. They contend that the current scientific findings on climate change may not be sufficient to warrant government action, either domestic measures to mitigate GHG emissions and adapt to the effects of climate change or international policy actions and financial assistance to support other countries' efforts. Commercial In terests : Some advocates argue that international climate change assistance to lower-income countries to support low-emission economic growth could benefit U.S. businesses through increased trade, commerce, and economic activity in the global marketplace. They contend that American clean energy and environmental management companies are well positioned to provide the innovative technology and services needed to meet the rapidly growing demand in emerging economies. Increased financing would not only promote development in the host country, but allow U.S. industries to make competitive inroads into rapidly expanding markets, improve the advancement and commercialization of U.S. technologies, mobilize greater investment in domestic sectors, and enhance job creation in the United States. Decreased funding may cede American influence in global markets to other economic powers still engaged with lower-income countries on environmental and natural resource issues (e.g., the European Union, China). Investment Efficienc ies : Some advocates claim that the costs of responding to tomorrow's climate-related catastrophes, instabilities, conflicts, and technological needs would be much higher than the costs of working today to prevent them through emissions reductions. "Each year of delay will lock in an increased amount of old [i.e., high-emissions] technology," according to the United Kingdom's Secretary of State for Energy and Climate Change. Economists often note that lower-income countries account for nearly all of the recent growth in global emissions and represent the cheapest opportunity to mitigate GHG pollution as part of a cost-effective solution. Additionally, some are concerned that locking in the developing world to a reliance on older, more GHG-intensive technologies during economic development may limit their flexibility and increase their costs to respond efficiently to future pollution abatement or climate resilient strategies. (Sometimes this is called a problem of "stranded capital.") Economists view some level of early investment as efficient, to hedge against these future risks. Natural Disaster Preparedness: Some advocates point to international climate change assistance as a means to assist in global disaster preparedness. They claim that recorded natural disasters continue to increase each year resulting in more casualties and mounting economic losses. They assert that extreme weather events have lead to increased droughts, food shortages, and resource competition, which, in turn, has lead in some cases to population displacement and migration. Some have proposed that increased international assistance to climate change adaptation programs could help avoid capital and other losses (e.g., buildings, infrastructure, etc.), minimize the redirection of strategic resources to ad hoc disaster response and urgent humanitarian needs, and avoid chronic humanitarian crises, such as food shortages, particularly for the resource poor in the least developed countries. National Security: Some advocates argue that international climate change assistance could help address risks to national security. According to a 2008 National Intelligence Assessment, the impacts of global climate change may worsen problems of poverty, social tensions, environmental degradation, and weak political institutions across the developing world. In October 2010, Chairman Mullen of the Joint Chiefs of Staff highlighted that climate change creates conditions "that could lead to failed states and make populations vulnerable to radicalization." Combating environmental drivers such as climate change, desertification, biodiversity loss, and deforestation could reduce the instability caused by the scarcity of, and potential competition for, resources like water, food, and habitat. Some see international financial assistance for climate change as a means to help make lower-income countries less susceptible to these threats, for the benefit of both the lower-income country and the security interests of the United States. International Leadership: Some advocates contend that international climate change assistance to lower-income countries helps the United States improve its leadership in global environmental issues. Through leadership, the United States may be able to influence and set important international economic and environmental policies, practices, and standards. But leadership—apropos of voting share—is tied directly to the level of financial contribution in many multilateral organizations. Some believe that delivering on financial pledges is an important opportunity for the United States to demonstrate credibility and support negotiations not just on environment, but on economic and security issues as well. Withdrawing commitments may cede American influence in world affairs to other economic powers still engaged with lower-income countries on environmental and natural resource issues (e.g., the European Union, China). Weakened influence could manifest in challenges to political negotiations, economic relationships, trade preferences, and future collaborations. International Obligations: Many advocates stress that the commitment to international climate change assistance to lower-income countries is codified in current multilateral agreements. Under the United Nations Framework Convention on Climate Change (UNFCCC), signed in 1992, the United States and other industrialized countries listed in Annex II of the Convention committed to provide financial and technical assistance to help lower-income countries' efforts to meet their UNFCCC obligations. While these commitments are legally binding, they are vaguely defined, making them impractical to quantify and enforce. More recent negotiations have striven to produce more quantified figures, and the Copenhagen Accord of 2009 produced an agreement by the wealthiest countries to provide $30 billion of "fast start" financing in the period 2010 to 2012 and to seek $100 billion annually by 2020. However, these financial targets are not legally binding, and accounting and enforcement remain difficult. Equity Issues: Some advocates consider international climate change assistance to lower-income countries a moral responsibility and a matter of climate equity. Not only have today's high-income economies generated about 80% of past fossil fuel-based emissions, but those same emissions have helped carry them to high levels of social and economic well-being. Past behavior arguably calls for the industrialized countries to provide funding to reduce the current and future risks imposed on others. The financial costs of coping with climate change may reach trillions of dollars. These costs would aim to address some combination of mitigation activities (i.e., actions taken to eliminate or reduce the long-term risk and hazards of climate change) and adaptation activities (i.e., actions taken to adjust to climate change, moderate potential damage, or cope with the consequences). Estimates of the projected costs vary widely depending upon assumptions made about the accepted levels of pollution, the ambitiousness of the global response, its structure, timing, and implementation, the potential climate-related damages, the affected sectors, as well as the methods of sourcing and delivering the necessary funds. The stricter the emissions target, the higher the estimate. The longer the response is delayed, the more threatening the damages may be, and the greater the resources required to respond to the threats. Bearing the costs of action (or inaction) are individuals, firms, local communities, national governments, and/or the international community. A variety of international institutions and non-governmental organizations have used various climate change mitigation and adaptation analyses to estimate the climate-related financing needs for lower-income countries. Table 1 reports findings from a variety of studies on both the "net costs" and "associated financing requirements" for mitigation and adaptation efforts in lower-income countries. "Mitigation costs" refer to net incremental costs as factored over the lifecycle of the investment; and "mitigation financing" refers to the up-front capital investment needed over and above the business-as-usual (BAU) investment. Both mitigation costs and mitigation financing are estimated for stabilizing atmospheric concentrations at 450 ppm CO 2 e; adaptation investments are estimated for a variety of assistance categories for both 2010 and 2030. Focusing on the 450 ppm target, mitigation net costs in lower-income countries range between $150 billion and $190 billion a year by 2030. If the estimates for associated financing needs are included, the total costs increase to $287 billion to $614 billion a year. For adaptation, the most comparable estimates are the medium-term figures produced by the UNFCCC and the World Bank, which range from $30 billion to $110 billion annually. Currently, resources committed to address mitigation and adaptation in lower-income countries cover approximately 5% of the aforementioned estimates. One recent study has contributions for mitigation-specific assistance at approximately $20 billion annually. Very few studies have addressed current contributions for adaptation assistance. Many claim that assessing climate-related financial and investment flows is a formidable challenge, given the inconsistencies across reporting systems, the many data gaps (with the further challenge of identifying the contributions of underlying finance, which unlike specific climate finance is not reported as such), and the complex web of flows (with the possibility of double counting). Estimates of the total net costs and financing requirements needed for mitigation and adaptation activities in lower-income countries are often based on economic models of pollution abatement costs and/or adaptation investments aggregated across sectors and regions. This section discusses in more technical detail the economic modeling behind the various cost estimates presented in the previous section. Due to characteristic differences, estimates of net costs and financing requirements are often differentiated between the costs of mitigation and the costs of adaptation. Mitigation costs refer to the costs of actions taken to reduce or reverse the forces that contribute to global climate change. In higher and lower-income countries alike, mitigation measures aim to reduce current levels of emissions and to emphasize low-GHG development. Strategies include transitioning to a low-emissions energy supply; capturing the opportunities in energy efficiency improvements in buildings, transportation, and industry; reducing deforestation and improving sustainable forest management to better serve as GHG emissions sinks; and employing more low-emissions and sustainable agriculture practices. In the future, it could also entail actions that remove carbon dioxide from the atmosphere and sequestering it permanently, or other geoengineering technologies. Estimates have been made of the incremental costs of various mitigation strategies. Figure 1 shows one example of what analysts refer to as an "Emissions Abatement Cost Curve." The purpose of the curve is to summarize the many emission reduction strategies available, and to characterize their emission reduction potential as well as their net costs, if the strategy is "pursued aggressively." The curve charts the amount of potential reductions (expressed along the horizontal axis in gigaton of CO 2 e abated per year) against the cost of specific measures (expressed along the vertical axis in cost per ton of CO 2 e abated). Of particular note, the curve shows that many abatement opportunities exist with net negative costs (approximately one-third of potential reductions), meaning that the measures may pay for themselves within the useful lifetime of the investment through efficiency savings (e.g., switching from incandescent light bulbs to LEDs would both reduce emissions and save money in the long run due to the extended product life and energy efficiency of LEDs). These negative cost options (shown on the left of the graph) are mainly found in energy efficiency measures in building, transportation, and industry as well as some fuel switching, recycling, and waste management practices. For emission reduction strategies in the agriculture and forestry sectors (e.g., improved agriculture practices, afforestation, reforestation), most options have low to moderate costs. Many of the low to moderate cost options fall within the curve's margin for error and are arguably breakeven estimates. Sectors with relatively high cost reduction opportunities are in some energy production options, with some emerging technologies having even higher costs than are represented on the graph given their nascent state of development. Figure 1 demonstrates that ideally if all possible mitigation measures were taken on the cost curve in strict order from lowest-cost to higher-cost in sequence (i.e., from replacing all residential incandescents with LEDs all the way up to retrofitting all coal-fired power generation with carbon capture and storage technologies), global emissions abatement of 38 GtCO 2 e could be achieved in 2030. At this rate, the average cost of the abatement opportunities would be $5 per tCO 2 e in 2030, and the total cost for realizing the whole curve would be $187.5 billion in the year 2030. Transaction and program costs—not represented on the curve—are often estimated at an average of between $1.25 and $6.25 per tCO 2 e abated, making the total annual global cost approximately $250 billion to $375 billion by 2030. While an abatement cost of $6 to $12 per tCO 2 e is reasonable in light of current economic discussions on climate change, many commentators stress that mitigation costs are extremely sensitive to policy choices. They increase steeply with the stringency of the emission reduction target and with the desired degree of certainty of reaching it. Global mitigation costs would likewise rise to the degree that the world deviates from a least-cost emission pathway (e.g., not tapping low cost reductions in lower-income countries in the initial mitigation effort would increase global costs significantly). Further, the failure to allow for all mitigation opportunities would likewise increase overall costs (e.g., only concentrating on energy efficiency measures and not on forest and agricultural management could increase overall costs). Many commentators note that low-emission investments for mitigation activities often have high up-front capital costs, followed later by overall savings in operating costs. Figure 2 charts the incremental capital needs, or "capital intensity costs" (i.e., the extra investment needed at the onset of a project over and above the business-as-usual (BAU) technologies), as an alternative metric to the net cost curve of Figure 1 (which charts the additional net costs of a low-emission project over its entire lifetim e ). Figure 2 shows that in some cases the difference between capital intensity costs and net costs can be as much as a factor of two to four, depending on the rate of opportunity costs assumed. The McKinsey & Company estimate concludes that the total global upfront investment needed for abatement measures would be $1,012.5 billion per year in 2030—incremental to BAU investments. For financially constrained countries, specifically many lower-income countries, these high up-front capital costs can be a significant disincentive to invest in low-emission technologies. The McKinsey & Company estimate outlined above is just one of many assessments conducted on financial needs. See Table 1 above for other mitigation cost estimates from a variety of studies. Adaptation costs refer to the costs of adjustments made in natural or human systems in response to actual or expected climate change and its effects. Estimates of adaptation costs have focused on the additional amount of investment needed to reduce the impact of anticipated future damages caused by climatic trends or events, including measures to increase resilience, reduce the impacts of anticipated disasters, and cope with the aftermaths. Examples of adaptation measures include employing climate-resistant crop varieties, improving irrigation systems, integrating sustainable land management into agricultural planning, protecting water resources, managing coastal zones, designing infrastructure for extreme weather or for sea-level rise, and improving public health services. From a global perspective, the adaptation challenge may be greatest in the developing world. Lower-income countries are generally more vulnerable to climate change because their economies are more dependent on climate-sensitive sectors such as agriculture, fishing, and tourism. Further, with lower per capita incomes, weaker institutions, and limited access to technology, lower-income countries are considered to have less adaptive capacity. See Figure 3 for one analysis of vulnerability and social capacity by country and region. The figure shows that in many cases a lower social capacity (as measured by literacy, education, health, and governance indexes) may make countries more vulnerable to the impacts of climate change. Estimating the costs of adaptation with precision is difficult, not only because adaptation measures are widespread and heterogeneous, but also because the measures are embedded in the broader network of economic development strategies. While any investment in education, health, sanitation, and security, for example, may constitute good development, it also may help reduce socioeconomic vulnerability to both climactic and non-climactic stress factors. A variety of studies have tried to estimate the incremental costs of adaptation in low-income countries. Methods, definitions, and scopes of adaptation in these studies vary, accounting for many of the differences in cost estimates. In particular, many estimates assume that some portion of the incremental costs will be covered by the recipient countries themselves. Some studies attempt to consider "all" costs of adaptation to climate change and resulting damages (although none are comprehensive); some include just large-scale adaptation costs (i.e., not private measures taken by individuals); and some try to discern just the need for public financing for adaptation. The UNFCCC Secretariat estimates that the additional annual investment and financial flows needed worldwide would be on the order of $49 billion to $171 billion by 2030, with $30 billion to $73 billion needed for lower-income countries (the largest element of uncertainty in the UNFCCC estimate lies in the cost of infrastructure adaptation). Other sources have produced varying estimates. See Table 1 above for adaptation cost estimates from a variety of studies. A variety of international institutions and non-governmental organizations have used various climate change mitigation and adaptation analyses to estimate the climate-related financing needs for lower-income countries. One example by Project Catalyst ( Figure 4 ) sums the incremental costs for the period 2010-2020 to give an average total of $45 billion per year for mitigation needs in lower-income countries. Factoring in a higher rate of investment in lower-income countries and covering transaction costs and specific funding for emerging technologies brings the total financing requirement for abatement in lower-income countries to around $100 billion annually. Including projections for the additional costs of adaptation activities gives a final estimate of $126 billion per year for the period 2010-2020 in lower-income countries. As outlined in the previous section, trillions of dollars may be advocated over the coming decades to provide scaled-up, new, additional, predictable, and adequate financing for lower-income countries to enable and support their actions on climate change. These investments would aim to upgrade and expand energy, industry, and transport infrastructure; to manage land use, land use changes, and forestry practices; and to support the implementation of adaptation activities for reducing climate vulnerability and building climate resilience. Having estimated the potential financial costs for climate change investment, the next step in the process would be to consider the sources from which these funds may be generated. While markets that are privately constituted and self-regulated have delivered moderately to climate change investments world-wide, public institutions—including national governments, international organizations, and official financing mechanisms of the UNFCCC —continue to be key drivers for climate change investments, specifically in lower-income countries. In the past, these institutions have relied heavily on government revenues to finance their activities. But, with climate-related costs rising into the tens or hundreds of billions of dollars a year, it is unlikely that direct budget contributions from governments can meet the demand. Other sources of finance may be sought, and many proposals exist. Potential sources of international climate change financing for lower-income countries can be divided into five broad categories: (1) private sector; (2) public interventions to stimulate private sector investment; (3) public sector; (4) innovative finance; and (5) voluntary actions. Most potential sources of finance would require some measure of government action or oversight—either directly, through budget contributions or a transfer of funds, or indirectly, through state-sponsored regulations or other incentives to leverage private sector investment. See Appendix A for an extended glossary of terms related to the various sources of climate finance discussed in this section. Each of the categories identified above could potentially generate funds to address climate change in lower-income countries. Each has advantages and disadvantages. There is no single set of criteria for comparing these options. Some of the criteria employed by commentators include the potential magnitude of funds that could be generated by each source; the economic and/or the GHG-related efficiency of each source; the practicality and predictability of generating funds from each source; the plausibility of assessing the "additionality" of each source; the overall accessibility and transparency of the funds provided and their use; and the equity and incidence effects as expressed among countries or between higher and lower-income countries. A brief summary of some of the more significant outstanding issues regarding the choice of sources is included in a discussion at the end of this section " Caveats Regarding Sources "; and a tabulated comparison of the various sources is offered in Appendix B . Private capital markets can provide one source for mobilizing financing for low-emission investments in lower-income countries. Instruments such as foreign direct investment, portfolio investment, microfinance, and public-private partnerships could be promoted to scale up private financing for climate change mitigation and adaptation activities. Incentive structures may need to shift in order to favor such investment, and economic and/or regulatory policies may need to be implemented to define targets and raise the profitability of alternatives. The section below outlines possible sources for international climate change financing in a privately constituted and self-regulated market. Public sector interventions to stimulate private capital investments are addressed in the next section. Foreign Direct Investment : Foreign direct investment is the long-term participatory investment in the ownership of productive assets—such as factories, mines, and land—by a multinational corporation in a developing country's energy, industry, or transport sector. It can be a relatively stable source of financing. It has the greatest advantages in mitigation activities, in terms of transferring technology and standards which could allow economic development to leapfrog into more climate-friendly sectors such as energy efficiency and renewable energy. Many high-emission sectors—such as road transport, metals, mining, chemicals, timber, and cement—are dominated by large multinational corporations, and their investments and practices may likely have a big influence on the timing of alternative development pathways in lower-income countries. However, given that foreign direct investment tends to lag rather than lead economic growth, it is unlikely to play a significant role in the early stages of a shift onto such a development pathway, particularly given the initial high degree of uncertainty and the absence of the in-country inputs that large international firms need in order to operate efficiently. Portfolio Investment : Portfolio investment is the purchase of stocks, bonds, and money market instruments by foreigners for the purpose of realizing a financial return but not resulting in foreign management, ownership, or legal control. It could also be a stable source of international climate change financing. Investment could be mobilized through venture capital funds or specific "green" funds. It could appeal to investors willing to allocate investments to options that might generate less return but have greater potential in terms of climate change mitigation and socially responsible business practices. Currently, almost all "green" investment opportunities are concentrated in the more industrialized countries or the countries with emerging economies. Funds made available through this channel to lower-income countries have been both limited and skewed in favor of one or two countries. Without other incentives, the amount of resources that can be raised is likely to remain quite small. Microfinance : Microfinance is the provision of financial services, in the fora of small loans at market value, to lower-income country clients who traditionally lack access to banking and related services. It could serve as another vehicle for mobilizing local private resources for investments in climate-friendly development. Over the past three decades, microfinance has grown dramatically, with more than 7,000 microcredit institutions in 2006, serving about 80 million people in about 65 countries. Climate-relevant microfinance has expanded beyond merely encompassing programs of credit provisioning to include schemes of microsavings and microinsurance. Given the close links between poverty reduction and climate vulnerability, scaling up microfinance has been considered a possible source of finance for climate adaptation programs. However, observers note that scaling up microfinance for long-term investment in productive activities and sustainable development would require support through a broader development strategy, including investments in infrastructure and human capital. Public-Private Partnerships : Public-private partnerships are business ventures funded and operated through a partnership between government and one or more private companies. They involve a contract between a public-sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. Public-private partnerships have helped stimulate private financing for energy efficiency and renewable energy projects in lower-income countries. Likewise, they have assumed a growing importance as a vehicle for financing climate change adaptation programs, in the form of infrastructure projects and the delivery of health services. Much of the economic policy debate on climate change has been dominated by the search for market-based solutions to the problem of market failure (i.e., the external costs of GHG pollution). Successful policy would address the externalities of GHG pollution in the market and reveal the costs of choosing high-emissions over low emissions technologies. Once determined, these costs could be internalized through economic incentives (e.g., setting emissions levels or compliance pricing, etc.) to help drive pollution abatement. Funds for public or private sector contributions to international climate change financial assistance for lower-income countries could be derived and transferred in any number of ways from the finances generated by the market-mechanism. In general, market-based mechanisms to reduce GHG emissions specify either the acceptable emissions level (quantity) or the compliance costs (price) and allow the marketplace to determine the economically efficient solution for the other variable. For example, tradable permit programs set the amount of emissions allowable under the program (i.e., the number of permits available limits, or "caps," allowable emissions), while allowing the marketplace to determine what each permit will be worth. Likewise, carbon fees set the maximum unit cost (per ton of CO 2 e) that one should pay for reducing emissions. Private decisions would determine how or how much pollution actually gets reduced. In one sense, preference for a carbon fee or a tradable permit system depends on how one views the uncertainty of costs involved and benefits to be received. Tradable Permit Systems : Tradable permit systems—better known as "cap and trade programs"—set an overall cap on GHG emissions and then issue tradable permits to firms which would allow them to emit specified quantities of GHG. Firms are required to hold a number of permits equivalent to their level of pollution. Those firms that need to increase their permissible quantities would purchase permits on the market. Those that could reduce their emissions more cheaply could potentially sell their allowances on the market. Some cap and trade programs would auction all permits during the initial issuance. Some programs would phase in permits through a period of free or reduced price allocations of permits. Some programs include a mechanism whereby firms could gain emission credits through pollution reductions performed in economic sectors outside of the regulated market (e.g., agriculture, forestry, or in countries or regions not covered by the program). This is referred to as an "offset" market. In each case, revenue for international climate change assistance can be generated in a number of ways. a. Revenues from domestic auctioning of emission allowances in domestic emission trading schemes : This would involve auctioning of domestic credits (as in the EU Emission Trading Scheme phase III, or any potential domestic cap and trade program) and transferring some part of associated revenues to international climate change financing. b. Revenues from international auctioning of emission allowances in international emission trading schemes (such as Assigned Amount Units under the Kyoto Protocol): An Assigned Amount Unit (AAU) is a tradable "carbon credit" representing an allowance to emit GHG under the UNFCCC Kyoto Protocol emissions trading market. AAUs are issued up to the level of initial "assigned amount" of an Annex 1 Party. Some countries support sourcing revenue for international climate change activities by retaining some allowances from the Annex I countries and then auctioning them. c. Revenues from offset levies : This would involve withholding a share of offset revenues from emissions trading markets—such as the Kyoto market or any domestic market—as an international source of climate change financing. This is currently done with the Kyoto Protocol's Clean Development Mechanism (CDM), which capitalizes the UNFCCC Adaptation Fund through a 2% levy on the proceeds from its certified emission reductions. Emission-Based Fees, and Other Levies : An emission-based fee is an environmental fee that is levied on the GHG content of fuels or other sources of emissions. By increasing the cost of emissions, emission fees raise public revenue, any or all of which could be transferred and used for international climate change assistance to lower-income countries. Emission fees are occasionally referred to as "carbon taxes"; under guidelines of the U.S. Office of Management and Budget, a "tax" is primarily for generating revenues, while a user (i.e., emissions) fee is primarily to charge for an entity's use of a resource (e.g., the atmosphere as a place to discharge waste emissions). a. Revenues from GHG fees : This would involve a tax on GHG emissions in countries raised on a per ton emitted basis. b. Revenues generated from taxes on international aviation and shipping : This would involve either a levy on maritime bunker/aviation jet fuels for international voyages, or a levy on passenger tickets of international flights. c. Revenues generated by removing fossil energy subsidies : This would involve public funds made available by the removal of fossil energy subsidies which could be diverted towards international climate change financing. While not a levy per se, redirection of subsidy grants or increases in tax receipts by reducing credits and deductions would function in a comparable economic manner to an emission tax on consumers. d. Revenues from fossil fuel extraction royalties/licenses : This would involve a redirection of a portion of existing government receipts associated with domestic fossil fuel production for use in international climate change financing. Allocating resources in a national public budget directly to international climate change assistance is a straightforward way for governments to finance activities in lower-income countries, and historically public funding has played an important role in both mitigation and adaptation financing. In practice, public funds may be mobilized similar to, or as part of, official development assistance (ODA); or, public funds may flow through international financial institutions as grants or grant-equivalent (i.e., "concessional") loans. While some see public funds as a practical, equitable, and potentially predictable source of international climate change financing, political acceptability in the donor countries over the longer term may depend on national circumstances and on the size of the contribution. Further, global fiscal cycles can place public finances in many high-income countries under extreme pressures and could make it difficult to generate sufficient and reliable financial flows over the required period or in the required order of magnitude. Voluntary Budget Contributions: Voluntary contributions involve public revenues provided to recipient countries—either directly or by international financial institutions—through national budgetary decisions. Voluntary contributions have played—and likely may continue to play—the most important role in publically funded international climate change finance. Voluntary contributions may draw revenue from a domestic base (e.g., through taxes or fees) and allow for contributing governments to (1) pursue different options at different times as public opinion evolves, (2) divert only a portion of revenue from a particular source for international climate change financing, rather than the entire revenue flow, and (3) retain control over annual spending, rather than provide some kind of automated mechanism. But voluntary contributions in many countries are subject to legislative decision making and annual appropriations, making predictability and reliability difficult to ascertain. Mandatory or Assessed Budget Contributions : Some lower-income countries have proposed that UNFCCC Annex I parties contribute from 0.5%-1.0% of their gross national income to climate change financing in non-Annex I countries, to be channeled through a multilateral fund under the authority of the Convention. This would generate approximately $150 billion to $300 billion per year at pre-crisis income levels of major Organization for Economic Cooperation and Development (OECD) economies. Others have proposed assessed contributions formulated on the basis of some combination of a contributing country's GHG emissions, population, and gross domestic product, in accordance with the principle of common but differentiated responsibilities and respective capabilities. Supporters propose that mechanisms should be put in place to make contributions legally binding. The source for these funds would be similar to voluntary contributions (i.e., domestic taxes or fees). Public Debt Instruments: Public debt instruments raise money for public entities by borrowing from bond markets. Most high-income country governments can borrow money at a discount because their chance of default is considered low compared to privately held companies. Multilateral Development Banks (MDB) and other International Financial Institutions (IFI) use the same principle for raising capital for lower-income country governments. Using their good credit rating, which is based on the fact that they are backed by the capital subscriptions of developed country governments, IFIs and MDBs borrow money at favorable conditions to lend at a lower interest rate or accept a higher risk, a benefit that they can pass on to their clients in the interest of development and climate protection. Increased capital subscriptions from higher-income countries would allow these institutions to increase lending to lower-income countries. Despite the spectrum of sources available for international climate change financing, many observers consider current funding inadequate, and look to more innovative methods of finance. Various proposals have been made for raising revenues for climate action from sources not closely linked to GHG emissions. While these proposals have the capacity to generate large quantities of financial assistance, they may be perceived as arbitrary in their choices and by the numerous competing causes that could benefit from their financing. Two of the more heavily discussed proposals include a financial transaction tax and special drawing rights. Financial Transaction Tax : A Financial Transaction Tax (FTT) is a levy on international financial transactions. The level of estimated revenues from the FTT is driven by the tax base, the tax rate, and the elasticity of the transaction volume to the tax rate. A global FTT, as currently debated, would be a new and additional source for climate finance. Strong international coordination and allowances for international implementation could increase the efficiency of such a source. However, critics point out that FTTs are unconnected to GHG emissions in any practical way, and the unresolved issues of incidence on both higher and lower-income countries would make it difficult to implement universally. Special Drawing Rights : Special Drawing Rights (SDRs) are an accounting mechanism—sometimes called "virtual currency"—typically held as a reserve asset in financial organizations such as the International Monetary Fund (IMF). SDRs supplement IMF member countries' official reserves and generate liquidity in the event of balance of payments difficulties. The value of an SDR is based on a basket of key international currencies. In some proposals to capitalize a fund for climate change financing, SDRs could be issued in exchange for real currency to generate revenues. In other proposals, bonds could be issued on the back of paid-in SDRs to generate liquidity and contributors would receive an equity stake in the fund proportional to their contribution. In either case, the IMF would not necessarily be the entity issuing these proposed SDRs or managing the system. Most policymakers have not supported the use of SDRs to capitalize resources for climate change finance because the effort would undermine the primary purpose of the SDR system, present legal and political/financial challenges in implementation, and offer few if any advantages over traditional capitalization. Some sources for international climate change financing may be found in philanthropic or voluntary markets. Proponents note that some companies and some consumers have already begun to implement voluntary changes and have already begun to make voluntary contributions in order to reduce GHG emissions. Many believe that absent more aggressive governmental intervention, it is unlikely that these trends would be quantitatively sufficient and timely enough to make a significant impact on climate change. Voluntary action may also hurt relative competitiveness and increase costs in the short term, reducing incentives to adopt more stringent standards in the future. Philanthropy : Many philanthropic organizations already provide contributions to climate change mitigation or adaptation financing in lower-income countries. Many work closely with nongovernmental and civil society organizations to promote education, knowledge sharing, and human capital advancements to further climate change investment in lower-income countries. Voluntary Offsets : Voluntary offsets are "carbon neutral" certificates that are sold by some private entities in exchange for climate-related services (e.g., a contribution to an international climate change fund). Companies currently sell offsets in exchange for assurance that the funds will be used to reduce GHG emissions (e.g., by planting trees). This may differ from general philanthropy in the sense that funds are, in principle, directly in exchange for quantified emissions reduction performance and could be issued through aggregators of small, diversified projects or through brokers. The Role of Market s : The economic debate within international climate change policy has been dominated by assessments of market-based mechanisms aimed at changing price incentives so that investment in low-emissions development becomes more attractive (e.g., cap and trade, carbon fees, loan guarantees). Many agree that private investment will likely have a predominant role to play in any low-emissions economic future, and that establishing a price on GHG emissions will likely have a part in any effective policy agenda. However, concerns remain whether such mechanisms can induce the required shifts in production and consumption patterns and mobilize the necessary investment. Some assert that price mechanisms are unreliable guides in cases where investments are large, where returns are not immediately visible, and where conditions are dependent upon unpredictable policy initiatives. The uncertainties in investments are heightened when the climate and development challenge takes place against a backdrop of systemic financial market failure and natural resource price volatility. As such, some policymakers believe that market mechanisms would contribute only a partial role in a larger package of measures that includes a reliance on regulations and large-scale public investments. The Role of Governments : Notwithstanding economic considerations, the "private funding" versus "public funding" debate also has political, legal, and equity components. For example, some recipient countries contend that donor governments should provide public funds as the main source of climate change assistance because they understand climate finance as an international equity issue, with contributions serving as reparation for past environmental loss or damage. Others assert that developed country governments—not private corporations—have signed onto legally binding international environmental agreements to provide assistance to lower-income countries. Some may believe public monies would be more direct and easier to generate, and therefore more predictable and sustained. They may not consider or recognize the challenges in some countries to appropriating federal funds for international purposes. Similarly, some recipient countries may be suspicious of foreign private investment and would prefer the funding to be under the control of local governmental decision-makers, hoping this would better reflect local priorities and indigenous cultures. Conversely, donor countries tend to underscore the costs of extending such financing, including the direct outlays of funds, the secondary costs to their domestic economies for investing abroad at concessional terms, and the losses accrued by passing funds through governments institutions or other intermediaries. The Requirement for Scaled Up, New and Additional , Predictable and Adequate Financing : Most, if not all, low-income countries have stated that fulfilling their commitments under the UNFCCC would depend on financial and technical support from higher-income countries. As noted above, they seek resources that can be defined as "scaled up, new and additional, predictable and adequate." While the term "scaled up" presumes an increase in funding from existing sources, the terms "new," "additional," and "adequate" are subject to diverse interpretations and controversy. "New" funds could signify entirely unique funding sources arising from new public levies, new international allocations, or new multilateral mechanisms; or, it could simply refer to funds from a new fiscal year, a new multilateral replenishment contribution, or a new domestic or international program that takes the place of an expiring one. Some are concerned that funding is not shifted merely from one type of development assistance to climate change assistance, with little or no increase comparable to the stated needs. "Additional" is meant to denote an increment above and beyond "business-as-usual." However, speculating as to counterfactual development assistance trajectories that would have taken place if not for the "additional" funding is rife with debate. Finally, the term "adequate," with respect to needs, is a wholly subjective quantity. The previous section outlined many of the existing and proposed funding sources for investment in climate change mitigation and adaptation activities in lower-income countries. The next step would be to consider the methods through which these funds could be transferred from contributing countries to their recipients. A variety of mechanisms, organizations, and institutions for disbursing international climate change financing already exists. All have a role in catalyzing climate action: mobilizing additional resources; reorienting public and private flows toward low-carbon and climate-resilient investments; supporting the research, development, and deployment of climate-friendly technologies; and strengthening the institutional capacities of recipient countries. Mechanisms can be divided into three broad categories: (1) private or quasi-private sector, (2) public sector bilateral, and (3) public sector multilateral. Foreign Direct Investment (FDI), Export Credit markets, non-concessional lending at the Multilateral Development Banks (MDB), and the various Kyoto Protocol market mechanisms at the UNFCCC (e.g., the Clean Development Mechanism (CDM)) would be classified as private or quasi-private sector mechanisms. Public sectors mechanisms would include contributing countries' Official Development Assistance (ODA) as well as many of the multilateral environment and development trust funds (e.g., the Global Environment Facility (GEF)) and the concessional lending windows housed at the various institutions at the World Bank Group. Figure 5 presents a comparison of the financial flows for energy and infrastructure development—including development specific to climate change mitigation—in low-income countries per annum (in this example, the analysis compares flows for the year 2007). The figure shows that total investment in all "mitigation-relevant" sectors (i.e., funding for economic development in all key sectors that shape future GHG emissions in developing countries, including energy, transport and water infrastructure, industry, waste management, agricultural, and forestry) amounted to an estimated $316 billion, of which over 80% was from private sector funds. It should be noted that "mitigation-relevant" investments need not be GHG reducing investments (e.g., both wind power generation and fossil fuel power generation are "mitigation-relevant" investments). "Mitigation-specific" investments (i.e., investments in which the primary objective is to reduce GHG emissions) amounted to $20 billion in 2007—or 6% of total key sector investment—of which approximately 60% was from private sector funds. All of the mechanisms identified above could potentially deliver funds to address climate change in lower-income countries. Each has advantages and disadvantages, and there is no single set of criteria for comparing these options. Many critics contend that the overall architecture of financial mechanisms to address climate change is underfunded and unnecessarily complex. The array of funds and financial institutions lack both strategic mandate and adequate coordination, leaving many gaps, overlaps, and inefficiencies. Divisions have arisen over the proper financial instruments to employ in lower-income countries (e.g., grants or loans) as well as the role shared by the public and private spheres. A brief summary of some of the more significant outstanding issues regarding the choice of sources is included in a discussion at the end of this section under " Caveats Regarding Mechanisms ." The sheer magnitude of the required investment for climate change mitigation and adaptation activities necessitates capital flows from the private sector. Currently, the private sector accounts for over 85% of global investment in those economic sectors relevant to climate change mitigation and adaptation activities, although governments largely control the underlying infrastructure investments that affect the opportunities for low-emissions economic development. Similarly, public sector financing has been more prominent in low-income countries—particularly the least developed countries and the small island states—in which private entities are still reticent to invest. To this point, private capital markets have filled in the gaps in climate change financing in lower-income countries, and, in some cases, have taken the lead in market-ready mitigation investment to create a low-carbon economy, such as energy-efficient machinery, cleaner cars, and renewable energy. Foreign Direct Investment : Over the past two decades, the international climate change agenda has shared a stage with an expanding global economy. As such, particular attention has been paid to foreign direct investment (FDI) in lower-income countries to address climate change. FDI has many potential benefits, including financing infrastructure expansion without contributing to public debt, supporting technology and knowledge transfer, and acting as a catalyst for further capital inflows. Despite considerable efforts to attract FDI in the last several years, actual levels of such investment into the energy and industry sectors in many countries with economies in transition have been moderate. Similarly, FDI tends to lag rather than lead economic growth, and, as such, is not likely to play a significant role in the early stages of a shift to lower-emission development trajectories. Mobilization of the necessary capital resources requires an attractive investment climate—a business-friendly environment, favorable macroeconomic performance, and a regulatory environment that is predictable, fair, transparent and efficient. Several mechanisms function predominantly in the private sector but were set up initially by public sector entities or are currently backed by guarantees (whether financial or institutional) from them. Export Credit Agencies: Export Credit Agencies (ECA) are private or quasi-governmental financial institutions or agencies that provide financing to domestic companies for their international trade activities. ECA services can include such instruments as direct loans, loan guarantees, and insurance for companies in order to help promote exports. These programs are implemented in cases where the private sector is unable or unwilling to provide financing to ensure equitable competition for U.S. exporters due to potential commercial, exchange rate, or political risks and uncertainties in overseas markets. The primary objective of ECAs is to remove the risk of repayment to exporters by shifting the financial burden of uncertainty onto themselves, for a premium. The U.S. Export-Import Bank and the Overseas Private Investment Corporation are two examples of export credit and overseas investment agencies connected to the United States government. Development Banks: Non-Concessional Lending : The International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC) are the facilities within the World Bank Group that make non-concessional or "hard" loans to middle-income countries as well as provide services for private sector ventures and projects in developing countries. While similar in structure to a commercial lending facility, the IBRD focuses primarily on investments that support poverty reduction, economic development, and global public goods, including food security and climate change. The IBRD currently has plans to increase lending to support renewable energy and energy efficiency projects in lower-income countries, and it continues to serve as a center for research and knowledge-sharing on development practices, promoting lessons learned and identifying innovations to combat the effects of climate change. The regional banks in the World Bank Group have similar non-concessional lending windows. The United States supports the IRBD through its capital subscription to the IBRD General Capital Increase (GCI). UNFCCC Kyoto Protocol Mechanisms : The UNFCCC introduced three market-based mechanisms to assist countries with commitments under the Kyoto Protocol to limit or reduce greenhouse gas emissions. The mechanisms include International Emission Trading, the Clean Development Mechanism, and Joint Implementation. Most relevant to developing country assistance, the Clean Development Mechanism (CDM) allows entities with emission-reduction or emission-limitation commitments under the Kyoto Protocol to implement emission-reduction projects in lower-income countries in order to earn saleable certified emission reduction (CER) credits which can be counted towards meeting Kyoto targets. Though the CDM has been used far less than many had initially envisioned (in part because of slow processes and governance issues), its board says that it has issued more than 1.7 billion tons of CO 2 e GHG reductions ($2.9 billion expected by end of 2012), and has leveraged US$33 billion from investors in 2007 alone. Similar programs include the World Bank's Carbon Finance Unit, which uses donations from private and public entities to purchase GHG emission reductions in client countries. As a complement to private sector investment, many countries also contribute funds to climate change initiatives in lower-income countries through various public sector mechanisms, organizations, and institutions. Governments may choose to contribute these funds either directly to recipient countries (i.e., bilateral assistance) or in combination with other donors through an international institution (i.e., multilateral assistance). Bilateral assistance is often provided through a contributing country's development agency (e.g., U.S. Agency for International Development (USAID)). These direct and long-standing relationships between donor and recipient countries' development agencies can enable cooperative implementation plans with respect to environmental issues. Many climate change initiatives share a sensitivity to other development sectors (e.g., agriculture, biodiversity, health, and infrastructure) and provide an opportunity to implement innovative cross-sectoral programs. Further, bilateral assistance gives contributors more control over where the money goes and how the money is spent. For example, contributing 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 assistance through a multilateral organization. By building a clear link between the contributing country and the recipient country, bilateral assistance may also garner more goodwill from the recipient country than if the funds had been provided through a multilateral organization. Multilateral organizations offer different benefits for contributing countries. Multilateral organizations pool the resources of several contributors, allowing countries to share the cost of development projects (often called burden-sharing). In this way, one country's multilateral assistance is said to "leverage" additional funds from other contributing countries, as well as from implementing agencies, non-governmental organizations, the private sector, and even the recipient countries themselves. Further, long-standing and established multilateral institutions dedicated to climate change initiatives and sustainable development practices may hold a level of expertise and may benefit from knowledge carry-overs that are not as prevalent in the smaller bilateral assistance agencies of some contributing countries. Additionally, contributing countries may find it politically sensitive to attach or enforce policy reforms to bilateral assistance, and multilateral organizations can usefully serve as a shield for imposing and enforcing conditionality that may be politically sensitive to attach bilaterally. Finally, many believe that providing funds to multilateral organizations plays a role in a contributing country's leadership in the world economy. Table 2 lists some of the most prominent bilateral and multilateral financing mechanisms for climate change activities in lower-income countries. Below are descriptions of the various public sector mechanisms currently employed by the United States. Commentary on the effectiveness of each mechanism can be found in the topical discussion at the conclusion of this section as well as in the respective CRS reports footnoted under each heading. Official Development Assistance: Official Development Assistance (ODA) programs, funded primarily through the U.S. Agency for International Development (USAID), aim to advance and sustain U.S. engagement with specific developing countries on critical global issues such as food security and climate change. ODA-funded programs are designed to support the efforts of recipient governments and their private sector and non-governmental partners to implement the political and economic changes needed for sustainable practice. USAID has targeted "adaptation," "clean energy," and "sustainable landscape" programs as the three pillars of the Obama Administration's Global Climate Change Initiative to assist vulnerable countries adapt to the impacts of climate change and reduce net GHG emissions in their economies. USAID estimates that approximately one-sixth of its agency-wide Development Assistance account is earmarked for the Administration's Global Climate Change Initiative programs. U.S. appropriations for bilateral climate change initiatives through USAID's or the Department of the State's ODA programs is subject to congressional approval. Congressional committees of jurisdiction include the U.S. House of Representatives Committee on Foreign Affairs, (various subcommittees); the U.S. House of Representatives Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs; the U.S. Senate Committee on Foreign Relations, Subcommittee on International Development and Foreign Assistance, Economic Affairs, and International Environmental Protection; and the U.S. Senate Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs. ODA is a significant component of international climate change assistance. The Organization for Economic Cooperation and Development (OECD) has estimated bilateral, climate-specific support to low-income countries at an annual average of about $3.4 billion from 2003-2007, as reported in their Creditor Reporting System. This climate-specific financing represented about 0.01% of contributing countries' Gross Net Income (GNI) for that period, and about 3.4% of contributing countries' total bilateral ODA for all purposes. Accordingly, the United States' contributions represented about 0.002% of GNI and about 0.1% of all bilateral ODA, in both instances below the international average. Given the vagaries of definitions and reporting, the OECD estimates that all bilateral financing support for climate mitigation represented about US$8 billion to $53 billion in 2007—no more than one-sixth of the total estimated flows of about US$314 billion going to the sectors relevant to climate mitigation actions (i.e., energy, transportation, agriculture, water supply, industry, minerals, and mining). International Financial Institutions: International Financial Institutions (IFI) are the primary multilateral mechanisms for climate change financing to lower-income countries. IFIs coordinate multiple donor country contributions and provide loans, grants, and investment services to developing economies to promote growth, alleviate poverty, and aid in targeted programs such as climate change and food security. IFIs were designed to provide professional advice and technical support to address the economic impediments to developing country investment. In the United States, climate-related funding for IFIs is managed primarily through the Office of International Affairs at the U.S. Department of the Treasury. U.S. appropriations for multilateral climate change initiatives through authorized International Financial Institutions are subject to congressional approval. Congressional committees of jurisdiction include the U.S. House of Representatives Committee on Financial Services, Subcommittee on International Monetary Policy and Trade; the U.S. House of Representatives Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs; the U.S. Senate Committee on Foreign Relations, Subcommittee on International Development and Foreign Assistance, Economic Affairs, and International Environmental Protection; and the U.S. Senate Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs. a. Development Banks: Concessional Lending: The International Development Association (IDA) is a facility within the World Bank Group that makes grants and highly concessional or "soft" loans to the world's 79 poorest countries. IDA remains the single largest source of development finance globally across a range of sectors, including climate change mitigation and adaption initiatives as well as climate-relevant programs in primary education, basic health services, clean water and sanitation, environmental safeguards, business improvements, infrastructure, and institutional reforms. The United States was a driving force behind the creation of IDA in 1960 and remains its largest shareholder. The United States currently supports IDA through appropriated contributions pledged to IDA's 16 th replenishment period. b. Tropical Forests Conservation Act: The Tropical Forest Conservation Act authorizes debt relief for low- and middle-income countries to support conservation of tropical forests. Under the program, treated debt is reduced and redirected to provide for grants to local non-governmental organizations and other entities engaged in forest conservation in the recipient country. The United States uses appropriated funds to pay for the budget cost of the debt restructuring. "Debt-for-nature" initiatives like the TFCA may be structured as either bilateral or multilateral programs and may employ third-party non-governmental organizations as brokers or rely on direct government-to-government agency coordination. To date, the United States has concluded 17 TFCA agreements in 14 countries, generating over $260 million for tropical forest conservation and the consequent GHG emission savings. c. Global Environment Facility: The Global Environment Facility (GEF) is an independent and international financial institution that provides grant-based financing to cover the additional or "incremental" costs associated with transforming projects with national development benefits into ones with global environmental benefits. GEF partners with international institutions, nongovernmental organizations, and the private sector to assist lower-income countries with environmental projects related to six areas: biodiversity, climate change, international waters, the stratospheric ozone layer, land degradation, and persistent organic pollutants. Since its inception, GEF has allocated $9.2 billion—supplemented by more than $40 billion in co-financing—for more than 2,700 projects in 165 countries. GEF estimates that approximately 50% of its implemented projects assist climate change activities. The United States currently supports GEF through appropriated contributions pledged to GEF's fifth replenishment period (2010-2014). d. Clean Technology Fund: The Clean Technology Fund (CTF) is one of two Climate Investment Funds administered by the World Bank Group that aim to help finance lower-income countries' transitions toward low-carbon and climate-resilient development. Implemented in 2008 by the United States, the United Kingdom, and Japan, and joined by several other donors in the international community, the CTF seeks to provide financing—principally to larger emerging economies and to regional groups—for demonstrating, deploying, and diffusing large-scale clean energy investments with the potential for long-term avoidance of GHG emissions. The fund promotes renewable energy and energy efficient technologies as well as energy efficiency strategies in the transportation, building, industry, and agricultural sectors. Eight contributing countries have pledged $4.4 billion to the CTF since September 2008 in support of programs in 18 lower-income countries. The U.S. pledge of $2 billion—split between the CTF and the SCF—is currently supported through annual appropriated contributions. e. Strategic Climate Fund: The Strategic Climate Fund (SCF), founded in conjunction with the CTF as the second of the World Bank's two Climate Investment Funds, supports three programs that aim to pilot new and scaled-up approaches to address climate change challenges in lower-income countries. The Pilot Program for Climate Resilience assists many of the poorest and most vulnerable countries prepare for and respond to the impacts of climate change by integrating climate adaptation measures into core development planning. The Forest Investment Program works to reduce deforestation in lower-income countries through improved forest management. The Program for Scaling-Up Renewable Energy in Low Income Countries supports a select number of the poorest countries in their efforts to expand energy access and stimulate economic growth through the deployment of renewable energy solutions. Ten contributing countries have pledged $2.5 billion to the SCF since September 2008 in support of programs in over 30 lower-income countries. The U.S. pledge of $2 billion—split between the CTF and the SCF—is currently supported through annual appropriated contributions. f. Green Climate Fund: The Green Climate Fund, currently under negotiation in the UNFCCC Ad Hoc Working Group on Long Term Cooperative Action as set forth by the Cancun Agreements in December 2010, is to be designated as the official financial mechanism of the Convention. Upon creation, it would support projects, programs, policies, and other activities in lower-income countries using thematic funding windows for mitigation, adaptation, forestry, capacity building, and technology transfer, among others. All program attributes have yet to be agreed upon by negotiating Parties, including provisions for its trustee, governance structure, administration, funding levels, and its official status under the Convention. The Debate between Bilateral and Multilateral: Contrasting models of foreign assistance have arisen through the years in programs like the Marshall Plan, involving bilateral aid arrangements between countries, and the Bretton Woods process, involving multilateral arrangements like the IMF, the World Bank, and others. Historically, bilateral assistance has dominated the foreign aid landscape, and it remains potentially the most direct and timely method of reaching a destination and working for a recipient government. Environmental contributions by multilateral organizations have been criticized for a lack of cost efficiency, a focus on economic development in lieu of the environment, and the imposition of requirements for global environmental benefits as opposed to local, environmentally sound development. But proponents stress that multilateral assistance tends to be less tied to the political self-interest of individual donor countries, allows for the efficient pooling of financial resources and the leveraging of additional monies, helps ensure that different bilateral arrangements do not work at cross-purposes, and serves to develop a sense of cooperation among nations with the additional advantage of reducing conflict. The Complex Institutional Architecture : Whether it is the United Nations family of agencies, the World Bank Group, or any number of countries and their development agencies, the plethora of actors engaged in climate financing is unwieldy to many recipient countries. Larger bureaucracies tend to slow and dampen performance, reduce flexibility and transparency, and heighten transaction costs. As mechanisms for climate finance proliferate, each new or special-purpose fund carries with it a set of challenges, including redesigned institutional and governance functions, inefficient allocations, and limitations on scaling up. These challenges threaten to reduce the overall effectiveness of climate finance because as transaction costs increase, recipient country ownership lags and alignment with country development objectives becomes more difficult. The Limitations of Current Market Mechanism s : The UNFCCC Clean Development Mechanism has demonstrated that markets can stimulate emission reductions, provide essential learning, and build capacity. But some attest that mechanisms such as the CDM contain inherent inefficiencies, including a relatively weak and inefficient UNFCCC governance structure, an inability to successfully generate local economic co-benefits, an uneven distribution of projects that is geared toward higher-income emerging economies, a weakness in incentives to foster real transformations to a low-carbon economy, and a debate over the additionality of a given project's reductions (i.e., a debate over if the enacted emission reductions paid for by the mechanism are additional to actions that otherwise would have occurred). The Choice between Top-Down or Bottom-Up: Whether purposeful or not, the international community is currently operating under a disjointed set of mechanisms which encourages fragmentation of the global response to climate change. Some argue that the "bottom-up" approach offers competition for market share, flexibility in international commitments, and a greater leeway to manage climate change action on individual terms, including accounting for different views of national circumstances, domestic politics, legal backgrounds, economic costs, and competitiveness exposures. The United States and other higher-income countries, as well as some emerging economies such as China, often stress the bottom-up approach as a way to protect international political issues (such as sovereign rights) and international economic issues (such as the globalization of markets). Others find fragmentation to be a great detriment to effectiveness, efficiency, and equity at a time when the international community may wish to bring together a myriad of elements into a single, functioning, strategic framework. Most lower-income countries tend to support a centralized, top-down mechanism situated in the UNFCCC, or the United Nations at large. They may perceive a heightened sense of coordination, consistency, and transparency afforded by these institutions through their "one country: one vote" paradigm. The United States has relied mostly on direct budget appropriations to finance climate change actions internationally. Congress is responsible for several activities in this regard, including (1) authorizing periodic appropriations for federal agency programs and multilateral fund contributions, (2) enacting those appropriations, and (3) overseeing U.S. interests in the programs. Oversight may come in the form of guidance; please see box "Some Examples of Legislative and Executive Branch Guidance" in this section for examples. Currently, direct budget contributions from the U.S. government are appropriated to relevant federal agencies to support their bilateral and multilateral contributions to international climate change initiatives. These appropriations are requested on an annual basis by the Administration and enacted on an annual basis by the Congress. The majority of bilateral and multilateral contributions to international climate change initiatives is funded through programs at the Department of State, the Department of the Treasury, and the U.S. Agency for International Development. Funds for these programs are appropriated in the Administration's Executive Budget, Function 150, for State, Foreign Operations, and Related Programs. Historical budget authority for these programs through 2009 is presented in Table 3 . The current Administration's budget authority and budget requests are presented in Table 4 . Congressional committees of jurisdiction for international climate change programs at the Department of State, the Department of the Treasury, and the U.S. Agency for International Development include the U.S. House of Representatives Committee on Foreign Affairs, (various subcommittees); the U.S. House of Representatives Committee on Financial Services, Subcommittee on International Monetary Policy and Trade; the U.S. House of Representatives Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs; the U.S. Senate Committee on Foreign Relations, Subcommittee on International Development and Foreign Assistance, Economic Affairs, and International Environmental Protection; and the U.S. Senate Committee on Appropriations, Subcommittee on State, Foreign Operations, and Related Programs. Currently, no federally legislated system exists to require or assure future, predictable public financing for international climate change assistance (e.g., a mandated allocation of redirected fossil fuel subsidies). Similarly, no federally legislated market-based mechanism has been instituted that would contribute funds generated from the private sector for international climate change assistance (e.g., a GHG cap-and-trade program, which could incentivize international private capital investment through offset markets or provide internationally targeted funds through an allocation of auction or offset revenue). U.S. participation in international negotiations for global environmental assistance stretches at least back to the 1972 United Nations Conference on the Human Environment (UNCHE), the first concerted effort by the international community to focus on the environment as a major topic of concern and attention. Therein, discussions among representatives from both industrialized and lower-income countries gave rise to a compromise on a doctrine to address both environmental and developmental policy. Governments at the time agreed that (1) the environment and development are two mutually reinforcing sides of the same coin, and (2) that industrialized countries would accept the principle of "incrementality" by which they would pay some or all of the additional costs of environmental initiatives in the developing world above and beyond the basic costs of development. The relationship between the environment and development was further developed at the 1992 United Nations Conference on Environment and Development, in the document called Agenda 21 , wherein a blueprint was detailed for putting sustainable development into practice. Agenda 21 also doubled the pledge by the industrial world to assist lower-income countries in poverty alleviation and environmental protection. Although Agenda 21 was impressive in its scope and comprehensiveness, the policy was non-binding; and some observers note that "the whole enterprise [was] heavily dependent on strong leadership from major countries, adequate financing, and effective institutional arrangements for follow-up ... none of which materialized." Financial pledges were made to support climate change initiatives specifically under the 1992 United Nations Convention on Climate Change (UNFCCC). The United States, as a Party to the UNFCCC, has committed to providing financial and technical assistance to lower-income countries' efforts in meeting their respective obligations. Historically, some of this assistance has flowed through the Global Environment Facility—the official financial mechanism of the UNFCCC—to which the United States has contributed funding since 1993. Further, at the 2009 UNFCCC Conference of Parties (COP) in Copenhagen, Denmark, and at the 2010 COP in Cancun, Mexico, the United States helped negotiate a package that included developed country pledges of an aggregated $30 billion of "fast start" climate financing for the period 2010 to 2012 and $100 billion annually by 2020. This funding is to come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance, and be delivered through both new and existing fund arrangements, with governance structures providing for equal representation of developed and developing countries. These negotiations are still pending and are currently non-binding. The 2011 COP is scheduled to meet during December in Durban, South Africa to further negotiations toward a potentially binding treaty. The Obama Administration has not yet specified what share of pledges it envisions the United States providing, nor a strategy for how to fulfill the long-term pledge. Historically, the United States' credibility on international climate change financing has been impaired by periodic under-funding. The United States is currently $217 million in arrears for its assessed contributions to the Global Environment Facility (i.e., 10% of the total U.S. pledge of $2,185 million since 1994). Also, though the Bush Administration helped establish the Clean Technology Fund in 2008 under the World Bank and pledged to help capitalize it, the U.S. Congress declined to appropriate the first U.S. payment of $400 million requested by the Administration for FY2009, and is far short of the $2 billion aggregated pledge the Bush Administration made for the period 2008-2012. Further, recent appropriations fall well below what many countries envisage for the U.S. share of the $30 billion UNFCCC "fast start" pledge. Based on provisions in H.R. 1473 , most FY2011 enacted funding for international climate programs at the Department of State, the Department of the Treasury, and USAID (Function 150) are drawn from larger line item agency categories. Allocations for these programs are at the discretion of the agency, in relation to its other programming, and have yet to be reported. The Obama Administration's FY2012 budget request for international climate programs at the Department of State, the Department of the Treasury, and USAID (Function 150) would fund near-term climate financing of slightly over $1.3 billion across three areas: (1) clean energy ($652 million, up from $531 million enacted for FY2010) to reduce net GHG emissions from the energy sector, industry, and urban areas; (2) sustainable landscapes ($421 million, up from $169 million enacted for FY2010) to assist reduction of GHG emissions from deforestation and land degradation; and (3) adaptation ($256 million, up from $246 million enacted for FY2010) to focus on helping countries manage climate and weather-related risks and build resilience. Table 4 outlines recent U.S. budget authority and Administration requests for international climate change assistance programs by agency. For a more detailed description of the Obama Administration's Global Climate Change Initiative, its agencies, programs, funding, and purposes, please refer to Appendix C . Appendix A. Glossary of Options for Generating and Disbursing Financing to Address Climate Change Appendix B. Comparison of Sources of Climate Change Financing Appendix C. U.S. Global Climate Change Initiative "Adaptation" ($256 million FY2012 request, up from $246 million in FY2010) Assisting countries manage climate and weather-related risks and build climate resilience. "Clean Energy" ($652 million FY2012 request, up from $531 million in FY2010) Mitigating net greenhouse gas emissions from energy sectors using energy efficiency and low-emission technologies. "Sustainable Landscapes" ($421 million FY2012 request, up from $169 million) Reducing greenhouse gas emissions from deforestation and land degradation.
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Many voices, domestic and international, have called upon the United States to increase foreign assistance to address climate change. Proponents maintain that such assistance could help promote low-emissions and high-growth economic development in lower-income countries, while simultaneously protecting the more vulnerable countries from the effects of a changing climate. Recent studies estimate the needs for climate change financing in the developing world to range from US$4 billion to several hundred billion annually by the year 2030. The United States has pledged funds in such fora as the United Nations Framework Convention on Climate Change (UNFCCC, 1992), the Copenhagen Accord (2009), and the UNFCCC Cancun Agreements (2010), wherein the wealthiest countries, in aggregate, agreed to provide up to $30 billion in "fast start" financing for the 2010-2012 period and to mobilize $100 billion annually by 2020. Pledged funds are to come from a wide variety of sources, both public and private, bilateral and multilateral, including alternative sources of finance. Lower-income countries have sought assistance that is new, additional to previous flows, adequate, predictable, and sustained. The fundamental dispute concerning international financing for climate change centers upon who should pay for it and how. The debate has been dominated by economic assessments of market-based mechanisms aimed at changing price incentives so that investment in low-emissions development becomes more attractive (e.g., cap and trade, carbon fees, loan guarantees). Many agree that private sector investment will likely have a significant role to play in any low-emissions future, and that establishing a price on GHG emissions will likely have a part in any effective policy agenda. However, concerns remain whether such mechanisms can induce the required shifts in production and consumption patterns, mobilize the necessary investment, and contribute adequately to international financial assistance. From this perspective, public funds—including from national governments and international organizations—continue to be a key driver for climate change investment, specifically in low-income countries. Many methods for disbursing international climate change financing currently exist. All have a role in catalyzing climate action. They include private sector funding through such avenues as foreign direct investment (FDI), export credit markets, multilateral development banks and finance corporations, and the various U.N. Kyoto Protocol market mechanisms, as well as public sector funding through official development assistance (ODA), multilateral trust funds (e.g., the Global Environment Facility (GEF), Climate Investment Funds (CIF), Green Climate Fund (GCF)), and the concessional lending windows housed at the World Bank Group. Many contend that the financial architecture is underfunded, unnecessarily complex, and lacks both strategic mandate and adequate coordination. Debate has arisen over the proper financial instruments to employ in lower-income countries as well as the role shared by the public and private spheres. Up to this point, the United States has relied mostly on direct budget appropriations to finance climate change actions internationally, but recent Congresses have considered several alternatives that could generate new financing for international purposes. Many in Congress and the public at large may question why the United States should help finance other countries' efforts on climate change. Some claim that international financing would incur costs to the United States, or redirect funds that could be used for domestic purposes and send them overseas. Others, however, contend that international financing may offer potential benefits to the United States in terms of global environmental protection, expanded commercial markets, and increased national security.
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Figure 1. Map of UruguaySource: Map Resources. Adapted by CRS Graphics. On November 29, 2009, Senator José "Pepe" Mujica of the ruling center-left Broad Front (FA) coalition was elected president of Uruguay in a second-round runoff vote. In legislative elections held concurrently with the October 25, 2009, first-round vote, the FA retained its majorities in both houses of the Uruguayan Congress. The new legislature and President are to be inaugurated to their respective five-year terms on February 15 and March 1, 2010. Mujica will replace popular incumbent President Tabaré Vázquez, who was constitutionally ineligible to run for a second consecutive term. Most analysts expect broad policy continuity from the Mujica Administration. President Tabaré Vázquez was inaugurated to a five-year term in March 2005. By winning the presidency and securing FA majorities in both houses of the Uruguayan Congress, Vázquez ended 170 years of political domination by the National (PN) and Colorado (PC) parties and ushered in the country's first left-leaning government. Throughout his term, President Vázquez has followed the moderate social democratic paths of the left-of-center governments of Brazil and Chile, advancing market-oriented economic policies while instituting social welfare programs intended to reduce poverty and inequality. He has maintained considerable popular support, receiving a 80% approval rating in December 2009. Although Uruguay has long been one of Latin America's most stable economies, it experienced a major economic and financial crisis between 1999 and 2002. During the crisis—which was principally the result of the spillover effects of the economic problems of its much larger neighbors, Argentina and Brazil—Uruguay's economy contracted by 11%, unemployment climbed to 21%, and over one-third of the country's 3.5 million citizens found themselves living below the poverty line. While economic stability returned to Uruguay prior to the 2004 election, some international investors were worried about the possible economic policies of the Vázquez government. In order to calm investor fears, Vázquez signed a three-year, $1.1 billion stand-by arrangement with the International Monetary Fund (IMF) shortly after taking office. The agreement committed Uruguay to a substantial primary fiscal surplus, low inflation, considerable reductions in external debt, and several structural reforms designed to improve competitiveness and attract foreign investment. Although Uruguay terminated the agreement in 2006 following the early repayment of its IMF debt, it has maintained a number of the policy commitments. The Vázquez Administration has also done much to address poverty and inequality throughout its term, though it has been criticized by some of the more leftist sectors of the FA for allegedly subordinating social welfare concerns to the maintenance of market-friendly economic policies. In the first months of his administration, Vázquez created a ministry of Social Development and sought to reduce the country's poverty rate with a $240 million National Plan to Address the Social Emergency (PANES). PANES provided a monthly conditional cash transfer of approximately $75 to over 100,000 households in extreme poverty. In exchange, those receiving the benefits were required to participate in community work and ensure that their children attended school daily and had regular health checkups. PANES included a number of other initiatives as well, such as food purchase cards, new homeless shelters, an expansion of free health coverage, and job training programs. In late 2007, PANES was replaced with the Plan for Social Equity. Vázquez has recently introduced two programs designed to expand opportunity through technology: Plan Ceibal , which provides all public school students in Uruguay with a free personal computer, and Plan Cardales , which provides low-income families with subsidized access to telephone, television, and Internet services. In addition to the administration's social welfare programs, Vázquez passed a law forbidding discrimination against workers for labor activities, and reestablished tripartite wage councils—composed of representatives of government, businesses, and unions—to negotiate wages for approximately 100,000 firms and 600,000 workers. The labor reforms have considerably increased the power of unions, playing a substantial role in the percentage of unionized workers more than doubling between 2005 and 2007 to approximately 24% of the labor force. Moreover, the Vázquez Administration and the FA have overhauled the tax system to make it more progressive, reducing the value-added tax and replacing the tax on wages with a personal income tax that exempts the poorest 60%. The Vázquez Administration's economic and social welfare policies, along with the recent boom in commodity prices—which significantly affect Uruguay's primarily agricultural economy —have contributed to several years of strong economic growth and considerable reductions in poverty. Since 2005, Uruguay's real gross domestic product (GDP) has grown by an average of 7% per year, the country's debt has fallen from 66% of GDP to 26% of GDP, and investment has increased to 19% of GDP, the highest rate in the country's history. Likewise, between 2004 and 2009, the poverty rate in Uruguay fell from 31.9% to 20.3% and extreme poverty fell from 4.2% to 1.4%, while real wages increased 18% and household income increased 30%. Uruguay remains one of the most developed countries in Latin America, with an adult literacy rate of nearly 98%, a life expectancy of 76 years, and a 2008 per capita income of $8,260. Although the global financial crisis has significantly slowed the Uruguayan economy with a 2.3% contraction in the first quarter of 2009, economic growth returned in the second quarter and the economy is expected to have grown 0.6% in 2009. Vázquez and the FA have done much to address Uruguay's dictatorship-era (1973-1985) human rights violations, which had been largely ignored by other administrations. During the country's 12 years of authoritarian rule, tens of thousands of Uruguayan citizens were forced into political exile, 3,000-4,000 were imprisoned, and several hundred were "disappeared" or killed. Nonetheless, the only official action taken by previous governments to investigate the country's past was the creation of a peace commission, which was active between 2000 and 2003, and only looked into those who had been "disappeared." Furthermore, the peace commission only had an investigative mandate since the country's amnesty law—passed in 1986 and ratified in a national referendum in 1989—treats dictatorship-era crimes with impunity. Immediately after his election, Vázquez initiated investigations into the government's human rights abuses during the authoritarian period. Since then, excavations of military barracks have turned up the remains of some of the "disappeared," files from the dictatorship have been released to the public, and the state has agreed to provide compensation to the those who were imprisoned for political reasons and the families of those who were killed. The Vázquez Administration also reinterpreted the amnesty law to exclude crimes committed outside Uruguay as a part of the regional coordination plan to eliminate political dissidents known as "Operation Condor." As a result, a number of former members of the military and police have been tried and jailed, including former dictators Juan María Bordaberry (1973-1976) and Gregorio Álvarez (1981-1985). Some former members of the security forces, who believe that their actions were necessary to defend the country from ideological subversives, have criticized the FA for allegedly seeking to rewrite the country's history. Although a referendum to repeal the country's amnesty law was rejected in the October 2009 general election, an Uruguayan Supreme Court ruling issued several days before the election found the application of the amnesty law in a case involving the 1974 death of a political prisoner to be unconstitutional. The ruling potentially could lead to the reopening of additional cases. Social issues have figured prominently in Uruguayan politics in recent years. In December 2007, Uruguay became the first Latin American nation to approve civil unions between homosexuals. The law grants civil unions inheritance, pension, and child custody rights similar to those of Uruguayan marriages. Uruguay has since lifted its ban on homosexuals serving in the military and approved a law allowing homosexuals to adopt children, another Latin American first. In November 2008, the Uruguayan Congress passed a bill to legalize abortion in the first 12 weeks of pregnancy under certain circumstances, such as the woman's health being at risk or extreme poverty. Although the bill was supported by the FA and a majority of Uruguayans, President Vázquez vetoed it. Following the veto, Vázquez resigned his position as head of the Socialist Party due to differences on the issue. Under existing Uruguayan law, abortion is illegal but a woman does not face sanction if the pregnancy resulted from rape or endangered the woman's life. On November 29, 2009, Senator José "Pepe" Mujica of the ruling center-left FA coalition was elected president of Uruguay in a second-round runoff vote. Mujica defeated former President Luis Alberto Lacalle (1990-1995) of the center-right PN, 53% to 43%. The runoff was triggered after none of the candidates received an absolute majority of the vote in the October 25, 2009, first-round election. Mujica was the leading presidential vote-getter in the first round, winning the support of 48% of the electorate, while Lacalle took 29%, Pedro Bordaberry of the center-right PC won 17%, Pablo Mieres of the centrist Independent Party (PI) won 2.5%, and Raúl Rodríguez of the leftist Popular Assembly (AP) took 0.7%. Bordaberry and the PC backed Lacalle in the second round, while Mieres and the PI remained neutral and Rodríguez and the AP called on their supporters to cast spoiled ballots in rejection of both candidates. Since voters in Uruguay must cast party-line presidential and legislative votes, congressional representation closely reflects the first-round presidential vote. When the new Congress takes office on February 15, 2010, the FA will maintain its legislative majorities, with 50 seats in the 99-seat House of Representatives and 16 seats in the 30-seat Senate. Likewise, the PN will remain the principal opposition force with 30 seats in the House and nine seats in the Senate, while the PC will once again be the third-largest political force in the Congress with 17 seats in the House and five seats in the Senate. The PI will hold two seats in the House. While the PC significantly increased its representation in both houses, its gains came largely at the expense of the PN, and the ideological balance of power of the Uruguayan Congress will remain roughly the same as it has been for the past five years (See Figure 2 ). Two referenda were held along with the October 2009 first-round election. One would have granted the more than 500,000 Uruguayan citizens residing abroad the right to vote absentee. Currently, Uruguayans must return to the country in order to cast a ballot. This extension of voting rights was opposed by the PC and PN since most of those living abroad—such as citizens who fled the country's right-wing dictatorship (1973-1985)—are perceived to be more sympathetic to the FA. Some also argued that those who reside abroad should have no say in the policies that will affect the lives of those actually living in Uruguay. The other referendum would have annulled the amnesty that was granted to the military and police following the return to democracy for crimes committed during the country's dictatorship. Those opposed to annulling the amnesty law noted that it was ratified with 56% of the vote in a 1989 referendum. Some also alleged that the referendum fomented persecution of the security forces while ignoring the crimes that were committed by the country's leftist guerilla group. Both referenda failed to gain the absolute majorities needed to be approved, with the extension of voting rights to citizens abroad and the amnesty repeal winning the support of 37% and 47% of Uruguayans, respectively. President-elect José Mujica was imprisoned for 14 years as a result of his activities as one of the leaders of the Tupamaro National Liberal Movement, a leftist urban guerilla group that operated in Uruguay during the 1960s and 70s, but he has adopted a more moderate profile since the end of the country's authoritarian period. Following the return to democracy, Mujica helped found the Popular Participation Movement (MPP), which is currently the largest faction within the FA coalition. He was elected to Uruguay's lower house in 1994 and to the Senate in 1999, before serving as minister of livestock, agriculture, and fisheries during the Vázquez Administration. Although he hails from a more left-leaning faction of the FA, Mujica has developed a reputation as a pragmatist and consensus-builder. He has already reached out to the political opposition, offering appointments to state companies and autonomous entities, and setting up multi-partisan technical commissions to develop security, education, energy, and environmental policy. While his campaign opponents attacked Mujica's past to portray him as a radical departure from the Vázquez government, most analysts maintain that the Mujica Administration's policies are likely to closely resemble those of his predecessor. Mujica selected Danilo Astori—a competitor for the FA presidential nomination who served as economy minister during the Vázquez Administration—as his running-mate in order to reassure voters and investors that he was committed to maintaining Uruguay's market-oriented economic policies. Mujica has said that he intends to delegate economic policy to Astori, and economic posts in the administration are expected to be filled by leaders associated with Astori's more centrist faction of the FA, the Líber Seregni Front (FLS). Members of the FLS have reportedly been selected to head the economy, tourism, and transportation ministries. Analysts also expect Mujica to broadly maintain the Vázquez Administration's social welfare and foreign policies, though he may place more emphasis on domestic redistribution and regional integration. The more left-leaning sectors of the FA, such as Mujica's MPP, will reportedly control the foreign and defense ministries, as well as the majority of the social ministries. Although FA majorities in both houses of Congress will enable the Mujica Administration to advance its legislative agenda without needing to negotiate with the political opposition, policies will likely be moderated by the need to establish consensus among the various ideological factions of the coalition. Some analysts have suggested that divisions within the FA—both in the Cabinet and the Congress—may arise if the economic environment inhibits increases in public spending. Uruguay's economic growth in the near term is unlikely to equal that of recent years despite the country experiencing only a minor recession as a result of the global financial crisis. Private analysts have predicted that GDP growth will average 3% in 2010 and 2011. Uruguay enjoys friendly relations with the United States, though it traditionally has had closer ties to Europe (the origin of the vast majority of the population) and its South American neighbors. Ties between Uruguay and the United States have increased in recent years, especially since the administration of Jorge Batlle (2000-2005), which closely aligned itself with the United States. In 2002, the United States provided Uruguay with a one week balance of payments loan to assist the country in countering the fallout from the Argentine financial crisis. Moreover, Batlle laid the groundwork for ongoing trade discussions with the United States through the 2002 creation of a Joint Commission on Trade and Investment (see " Trade " below). While many analysts expected the Vázquez Administration to distance the country from the United States and forge closer relations with fellow members of the Common Market of the South (Mercosur) once it took office, those predictions have not been borne out. Ongoing disputes within Mercosur over trade asymmetries and a bitter conflict with Argentina over the construction of a cellulose pulp mill along the shared Uruguay River have led to frosty relations between Uruguay and its neighbors. Likewise, the Vázquez Administration has sought to strengthen ties with the United States in order to diversify its trade relations and reduce its economic reliance on Argentina and Brazil, which played a significant role in the country's 1999-2002 recession. President-elect Mujica has indicated that he will prioritize relations with Uruguay's neighbors and push for increased regional integration through Mercosur. Nonetheless, he has also expressed his desire to continue strengthening U.S.-Uruguay relations and will likely build upon the bilateral agreements signed during the Vázquez Administration. Additionally, Mujica may attempt to amplify Uruguay's growing trade relations with Asia, as he has reportedly designated former Ambassador to China Luis Almagro as his foreign minister. Trade ties between the United States and Uruguay have grown substantially since 2002, when the countries created a Joint Commission on Trade and Investment. The joint commission has provided the means for ongoing U.S.-Uruguay trade discussions, which led to the signing of a bilateral investment treaty in October 2004 and a Trade and Investment Framework Agreement (TIFA) in January 2007. The TIFA is a formal commitment to pursue closer trade and economic ties. It established a Council on Trade and Investment, which serves as the formal mechanism for liberalizing bilateral trade and investment between the two countries. Protocols to the TIFA on trade facilitation and public participation in trade and environment were signed by the United States and Uruguay in October 2008. Although President Bush and President Vázquez initially sought to negotiate a free trade agreement (FTA), internal pressure from the more leftist sectors of the FA and external pressure from fellow members of Mercosur ultimately led the Vázquez Administration to back away from the FTA and sign the more flexible TIFA. While a FTA may be possible at some point in the future, it is unlikely that Mujica would pursue such an agreement and the Obama Administration has indicated that it prefers to move forward within the TIFA framework for now. In 2008, U.S. exports to Uruguay totaled $893 million, a 39% increase from 2007, while U.S. imports from Uruguay totaled $244 million, a 50% decline from 2007. Capital goods, such as heavy and electrical machinery, comprised a substantial portion of U.S. exports, while beef, repaired goods, leather, wood, and fish accounted for the majority of U.S. imports (see Table 1 ). In 2008, the United States was Uruguay's sixth-largest trade partner, after Argentina, Brazil, Russia, China, and Venezuela. The same year, Uruguay was the United States' 96 th -largest trade partner, representing just 0.3% of total U.S. trade. On September 14, 2009, the ATPDEA Expansion and Extension Act of 2009 ( S. 1665 , Lugar) was introduced in the Senate. Among other provisions, the bill would amend the Andean Trade Promotion and Drug Eradication Act (Title XXXI of the Trade Act of 2002, P.L. 107-210 ) to provide unilateral trade preferences to Uruguay. Under the bill, certain Uruguayan products, such as wool-based textiles, would be eligible to receive duty-free or reduced tariff treatment until December 31, 2012. Uruguay is one of the top 10 per capita contributors of forces to U.N. peacekeeping missions. It currently has between 2,500 and 3,000 soldiers deployed in 15 countries worldwide. Uruguay's largest deployment is part of the U.S.-supported United Nations Stabilization Mission in Haiti (MINUSTAH), which it has participated in since 2004. It is the second-largest contributor of forces to MINUSTAH, with some 1,100 soldiers currently deployed. Uruguay is currently pushing for an extension of MINUSTAH's mandate and a more comprehensive focus that includes long-term development. Although Uruguay does not receive substantial amounts of U.S. foreign assistance as a result of its relatively high level of development, it does receive military assistance designed to provide equipment and training to improve Uruguay's interoperability with U.S. and international peacekeeping forces. The United States provided Uruguay with $238,000 in International Military Education and Training (IMET) in FY2008 and $250,000 in IMET in FY2009. Under the Obama Administration's FY2010 request, Uruguay would receive $1.7 million in U.S. assistance, including $1 million in Foreign Military Financing (FMF) and $480,000 in IMET.
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On November 29, 2009, Senator José "Pepe" Mujica of the ruling center-left Broad Front coalition was elected president of Uruguay, a relatively economically developed and politically stable South American country of 3.5 million people. Mujica, a former leader of the leftist Tupamaro urban guerilla movement that fought against the Uruguayan government in the 1960s and 1970s, defeated former President Luis Alberto Lacalle (1990-1995) of the center-right National Party in the country's sixth consecutive democratic election since its 12-year dictatorship ended in 1985. Mujica was forced to contest a runoff after he failed to win an absolute majority of the vote in the October 2009 first-round election. In legislative elections held concurrently with the first-round vote, the Broad Front retained its majorities in both houses of the Uruguayan Congress. The new legislature and President are to be inaugurated to their respective five-year terms on February 15 and March 1, 2010. Mujica will replace popular incumbent President Tabaré Vázquez, who was constitutionally ineligible to run for a second consecutive term. Vázquez's 2004 victory ended 170 years of political domination by the National and Colorado parties. Throughout his term, Vázquez has followed the moderate social democratic paths of the left-of-center governments of Brazil and Chile, advancing market-oriented economic policies while instituting social welfare programs intended to reduce poverty and inequality. The Vázquez Administration's policies appear to have been reasonably successful, as they—along with a boom in global commodity prices—have contributed to several years of strong economic growth and considerable reductions in poverty. Beyond economic and social welfare policy, Vázquez has done much to address Uruguay's dictatorship-era human rights violations and expand rights to the country's homosexual population. Uruguay has enjoyed friendly relations with the United States since its transition back to democracy, though it traditionally has had closer ties to Europe and its South American neighbors, Argentina and Brazil. Commercial ties between Uruguay and the United States have expanded substantially in recent years, with the countries signing a bilateral investment treaty in 2004 and a Trade and Investment Framework Agreement in January 2007. The United States and Uruguay have also cooperated on military matters, with both countries playing significant roles in the United Nations Stabilization Mission in Haiti. Relations are likely to remain close in the coming years as the Obama Administration and President-elect Mujica have announced their mutual desire to further strengthen bilateral ties. On September 14, 2009, the ATPDEA Expansion and Extension Act of 2009 (S. 1665, Lugar) was introduced in the Senate. Among other provisions, the bill would amend the Andean Trade Promotion and Drug Eradication Act (Title XXXI of the Trade Act of 2002, P.L. 107-210) to provide unilateral trade preferences to Uruguay. Under the bill, certain Uruguayan products, such as wool-based textiles, would be eligible to receive duty-free or reduced tariff treatment until December 31, 2012. This report examines recent political and economic developments in Uruguay as well as issues in U.S.-Uruguayan relations.
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The National Security Council (NSC) has been an integral part of U.S. national security policymaking since 1947. Of the various organizations in the Executive Office of the President that have been concerned with national security matters, the NSC is the most important and the only one established by statute. The NSC lies at the heart of the national security apparatus, being the highest coordinative and advisory body within the government in this area aside from the President's Cabinet. The Cabinet has no statutory role, but the NSC does. This study reviews the organizational history of the NSC and other related components of the Executive Office and their changing role in the national security policy process. It is intended to provide information on the NSC's development as well as subsequent usage. This study is not intended to be a comprehensive organizational history of all components of the national security policy process nor of the process itself as a whole. Moreover, the high sensitivity and security classification of the NSC's work and organization limit available sources. It is also important to keep in mind the distinction between the NSC's statutory membership (i.e., the President, Vice President, Secretary of State, Secretary of Defense, and Secretary of Energy) and its staff (i.e., the National Security Adviser and his assistants). These two groups have very different roles and levels of influence. Successful national security policymaking is based on careful analysis of the international situation, including diplomatic, economic, intelligence, military, and morale factors. Based on a comprehensive assessment, effective government leaders attempt to attain their goals by selecting the most appropriate instrument of policy, whether it is military, diplomatic, economic, based on the intelligence services, or a combination of more than one. Although this approach has been an ideal throughout the history of international relations, prior to World War II, U.S. Presidents focused primarily on domestic matters and lacked organizational support to integrate national security policies. They relied instead on ad hoc arrangements and informal groups of advisers. However, in the early 1940s, the complexities of global war and the need to work together with allies led to more structured processes of national security decision making to ensure that the efforts of the State, War, and Navy Departments were focused on the same objectives. There was an increasingly apparent need for an organizational entity to support the President in looking at the multiplicity of factors, military and diplomatic, that had to be faced during wartime and in the early postwar months when crucial decisions had to be made regarding the future of Germany and Japan and a large number of other countries. Given continuing worldwide responsibilities in the postwar years that involved active diplomacy, sizable military forces, sophisticated intelligence agencies, in addition to economic assistance in various forms, the United States established organizational mechanisms to analyze the international environment, identify priorities, and recommend appropriate policy options. Four decades later, the end of the Cold War saw the emergence of new international concerns, including transnational threats such as international terrorism and drug trafficking, that have continued to require the coordination of various departments and agencies concerned with national security policies. Coordinative mechanisms to implement policy are largely creations of the executive branch, but they directly influence choices that Congress may be called upon to support and fund. Congress thus takes interest in the processes by which policies and the roles of various participants are determined. Poor coordination of national security policy can result in calls for Congress to take actions that have major costs, both international and domestic, without the likelihood of a successful outcome. Effective coordination, on the other hand, can mean the achievement of policy goals with minimal losses of human lives while providing the opportunity to devote material resources to other needs. Throughout most of the history of the United States, until the 20 th century, policy coordination centered on the President, who was virtually the sole means of such coordination. The Constitution designates the President as Commander-in-Chief of the Armed Forces (Article II, Section 2) and grants him broad powers in the areas of foreign affairs (Article II, Section 2), powers that have expanded considerably in the 20 th century through usage. Given limited U.S. foreign involvements for the first 100 or so years under the Constitution, the small size of the Armed Forces, the relative geographic isolation of the nation, and the absence of any proximate threat, the President, or his executive agents in the Cabinet, provided a sufficient coordinative base. However, the advent of World War I, which represented a modern, complex military effort involving broad domestic and international coordination, forced new demands on the system that the President alone could not meet. In 1916, the Council of National Defense was established by statute (Army Appropriation Act of 1916). It reflected proposals that went back to 1911 and consisted of the Secretaries of War, Navy, Interior, Agriculture, Commerce and Labor. The statute also allowed the President to appoint an advisory commission of outside specialists to aid the Council. The Council of National Defense was intended as an economic mobilization coordinating group, as reflected by its membership—which excluded the Secretary of State. His inclusion would have given the Council a much wider coordinative scope. Furthermore, the authorizing statute itself limited the role of the Council basically to economic mobilization issues. The Council of National Defense was disbanded in 1921, but it set a precedent for coordinative efforts that would be needed in World War II. The President remained the sole national security coordinator until 1938, when the prewar crisis began to build in intensity, presenting numerous and wide-ranging threats to the inadequately armed United States. The State Department, in reaction to reports of Axis activities in Latin America, proposed that interdepartmental conferences be held with War and Navy Department representatives. In April 1938, Secretary of State Cordell Hull, in a letter to President Franklin Roosevelt, formally proposed the creation of a standing committee made up of the second ranking officers of the three departments, for purposes of liaison and coordination. The President approved this idea, and the Standing Liaison Committee, or Liaison Committee as it was also called, was established, the members being the Under Secretary of State, the Chief of Staff of the Army, and the Chief of Naval Operations. The Standing Liaison Committee was the first significant effort toward interdepartmental liaison and coordination, although its work in the area was limited and uneven. The Liaison Committee largely concentrated its efforts on Latin American problems, and it met irregularly. Although it did foster some worthwhile studies during the crisis following the fall of France, it was soon superseded by other coordinative modes. It was more a forum for exchanging information than a new coordinative and directing body. An informal coordinating mechanism, which complemented the Standing Liaison Committee, evolved during the weekly meetings established by Secretary of War Henry L. Stimson, who took office in June 1940. Stimson arranged for weekly luncheons with his Navy counterpart, Frank Knox, and Cordell Hull, but these meetings also did not fully meet the growing coordinative needs of the wartime government. In May 1940 President Roosevelt used the precedent of the 1916 statute and established the National Defense Advisory Council (NDAC), composed of private citizens with expertise in specific economic sectors. As with the earlier Council of National Defense, NDAC was organized to handle problems of economic mobilization; and by the end of the year it had given way to another organization in a succession of such groups. During the war, there were a number of interdepartmental committees formed to handle various issues, and, while these did help achieve coordination, they suffered from two problems. First, their very multiplicity was to some degree counter-productive to coordination, and they still represented a piecemeal approach to these issues. Second, and more important, these committees in many cases were not advising the President directly, but were advising his advisers. Although their multiplicity and possible overlapping fit Roosevelt's preferred working methods, they did not represent coordination at the top. Roosevelt ran the war largely through the Joint Chiefs of Staff (JCS), who were then an ad hoc and de facto group, and through key advisers such as Harry Hopkins and James F. Byrnes, and via his own personal link with British Prime Minister Winston Churchill. The weekly meetings arranged by Stimson evolved, however, into a significant coordinative body by 1945, with the formal creation of the State, War, Navy Coordinating Committee (SWNCC). SWNCC had its own secretariat and a number of regional and topical subcommittees; its members were assistant secretaries in each pertinent department. The role of SWNCC members was to aid their superiors "on politico-military matters and [in] coordinating the views of the three departments on matters in which all have a common interest, particularly those involving foreign policy and relations with foreign nations." SWNCC was a significant improvement in civilian-military liaison, and meshed well with the JCS system; it did not, however, concern itself with fundamental questions of national policy during the early months of the Cold War. SWNCC operated through the end of the war and beyond, becoming SANACC (State, Army, Navy, Air Force Coordinating Committee) after the National Security Act of 1947. It was dissolved in 1949, by which time it had been superseded by the NSC. The creation of SWNCC, virtually at the end of the war, and its continued existence after the surrender of Germany and Japan reflected the growing awareness within the federal government that better means of coordination were necessary. The World War II system had largely reflected the preferred working methods of President Roosevelt, who relied on informal consultations with various advisers in addition to the JCS structure. However, the complex demands of global war and the post-war world rendered this system inadequate, and it was generally recognized that a return to the simple and limited prewar system would not be possible if the United States was to take on the responsibilities thrust upon it by the war and its aftermath. The NSC was not created independently, but rather as one part of a complete restructuring of the entire national security apparatus, civilian and military, including intelligence efforts, as accomplished in the National Security Act of 1947. Thus, it is difficult to isolate the creation of the NSC from the larger reorganization, especially as the NSC was much less controversial than the unification of the military and so attracted less attention. As early as 1943, General George C. Marshall, Army Chief of Staff, had proposed that the prospect of a unified military establishment be assessed. Congress first began to consider this idea in 1944, with the Army showing interest while the Navy was opposed. At the request of the Navy these investigations were put off until 1945, although by then it was clear to Secretary of the Navy James Forrestal that President Truman, who had come to the White House upon the death of President Roosevelt in April 1945, favored some sort of reorganization. Forrestal believed that outright opposition would not be a satisfactory Navy stance. He also realized that the State Department had to be included in any new national security apparatus. Therefore, he had Ferdinand Eberstadt, a leading New York attorney and banker who had served in several high-level executive branch positions, investigate the problem. With respect to the formation of the NSC, the most significant of the three questions posed by Forrestal to Eberstadt, was: What form of postwar organization should be established and maintained to enable the military services and other governmental departments and agencies most effectively to provide for and protect our national security? Eberstadt's response to this question covered the military establishment, where he favored three separate departments and the continuation of the JCS, as well as the civilian sphere, where he suggested the formation of two new major bodies "to coordinate all these [civilian and military] elements." These two bodies he called the National Security Council (NSC), composed of the President, the Secretaries of State and of the three military departments, the JCS "in attendance," and the chairman of the other new body, the National Security Resources Board (NSRB). Eberstadt also favored the creation of a Central Intelligence Agency (CIA) under the NSC. Eberstadt's recommendations clearly presaged the eventual national security apparatus, with the exception of a unified Department of Defense. Furthermore, it was a central point in Forrestal's plans for holding the proposed reorganization to Navy desires, bringing in the State Department, as he desired, and hopefully obviating the need for some coalescence of the military services. The NSC was also a useful negotiating point for Forrestal with the Army, as Eberstadt had described one of its functions as being the "building up [of] public support for clear-cut, consistent, and effective foreign and military policies." This would appeal to all the service factions as they thought back on the lean and insecure prewar years. War-Navy negotiations over the shape of the reorganization continued throughout 1946 and into 1947. However, some form of central coordination, for a while called the Council of Common Defense, was not one of the contentious issues. By the end of May 1946, agreement had been reached on this and several other points, and by the end of the year the two sides had agreed on the composition of the new coordinative body. The creation of the NSC was one of the least controversial sections of the National Security Act and so drew little attention in comparison with the basic concept of a single military department, around which most of the congressional debate centered. The concept of a regular and permanent organization for the coordination of national security policy was as widely accepted in Congress as in the executive. When the NSC was considered in debate, the major issues were the mechanics of the new organization, its membership, assurances that it would be a civilian organization and would not be dominated by the new Secretary of the National Military Establishment, and whether future positions on the NSC would be subject to approval by the Senate. The NSC was created by the National Security Act, which was signed by the President on July 26, 1947. The NSC appears in Section 101 of Title I, Coordination for National Security, and its purpose is stated as follows: (a) ... The function of the Council shall be to advise the President with respect to the integration of domestic, foreign, and military policies relating to the national security so as to enable the military services and the other departments and agencies of the Government to cooperate more effectively in matters involving the national security. (b) In addition to performing such other functions as the President may direct, for the purpose of more effectively coordinating the policies and functions of the departments and agencies of the Government relating to the national security, it shall, subject to the direction of the President, be the duty of the Council (1) to assess and appraise the objectives, commitments, and risks of the United States in relation to our actual and potential military power, in the interest of national security, for the purpose of making recommendations to the President in connection there with; and (2) to consider policies on matters of common interest to the departments and agencies of the Government concerned with the national security, and to make recommendations to the President in connection therewith.... (d) The Council shall, from time to time, make such recommendations, and such other reports to the President as it deems appropriate or as the President may require. The following officers were designated as members of the NSC: the President; the Secretaries of State, Defense, Army, Navy, and Air Force; and the Chairman of the National Security Resources Board. The President could also designate the following officers as members "from time to time:" secretaries of other executive departments and the Chairmen of the Munitions Board and the Research and Development Board. Any further expansion required Senate approval. The NSC was provided with a staff headed by a civilian executive secretary, appointed by the President. The National Security Act also established the Central Intelligence Agency under the NSC, but the Director of Central Intelligence (DCI) was not designated as an NSC member. The act also created a National Military Establishment, with three executive departments (Army, Navy, and Air Force) under a Secretary of Defense. Implicit in the provisions of the National Security Act was an assumption that the NSC would have a role in ensuring that the U.S. industrial base would be capable of supporting national security strategies. The Chairman of the National Security Resources Board, set up by the same act to deal directly with industrial base and civilian mobilization issues, was provided a seat on the NSC. Over the years, however, these arrangements proved unsatisfactory and questions of defense mobilization and civil defense were transferred to other federal agencies and the membership of the NSC was limited to the President, Vice President, the Secretary of State and the Secretary of Defense. Thus, the need for a coordinative entity that had initially been perceived to center on economic mobilization issues during World War I had evolved to one that engaged the more permanent themes of what had come to be known as national security policy. The creation of the NSC was a definite improvement over past coordinative methods and organization, bringing together as it did the top diplomatic, military, and resource personnel with the President. The addition of the CIA, subordinate to the NSC, also provided the necessary intelligence and analyses for the Council so that it could keep pace with events and trends. The changeable nature of its organization and its designation as an advisory body to the President also meant that the NSC was a malleable organization, to be used as each President saw fit. Thus, its use, internal substructure, and ultimate effect would be directly dependent on the style and wishes of the President. Early Use . The NSC first met on September 26, 1947. President Truman attended the first session, but did not attend regularly thereafter, thus emphasizing the NSC's advisory role. In his place, the President designated the Secretary of State as chairman, which also was in accord with the President's view of the major role that the State Department should play. Truman viewed the NSC as a forum for studying and appraising problems and making recommendations, but not one for setting policy or serving as a centralized office to coordinate implementation. The NSC met irregularly for the first 10 months. In May 1948, meetings twice a month were scheduled, although some were canceled, and special sessions were convened as needed. The Hoover Commission . The first review of NSC operations came in January 1949 with the report of the Hoover Commission (the Commission on Organization of the Executive Branch of the Government), which found that the NSC was not fully meeting coordination needs, especially in the area of comprehensive statements of current and long-range policies. The Hoover Commission recommended that better working-level liaison between the NSC and JCS be developed, that the Secretary of Defense become an NSC member, replacing the service secretaries, and that various other steps be taken to clarify and tighten roles and liaison. 1949 Amendments . In January 1949, President Truman directed the Secretary of the Treasury to attend all NSC meetings. In August 1949, amendments to the National Security Act were passed (P.L. 81-216), changing the membership of the NSC to consist of the following officers: the President, Vice President, Secretaries of State and Defense, and Chairman of the National Security Resources Board. This act also designated the JCS as "the principal military advisers to the President," thus opening the way for their attendance, beginning in 1950, even though the Service Secretaries were excluded. In August 1949, by Reorganization Plan No. 4, the NSC also became part of the Executive Office of the President, formalizing a de facto situation. Subsequent Usage and Evaluation . The outbreak of the Korean War in June 1950 brought greater reliance on the NSC system. The President ordered weekly meetings and specified that all major national security recommendations be coordinated through the NSC and its staff. Truman began presiding regularly, chairing 62 of the 71 meetings between June 1950 and January 1953. The NSC became to a much larger extent the focus of national security decision making. Still, the NSC's role remained limited. Truman continued to use alternate sources of information and advice. As one scholar has concluded: Throughout his administration Truman's use of the NSC process remained entirely consistent with his views of its purpose and value. The president and his secretary of state remained completely responsible for foreign policy. Once policy decisions were made, the NSC was there to advise the president on matters requiring specific diplomatic, military, and intelligence coordination. President Dwight Eisenhower, whose experience with a well-ordered staff was extensive, gave new life to the NSC. Under his Administration, the NSC staff was institutionalized and expanded, with clear lines of responsibility and authority, and it came to closely resemble Eberstadt's original conception as the President's principal arm for formulating and coordinating military, international, and internal security affairs. Meetings were held weekly and, in addition to Eisenhower himself and the other statutory members, participants often included the Secretary of the Treasury, the Budget Director, the Chairman of the JCS, and the Director of Central Intelligence. Organizational Changes. In his role as chairman of the NSC, Eisenhower created the position of Special Assistant for National Security Affairs, who became the supervisory officer of the NSC, including the Executive Secretary. The Special Assistant—initially Robert Cutler, a banker who had served under Stimson during World War II—was intended to be the President's agent on the NSC, not an independent policymaker in his own right, and to be a source of advice. Eisenhower established two important subordinate bodies: the NSC Planning Board, which prepared studies, policy recommendations, and basic drafts for NSC coordination, and the Operations Coordinating Board, which was the coordinating and integrating arm of the NSC for all aspects of the implementation of national security policy. By the end of the Eisenhower Administration, the NSC membership had changed slightly. The National Security Resources Board had been abolished by Reorganization Plan No. 3 in June 1953, and this vacancy was then filled by the Director of the Office of Civil and Defense Mobilization. In 1956, President Eisenhower, partly in response to recommendations of the second Hoover Commission on the Organization of the Executive Branch of Government, also established the Board of Consultants on Foreign Intelligence Activities in the Executive Office. This board was established by Executive Order 10656 and was tasked to provide the President with independent evaluations of the U.S. foreign intelligence effort. The Board of Consultants lapsed at the end of the Eisenhower Administration, but a similar body, the President's Foreign Intelligence Advisory Board (PFIAB), was created by President Kennedy after the Bay of Pigs failure. PFIAB was itself abolished in 1977, but was resurrected during the Reagan Administration in 1981. Members are selected by the President and serve at his discretion. Evaluation . The formal structure of the NSC under Eisenhower allowed it to handle an increasing volume of matters. Its work included comprehensive assessments of the country's basic national security strategy, which were designed to serve as the basis for military planning and foreign policymaking. The complexity of NSC procedures under Eisenhower and its lengthy papers led to charges that quantity was achieved at the expense of quality and that the NSC was too large and inflexible in its operations. Critics alleged that it was unable to focus sufficiently on major issue areas. Some observers also held that NSC recommendations were often compromises based on the broadest mutually acceptable grounds from all the agencies involved, leading to a noticeable lack of innovative national security ideas. The Eisenhower NSC did, nonetheless, establish national security policies that were accepted and implemented throughout the government and that laid the basis for sustained competition with the Soviet Union for several decades. It may be that the NSC process became overly bureaucratic towards the end of the Eisenhower Administration, perhaps affected by the President's declining health. Hearings by the Senate Government Operations Committee in 1960-1961, led by Senator Henry Jackson, produced proposals for a substantial reorientation of this "over-institutionalized" structure, and its replacement by a smaller, less formal NSC that would offer the President a clear choice of alternatives on a limited number of major problems. Some scholars have noted that Eisenhower himself found the lengthy NSC procedures burdensome and argue that many key decisions were made in the Oval Office in the presence of only a few advisers. Nonetheless, Eisenhower saw the NSC process as one which produced a consensus within the Administration which would lead to effective policy implementation. According to this view, the process was largely one of education and clarification. A recent analysis has concluded, that NSC meetings brought Eisenhower's thinking into sharper focus by forcing him to weigh it against a range of alternatives that were presented and defended by individuals whose opinions the president took seriously and whose exposure to requisite information and expertise he assured. These individuals, in turn, were educated about the problems in the same way as Eisenhower. President John Kennedy, who did not share Eisenhower's preference for formal staff procedures, accepted many of the recommendations of the Jackson Committee and proceeded to dismantle much of the NSC structure, reducing it to its statutory base. Staff work was carried out mainly by the various departments and agencies, and personal contacts and ad hoc task forces became the main vehicles for policy discussion and formulation. The NSC was now one among many sources of advice. Kennedy's National Security Adviser, McGeorge Bundy, played an important policy role directly under the President. The nature of this position was no longer that of a "neutral keeper of the machinery"; for the first time, the Adviser emerged in an active policymaking role, in part because of the absence of any definite NSC process that might preoccupy him. Kennedy met regularly with the statutory NSC members and the DCI, but not in formal NSC sessions. Studies and coordination were assigned to specific Cabinet officers or subordinates in a system that placed great emphasis on individual responsibility, initiative and action. The Secretary of State, Dean Rusk, was initially seen as the second most important national security official in the President's plans, and Kennedy indicated that he did not want any other organizations interposed between him and Rusk. However, Kennedy came to be disappointed by the State Department's inability or unwillingness to fill this role as the leading agency in national security policy. At the beginning of the Kennedy Administration, the NSC was reportedly cut from seventy-one to forty-eight and "in place of weighty policy papers, produced at regular intervals, Bundy's staff would produce crisp and timely National Security Action Memoranda (NSAMs). The new name signified the premium that would be placed on 'action' over 'planning.'" With an emphasis on current operations and crisis management, special ad hoc bodies came into use. The outstanding example of this was the Executive Committee (ExCom), formed in October 1962 during the Cuban Missile Crisis, which orchestrated the U.S. response to Soviet moves to introduce missiles in Cuba. Organizational Changes. Kennedy added the Director of the Office of Emergency Planning to the NSC, replacing the Director of the Office of Civil and Defense Mobilization. It was planned that the new appointee would fill the role originally envisioned for the National Security Resources Board in coordinating emergency management of resources. The Planning Board and the Operations Control Board were both abolished (by Executive Order 10920) in order to avoid the Eisenhower Administration's distinction between planning and operations. The NSC staff was reduced, and outside policy experts were brought in. Bundy noted that they were all staff officers: Their job is to help the President, not to supersede or supplement any of the high officials who hold line responsibilities in the executive departments and agencies. Their task is that of all staff officers: to extend the range and enlarge the direct effectiveness of the man they serve. Heavy responsibilities for operation, for coordination, and for diplomatic relations can be and are delegated to the Department of State. Full use of all the powers of leadership can be and is expected in other departments and agencies. There remains a crushing burden of responsibility, and of sheer work, on the President himself; there remains also the steady flow of questions, of ideas, of executive energy which a strong President will give off like sparks. If his Cabinet officers are to be free to do their own work, the President's work must be done—to the extent that he cannot do its himself—by staff officers under his direct oversight. But this is, I repeat, something entirely different from the interposition of such a staff between the President and his Cabinet officers. Evaluation . Some critics attacked the informality of the system under Kennedy, arguing that it lacked form and direction, as well as coordination and control, and that it emphasized current developments at the expense of planning. As noted, Kennedy himself was disappointed by the State Department, on which he had hoped to rely. In retrospect, Kennedy's system was designed to serve his approach to the presidency and depended upon the President's active interest and continuous involvement. Some critics, both at the time and subsequently, have suggested that the informal methods that the Kennedy Administration adopted contributed to the Bay of Pigs debacle and the confusion that surrounded U.S. policy in the coup against President Diem of South Vietnam in 1963. President Lyndon Johnson's sudden accession to power, the need for a show of continuity, and pressures from the upcoming presidential election all forced Johnson, at least until 1965, to rely heavily on Kennedy's system and personnel, especially as Johnson was less familiar with national security than domestic affairs. Organizational Changes . Johnson, like Truman, sought out advice from a number of sources other than the NSC and its member departments, although he relied heavily on the Secretaries of State and Defense, Dean Rusk and Robert McNamara. The institutional system that evolved under Johnson depended heavily on the ability of the State Department to handle the planning and coordination process. This system came about from a study headed by General Maxwell Taylor in 1966 that led to National Security Action Memorandum (NSAM) 341 which concluded that it was necessary to enhance the State Department's role in the policy process and to improve "country team expertise" in Washington, which was felt to be far below that in the various embassies. NSAM 341 led to a new system of interagency committees. The most important of these was the Senior Interdepartmental Group (SIG), whose members were: the Under Secretary of State, Deputy Secretary of Defense, Administrator of the Agency for International Development, DCI, JCS Chairman, Director of the U.S. Information Agency, and the National Security Adviser. In support of the SIG were a number of Interdepartmental Regional Groups (IRGs), each headed by the appropriate Assistant Secretary of State. Within the NSC itself, structure and membership remained what they had been under Kennedy (with the Office of Emergency Planning changing title to the Office of Emergency Preparedness in 1968), although the title Special Assistant to the President for National Security Affairs was shortened to Special Assistant when Walt W. Rostow replaced Bundy in 1966. This reflected the frequent diversion of the occupant of this position away from NSC affairs to more general concerns. Evaluation . Johnson's NSC system barely existed as such. The role of the NSC staff was more restricted, and budget and personnel both declined. Key decisions, those especially regarding the war in Vietnam, were made during Tuesday lunches attended by the President, the Secretaries of State and Defense, and a few other invited officials. Johnson's informal system was not a wholly successful replacement for the highly structured system developed in the Eisenhower Administration. The SIG/IRG system fulfilled neither old functions nor the objectives set forth in NSAM 341. Although this new structure was dominated by the State Department, there was little enthusiasm for the system as a whole on the part of the department's leadership. The State Department did not provide decisive leadership and settled for a system of consensus opinions. Vagueness as to authority in the SIG/IRG system reduced its effect on the bureaucracies. Moreover, there was an insufficient allocation of resources for staff support for the new organization. By 1969, the NSC existed largely in name. Johnson conferred constantly with a wide number of advisers within and outside government; while he respected institutional responsibilities, his own decision making was an intensely personal process. Experience in the Eisenhower Administration clearly had a formative effect on President Richard Nixon's approach to national security organization. Wanting to switch White House priorities from current operations and crisis management to long-range planning, Nixon revived the NSC. Nixon's NSC staff structure resembled Eisenhower's, with an emphasis on examining policy choices and alternatives, aiming for a number of clear options reaching the highest level, where they would be treated systematically and then effectively implemented. Nixon made it clear that he wanted distinct options presented to him from which he could choose, rather than consensus opinions requiring only acceptance or rejection. Nixon used an NSC framework similar to that set in place by Eisenhower but intended, as much as Kennedy, to give the NSC staff a powerful policy role. Organizational Changes . While adopting the basic form of the Eisenhower NSC, Nixon streamlined its procedures. The position of Assistant for National Security Affairs was revived, and Henry Kissinger, a Harvard professor and occasional government adviser, was named to fill it. NSC meetings were limited to the statutory members, with Kissinger and the JCS Chairman also sitting in and the DCI attending for intelligence matters. In January 1973, the Office of Emergency Preparedness was abolished along with the NSC seat that originally had belonged to the Chairman of the National Security Resources Board. Six interdepartmental groups, similar to Johnson's IRGs, formed the NSC's support network, preparing basic studies and developing policy options. However, the influence of the State Department was reduced, and Kissinger's influence soon predominated. Four major new bodies were created: Washington Special Action Group (WASAG): headed by Kissinger and designed to handle contingency planning and crises. NSC Intelligence Committee: chaired by Kissinger and responsible for providing guidance for national intelligence needs and continuing evaluations of intelligence products. Defense Program Review Committee: chaired by Kissinger and designed to achieve greater integration of defense and domestic considerations in the allocation of natural resources. This committee was intended to allow the President, through the NSC, to gain greater control over the defense budget and its implications and policy requirements. As a result of opposition by Defense Secretary Melvin Laird, its role was, however, significantly circumscribed. Senior Policy Review Group: chaired by Kissinger, this group directed and reviewed policy studies and also served as a top level deliberative body. This system had two principal objectives: the retention of control at the top, and the development of clear alternative choices for decisionmakers. Evaluation . Most of the criticism of the Nixon NSC centered on the role played by Kissinger. His position in a number of the key committees gave him control over virtually the entire NSC apparatus, leading to charges that the system, for all its efficiency, now suffered from over centralization, and later from domination by one man. During Nixon's first term, Kissinger competed with the State Department for control of foreign policy, and soon overshadowed Secretary of State William Rogers. Critics felt that Kissinger stifled dissent within the NSC and the rest of the national security apparatus. Kissinger's venture into "shuttle diplomacy" and the unique circumstances of the Watergate scandal further emphasized his key role. Kissinger's accession to Rogers' position in September 1973, while retaining his National Security Council post, brought renewed criticism of his role. The direct involvement of the NSC Adviser in diplomatic negotiations set a precedent that some observers have criticized as undercutting the established responsibilities of the State Department and as an attempt to orchestrate national security policy beyond the reach of congressional oversight. Kissinger's predominance derived from his unique intellectual abilities, skill at bureaucratic maneuvering, and the support of a President determined to act boldly in international affairs without being restrained by bureaucratic or congressional inhibitions. It was achieved at a time of profound political differences over foreign policy in which Administration and congressional goals were, on occasion, diametrically opposed. However, under President Nixon, the NSC was restored to a central role in the policy process, acting as the major vehicle and conduit for the formation of national security policy. President Gerald Ford, who inherited his predecessor's NSC, took no major steps to change the system per se, although Kissinger was replaced as National Security Adviser by Air Force Lieutenant General Brent Scowcroft in November 1975. The national security policy process continued to be dominated by Kissinger, who retained his position as Secretary of State, an indication of the preeminence he had achieved, as well as a reflection of Ford's limited experience in the conduct of foreign policy prior to his sudden accession. In June 1975, the Commission on the Organization of the Government for the Conduct of Foreign Policy, also known as the Murphy Commission, issued a report on ways to more effectively formulate and implement foreign policy. Its recommendations dealt in part with the Executive Office of the President and the NSC structure. Implicitly criticizing the expansive role of the NSC staff under Kissinger, the Commission recommended that only the President should have line responsibility in the White House; that staff officials should not themselves issue directives to departmental officials; that, in the future, the National Security Adviser have no other official responsibilities; that the Secretary of the Treasury be made a statutory member of the NSC and that the NSC's scope be expanded to include major international economic policy issues; and that senior officials concerned with domestic policy be invited to NSC meetings when issues with domestic implications were discussed. The Commission also considered general alternative structures and pointed out their basic advantages and disadvantages. It also noted that, Policymaking is not a branch of mechanics; however wisely designed or carefully utilized, no machinery is adequate to assure its results. The selective use of various mechanisms and forums in ways which fit the particular issues, positions, and personalities involved is as much a part of the President's responsibility as is the necessity, finally, to decide the substantive issues. There were no immediate steps taken to implement the Report's recommendations. Organizational Changes . In February 1976, President Ford issued Executive Order 11905 reorganizing the intelligence community, in response to ongoing investigations in that area. This order, among other things, reaffirmed the NSC's overall policy control over the foreign intelligence community. Some changes were made in the NSC sub-structure, including the abolition of the NSC Intelligence Committee. The so-called 40 Committee of the NSC, which was responsible for covert operations and certain sensitive foreign intelligence operations, was replaced by the Operations Advisory Group. This Executive Order also created the Intelligence Oversight Board in the Executive Office (subsequently disbanded in 1993). It was composed of three civilians and was tasked with reviewing the propriety and legality of the intelligence agencies' operations. In December 1975, Ford vetoed a bill that would have made the Secretary of the Treasury a statutory member of the NSC, saying that the Treasury Secretary is invited to participate in NSC affairs having significant economic and monetary implications, but that there is no need to involve him in all NSC activities. Evaluation . These changes did not detract from the central role that the NSC had achieved under President Nixon. Kissinger's loss of his dual position did not seem to lessen his influence over the policy process, leading critics to charge that this change was largely cosmetic. The new National Security Adviser, Brent Scowcroft, had previously served as Kissinger's deputy on the NSC staff, and was unlikely to challenge Kissinger's pre-eminence. The Ford NSC reflected the close relationship between the President and the Secretary of State, a relationship that itself became a source of controversy both in the Republican primaries of 1976 as well as the ensuing general election. Critics continued to maintain that the Ford Administration decision making was secretive, impervious to congressional input, and out of touch with public opinion. Under President Jimmy Carter, steps were taken to end the dominant role of the NSC staff and make it a more coequal and cooperating partner with the Departments of State and Defense. The NSC underwent a major reorganization in the new Administration. Organizational Changes . Upon taking office in January 1977, President Carter issued a directive (PD-2) reorganizing the NSC staff. The avowed purpose of the reorganization was "to place more responsibility in the departments and agencies while insuring that the NSC, with my Assistant for National Security Affairs, continues to integrate and facilitate foreign and defense policy decisions." The number of NSC staff committees was reduced from seven to two, the Policy Review Committee (PRC) and the Special Coordination Committee (SCC). The functions of these two committees were as follows: Policy Review Committee: the PRC had responsibility for subjects which "fall primarily within a given department but where the subject also has important implications for other departments and agencies." Examples were "foreign policy issues that contain significant military or other interagency aspects; defense policy issues having international implications and the coordination of the annual Defense budget with foreign policy objectives; the preparation of a consolidated national intelligence budget and resource allocation for the Intelligence Community...; and those international economic issues pertinent to the U.S. foreign policy and security." Executive Order 12036 of January 24, 1978, added responsibility for the establishment of national foreign intelligence requirements and priorities, and periodic reviews and evaluations of national foreign intelligence products. The Vice President, the Secretaries of State and Defense, and the Assistant for National Security Affairs were members of the PRC; the DCI and the Chairman of the JCS also attended. The Secretary of the Treasury, the Chairman of the Council of Economic Advisers, and other officials attended when pertinent topics were being considered. Appropriate Cabinet officers chaired the PRC in accordance with matters being considered; the DCI was chairman when the PRC considered intelligence matters as specified in E.O. 12036. NSC Interdepartmental Groups, which dealt with specific issues at the direction of the President, were under the PRC. Special Coordination Committee: the SCC dealt with "specific, cross-cutting issues requiring coordination in the development of options and the implementation of Presidential decisions." These included "oversight of sensitive intelligence activities ... arms control evaluation; ... and crisis management." E.O. 12036 gave the SCC responsibility for sensitive foreign intelligence collection operations and counterintelligence. The SCC thus replaced WASAG and the Operations Advisory Group. Unlike the PRC, the SCC was chaired by the Assistant for National Security Affairs; other members were the Vice President, the Secretaries of State and Defense, and the DCI—or their deputies—and other officials attended when appropriate. When intelligence "special activities" were being considered, the members had to attend, as had the Attorney General, the Chairman of the JCS, and the Director of the Office of Management and Budget (OMB); for counterintelligence activities, the Director of the FBI attended. The initial emphasis of the NSC's role as a policy coordinator and "think tank" represented a clear reversal of the trend that had developed under Presidents Nixon and Ford. The staff of the NSC was reduced under the Carter Administration, and National Security Adviser Zbigniew Brzezinski established a number of regional and topical offices on the NSC staff that aimed at a more "collegial" approach to staff procedures. Although the PRC had a wider charter than the SCC, as a result of the growing importance of crisis management functions and the increasing influence of the National Security Adviser, initiative passed to the SCC and there were fewer PRC meetings. Evaluation . A rumored rivalry between Brzezinski and Secretary of State Cyrus Vance was not publicly evident during the first year of the Carter Administration, but reports of differences between the two men later increased dramatically as senior Administration officials advised different responses to such questions as Soviet and Cuban activities in Africa and the Iranian hostage question. Towards the end of the Administration, differences between Vance and Brzezinski became pronounced and were widely perceived as contributing to weak and vacillating policies. Carter's Director of Central Intelligence Stansfield Turner later wrote: National Security Advisers and Secretaries of State and Defense had clashed before, notably under President Nixon when Henry Kissinger was the Adviser. But because Nixon tended to follow Kissinger's advice more often than not, there was no stalemate, and foreign policy moved ahead in innovative ways. However, Jimmy Carter vacillated between Brzezinski and Vance, and they often canceled each other out. Vance, who had strongly opposed the ill-fated effort to rescue the U.S. hostages in Iran, finally resigned and was succeeded by Senator Edmund Muskie in April 1980. Brzezinski's outspokenness and his public role in policymaking became an issue, and led to calls for Senate confirmation of NSC advisers and closer congressional oversight of the NSC staff. There were also reports of infighting between Carter loyalists on the NSC staff and those who had worked for Vice President Walter Mondale, who had been given a major policy role. Campaigning for the presidency in 1980, Ronald Reagan criticized the divisions of the Carter Administration and promised to restore Cabinet leadership (as, in the 1976 campaign, he had criticized Henry Kissinger's predominant influence in the Ford Administration). Substituting Cabinet leadership for an active NSC proved, however, to be a significant challenge. Organizational Changes. After extensive delays and bureaucratic infighting, President Reagan signed a Presidential Directive (NSDD-2), which enhanced the role of the State Department in national security policymaking and downgraded that of the National Security Adviser. The various NSC sub-committees were to be chaired by State, Defense, and CIA officials, not NSC staff. The Reagan NSC included three Senior Interagency Groups (SIGs)—one for foreign policy, chaired by the Deputy Secretary of State; one for defense, chaired by the Deputy Secretary of Defense; and one for intelligence, chaired by the Director of Central Intelligence. There were also regional and functional interagency groups, chaired by representatives of various Cabinet departments. Crisis management formally became the direct responsibility of the Vice President. This structure, however, had major limitations. Observers and participants portray an absence of orderly decision making and uncertain lines of responsibility. As the Special Review Board (known as the Tower Board) appointed by the President to assess the proper role of the NSC system in the wake of the Iran-Contra revelations, pointedly noted: A President must at the outset provide guidelines to the members of the National Security Council, his National Security Adviser, and the National Security Council staff. These guidelines, to be effective, must include how they will relate to one another, what procedures will be followed, what the President expects of them. If his advisors are not performing as he likes, only the President can intervene. The Reagan Administration had a total of six National Security Advisers. Their history is poignant. The first, Richard Allen, did not have direct access to the President, but reported to him through Presidential Counselor Edwin Meese. Allen's tenure was brief; after accusations of influence peddling, he was replaced in January 1982 by Judge William Clark, a longtime Reagan associate who had served since the beginning of the Administration as Deputy Secretary of State. Clark, in turn, resigned in October 1983 to become Secretary of the Interior and his deputy, Robert McFarlane, became National Security Adviser. McFarlane was replaced in January 1986 by his deputy, Vice Admiral John Poindexter, and subsequently pleaded guilty to withholding information from Congress. Poindexter himself was relieved in the context of the Iran-Contra scandal in November 1986, and eventually went on trial for obstructing justice. An effort was made to restore NSC effectiveness under former Ambassador Frank Carlucci, who succeeded Poindexter in December 1986. When Carlucci was appointed Secretary of Defense, he was replaced by Army General Colin Powell in November 1987. Evaluation. Until the arrival of Carlucci, the Reagan NSC structure lacked a strong, politically attuned National Security Adviser that had characterized Administrations since 1961. It also lacked the administrative structure that existed under Eisenhower, Nixon, Ford, and Carter. The absence of either influential NSC Advisers or effective administrative machinery has been seen by many critics as a major factor contributing to the Iran-Contra misadventures. Allowing NSC committees to be chaired by Cabinet officials tended to reduce the possibility that all sides of a given issue would be laid before the full NSC or the President. The Tower Board noted: Most presidents have set up interagency committees at both a staff and policy level to surface issues, develop options, and clarify choices. There has typically been a struggle for the chairmanship of these groups between the National Security Adviser and the NSC staff on the one hand, and the cabinet secretaries and department officials on the other. Our review of the operation of the present system and that of other administrations where committee chairmen came from the Departments has led us to the conclusion that the system generally operates better when the committees are chaired by the individual with the greatest stake in making the NSC system work. We recommend that the National Security Adviser chair the senior-level committees of the NSC system. The Reagan Administration, in its efforts to avoid the dominant influence wielded by previous NSC Advisers, fell victim to perpetual bureaucratic intrigues. The efforts of politically weak NSC Advisers, especially McFarlane and Poindexter, to undertake White House initiatives covertly over the strong opposition of senior Cabinet officials and congressional leaders called into question the basic competence of the Administration. Another aspect of the Reagan NSC that came under heavy criticism was the involvement of NSC staff in covert actions. Although NSC staff efforts to manage certain crises, such as the capture of the Achille Lauro hijackers, were successful, the participation of NSC personnel, especially Lieutenant Colonel Oliver North, in operations run apart from the traditional intelligence apparatus, including efforts to gain the release of American hostages and to supply Nicaraguan insurgents, has been widely censured. Such efforts have been criticized as undercutting the agencies with responsibilities for such operations and which are accountable to congressional oversight committees; secondly, failing to take full advantage of the professional expertise available to the Intelligence Community, and potentially involving the country in misguided ventures. The Iran-Contra Committee recommended that "the members and staff of the NSC not engage in covert actions." Reagan's final two NSC Advisers, Carlucci and Powell, brought a period of greater stability to NSC operations and both eschewed participation in covert actions. After Poindexter's departure, Carlucci created a Senior Review Group that he himself chaired and that was composed of statutory NSC members (besides the President and Vice President). He also established a Policy Review Group that was chaired by his deputy and composed of second-ranking officials of NSC agencies. President Reagan's own role in the details of national security policymaking remains unclear. His policies on U.S.-Soviet relations, support for an aggressive struggle against international communism, and the need for strong military forces, including strategic defenses were well-known; such positions provided the overall goals for Administration officials. It is generally acknowledged, however, that unlike some of his predecessors, President Reagan did not himself engage in detailed monitoring of policy implementation. Some maintain that his NSC structure and the absence of strong NSC Advisers led directly to bureaucratic gridlock and ill-advised involvement of the NSC staff in covert actions. Others have concluded that the experience of the Reagan Administration demonstrates that a strong and efficient National Security Adviser and staff has become essential to national security policymaking, especially if the President himself does not provide detailed direction. The absence of such an Adviser, it is argued, will undermine the development and implementation of effective national security policies. Some subsequent historians, however, give Reagan higher marks for overall national security policy even if his NSC staff was often in flux. The Bush Administration saw the return of Brent Scowcroft as National Security Adviser. His tenure was marked by the absence of public confrontations with Cabinet officers and a close working relationship with the President. National Security Directive 1 (NSD-1) established three NSC sub-groups. The NSC Principals Committee, was composed of the Secretaries of State and Defense, the DCI, the Chairman of the JCS, the Chief of Staff to the President, and the National Security Adviser, who was the chairman. The NSC Deputies Committee, chaired by the Deputy National Security Adviser, was composed of second-ranking officials. There were also a number of NSC Policy Coordinating Committees, chaired by senior officials of the departments most directly concerned with NSC staff members serving as executive secretaries. The Bush NSC structure most closely resembled that of the Nixon and Ford Administrations in providing for a National Security Adviser chairing most of the key committees. The key differences lay in the personalities involved and the fact that political divisions over foreign policy, while important, lacked some of the emotional heat caused by controversies over Vietnam and Nicaragua. Secretary of State James Baker was a powerful figure in the Administration and a longtime political associate of the President; similarly, Secretary of Defense Dick Cheney himself had White House experience as chief of staff in the Ford Administration and served in a leadership post in the House of Representatives. On occasion, however, Bush did formulate policy within a narrow circle of White House aides. Evaluation. Whether because of the personalities of NSC principals, the structure of NSC committees or the determination among political opponents to concentrate on the domestic economy, the Bush NSC did not come in for the heavy criticisms that were levied against most of its predecessors. Most observers would probably judge that the Bush Administration created a reasonably effective policymaking machinery and avoided the mistakes of some of its predecessors. Arguably, a standard NSC organization had been created. The Administration successfully addressed most issues that resulted from the breakup of the Soviet Union and the unification of Germany along with the conduct of Desert Storm. President Clinton came into office with a determination to focus on domestic issues. His Administration sought to emphasize connections between international concerns and the domestic economy in such areas as trade, banking, and environmental standards. Anthony Lake, who had resigned in protest from the NSC Staff in the Nixon Administration and later served in the State Department in the Carter Administration, was appointed National Security Adviser, and continued in office until he resigned in March 1997. Lake's deputy, Samuel R. Berger, succeeded him, remaining until the end of the Clinton Administration. With the end of the Cold War, it was widely acknowledged that there was a need for closer integration of national security policy and international economic policy. A major Clinton Administration initiative was the establishment of a National Economic Council (NEC) to coordinate international economic policy which, many observers believed, had usually received short shrift from NSC staffs focused narrowly on diplomatic and security issues. The NEC, initially headed by Robert Rubin, who would subsequently become Treasury Secretary in 1995, was charged with coordinating closely with the NSC. To facilitate coordination some NEC staff were "double-hatted" as NSC officials. The close relationship has been credited with enhancing policy coordination at senior White House levels, although, according to some observers, the original promise was not realized as many aspects of international economic and trade policies became parts of major political disputes such as the North American Free Trade Agreement and most-favored-nation status for China. Some observers would have preferred to include a stronger international economic component within the NSC itself, but others have raised strong objections to such an approach on the grounds that national security policymaking, in significant measure the province of diplomats and military officers, is not as closely related to domestic political concerns as international economic policy. Proponents of the latter view argue that economic issues inevitably involve concerns of various domestic groups and the NSC is ill-suited to integrate them into its policymaking processes. Presidential Decision Directive (PDD) 2, Organization of the National Security Council, issued on January 20, 1993, expanded the NSC to include, in addition to statutory members and advisers, the Secretary of the Treasury, the U.S. Representative to the United Nations, the Assistant to the President for Economic Policy, and the Chief of Staff to the President. The Attorney General attended relevant meetings including those that discuss covert actions. The National Security Adviser determined the agenda of NSC meetings and ensured the preparation of necessary papers. The Clinton NSC continued the practice of designating the National Security Adviser as chairman of the Principals Committee of Cabinet-level officers. At a lower level, a Deputies Committee was chaired by the Deputy Assistant to the President for National Security Affairs and included representatives of the key Cabinet departments (as well as the Assistant to the Vice President for National Security Affairs). The Deputies Committee was also responsible for day-to-day crisis management. In addition, provision was made for a system of Interagency Working Groups, (IWG) some permanent, some ad hoc , to be established by the direction of the Deputies Committee and chaired by representatives of the relevant departments, the NEC or the NSC staff. The IWGs convened on a regular basis to review and coordinate the implementation of presidential decisions in their policy areas. Evaluation. In general, the Clinton NSC did not see the internecine bureaucratic warfare that had surfaced in earlier administrations. PDD 2 provided for a strong NSC staff. Lake, in his writings on national security policymaking prior to becoming National Security Adviser, reflected a keen appreciation of the disadvantages of bureaucratic infighting. He subsequently recalled that when he came into office, "My model for a national security adviser was that of the behind-the-scenes consensus builder who helped present the communal views of senior advisers to the President." After some months, nonetheless, Lake decided to change my approach. I would stay behind the scenes.... And I would do my best always to try to achieve consensus and to make sure that my colleagues' views always had a fair hearing with the President. But I would be less hesitant in voicing my own views when they differed from those of my colleagues, even if it prevented consensus or put me more at odds with them–whether on NATO enlargement, Bosnia, Haiti, or other issues. In 1999, the Clinton NSC staff played an important and influential role in shaping policy regarding Kosovo. Carefully attuned to shifts in U.S. public opinion, Berger, who succeeded Lake as National Security Adviser in March 1997, reportedly focused on the political dimension of policymaking and sought to avoid options that might lead to paralyzing debate in this country or other NATO states. He is reported to have helped the Administration steer a middle course between those who recommended a ground campaign against Serbia and those more ready to compromise with the Yugoslav leadership and, as a result, the Administration maintained a strong sense of unity throughout the Kosovo campaign. One press account suggested that "What may be Berger's distinctive accomplishment is to have put himself so preeminently at the center of decision-making while minimizing the historic antagonisms between national security advisers and secretaries of state and defense." In February 2001, President George W. Bush issued National Security Presidential Directive-1, Organization of the National Security Council System." The NSPD indicated that the NSC system was to advise and assist the President and "coordinate executive departments and agencies in the effective development and implementation" of national security policies. Among the statutory and other officials to be invited to attend NSC meetings, the Attorney General was to be asked to attend meeting pertaining to his responsibilities, both matters within the Justice Department's jurisdiction and those matters arising under the Attorney General's responsibilities in accordance with 28 U.S.C. 511 to give advice and opinion on questions of law. The National Security Adviser was charged with determining the agenda, ensuring necessary papers are prepared and recording NSC actions and presidential decisions. As had been the custom, the Principals Committee of the NSC consisted of relevant department heads and relevant advisory officials, and was chaired by the National Security Adviser. When economic issues were on the agenda the National Security Adviser and the Assistant to the President for Economic Policy were to work in concert. The NSC Deputies Committees was composed of deputy department heads, advisory officials and was chaired by the Deputy National Security Adviser. Lower-level coordination was effected by Policy Coordinating Committees, which were chaired by appointees of the Secretary of State, another Cabinet-level official, or the National Security Adviser. Subsequent to 9/11, the Intelligence Reform and Terrorism Prevention Act ( P.L. 108 - 458 ) abolished the position of Director of Central Intelligence and established a new position of Director of National Intelligence (DNI) with enhanced authorities over the entire Intelligence Community. The DNI replaced the DCI in NSC-level deliberations. Several accounts have described the key role of the NSC in undertaking a review of U.S. options in Iraq in late 2006 that resulted in the changes in tactics and force levels that have come to be known as the Surge. Although senior officials in DOD and the State Department were known to be skeptical of increasing troop levels, NSC staffers are reported to have argued that increased numbers of U.S. forces could provide the security to the Iraqi population that would encourage political stabilization. According to these reports, in the end President Bush adopted this approach. Evaluation. Although some observers have argued that Condoleezza Rice, as National Security Adviser in President Bush's first term, allowed the Defense Department to dominate policymaking, especially in regard to Iraq, most acknowledged that she had a good working relationship with the President and was an effective public spokesman for the Administration. Hadley made fewer public appearances but emphasized the importance of the NSC staff monitoring the implementation of NSC decisions. As noted above, he is also credited with organizing a review of Iraq policy that resulted in major changes. At the beginning of his Administration, President Obama designated retired Marine General James L. Jones to serve as National Security Adviser. Jones had previously served as Marine Corps Commandant and as NATO's Supreme Allied Commander. On February 13, 2009, the President signed Presidential Policy Directive-1, Organization of the National Security Council System. The directive lists those who will participate in NSC deliberations, including the Attorney General, the Secretary of Homeland Security, the U.S. Representative to the U.N., and the Counsel to the President. It also makes reference to officials who will be specifically invited to sessions dealing with international economic affairs, homeland security, counterterrorism, and science and technology issues. It describes the membership and duties of the Principals and Deputies Committees, which are to be chaired by the National Security Adviser and the Deputy National Security Adviser, respectively. The Principals Committee will be the "senior interagency forum for consideration of policy issues affecting national security" while the Deputies Committee will "review and monitor the work of the NSC interagency process" and "shall be responsible for day-to-day crisis management." The use of the term "monitor" may indicate a determination to enhance the NSC's ability to oversee implementation of presidential decisions on national security issues. Further management of the development and implementation of national security policies will be overseen by interagency policy committees that can be established to address specific issues. In May 2009 the Administration announced the integration or the staffs of the National Security Council and the Homeland Security Council into a single National Security Staff (NSS), with the goal of ending "the artificial divide between White House staff who have been dealing with national security and homeland security issues." New directorates and positions were established to deal with cybersecurity, terrorism involving weapons of mass destruction, border security, information sharing and resilience policy, including preparedness and response. The position of Assistant to the President for Homeland Security, currently filled by John Brennan, will be retained "with direct and immediate access" to the President, but the incumbent would organizationally report to the National Security Advisor." General Jones' tenure was marked by his efforts to manage collaboration among major agencies in pursuit of Administration goals. Some media commentators have suggested that he was less focused on crisis management. In October 2010, General Jones resigned as National Security Adviser and was replaced by his deputy, Tom Donilon, who had earlier served in the State Department during the Clinton Administration. Evaluation. In the initial months of the Obama Administration, several steps were taken to modify and enhance the role of the National Security Council. The integration of NSC and Homeland Security Council staffs may work to overcome the intelligence and law enforcement divide that many observers believe existed prior to 9/11. It may also facilitate closer cooperation of Federal agencies and state, local, and tribal entities in dealing with homeland security issues. These relationships are, however, complex and derive from separate statutory missions; observers suggest that establishing new organizational entities can affect, but not determine the ability of different agencies to share information and cooperate on operational planning and programs. The relationships among the relevant senior officials and the role of the President will remain crucial. The Obama Administration has not had to contend with major public disputes between the NSC and the State and Defense Departments, but there have been some complaints that Mr. Brennan has exercised an influence on intelligence activities that more properly belongs to the Director of National Intelligence. Largely because of the major influence in policymaking exerted by Kissinger and Brzezinski, the position of National Security Adviser has emerged as a central one. Brzezinski was even accorded Cabinet status—the only National Security Adviser to be thus designated. Some observers over the years have argued that the position should be subject to Senate confirmation and that the National Security Adviser should be available to testify before congressional committees as are officials from other government departments and agencies. Others argue that a President is entitled to confidential advice from his immediate staff. They further suggest that making the position subject to confirmation would create confusion in the eyes of foreign observers as to which U.S. officials speak authoritatively on national security policy. This latter argument is arguably undercut, however, by the practice of some recent National Security Advisers of appearing on television news programs. National Security Advisers have come from various professions; not all have had extensive experience in foreign and defense policy. The report of the Committees Investigating the Iran-Contra Affair recommended that the National Security Adviser not be a military officer on active duty, although no rationale was given for this recommendation. Most NSC staff members over the years have been career military officers, foreign service officers, or civil servants with backgrounds in foreign policy and defense issues. A considerable number have been detailed to the NSC staff from various federal agencies, which continue to pay their salaries. Although occasionally criticized as allowing the expansion of the White House staff beyond congressional authorization; nonetheless, the practice has continued with annual reports of the number of personnel involved being made to Appropriations Committees. Beginning with the Kennedy Administration, a concerted effort was made to bring outside experts into the NSC staff in order to inject fresh perspectives and new ideas into the policymaking process. This effort has been continued to varying extents by successive Administrations. Henry Kissinger made a particular effort to hire academic experts, although some would eventually resign and become bitter critics. The Reagan NSC was occasionally criticized for filling NSC staff positions with political activists. Most of the NSC staff positions in the George H. W. Bush Administration were filled with government officials. Anthony Lake, President Clinton's first National Security Adviser, argues that the NSC staff should be made up of as many career officials as possible, with as much carryover between administrations as can be managed. Its experts should be good (but not necessarily gray) bureaucrats who know how to get things done and how to fight for their views, and who are serving the national interest more than the political interests of their President. He cautioned that: a political appointee whose main credential is work on national security issues in political campaigns will have learned to think about national security issues in a partisan context. The effect of his or her advice is likely to be to lengthen the period of time during which a President, at the outset of a term, tries to make policy on the basis of campaign rhetoric rather than international reality. The very composition of the NSC, its statutory members, and those who attend meetings on occasion serve to identify those agencies and departments with which the NSC has a regular working relationship. These are the Departments of State and Defense (both the civilian and military staffs), the CIA, the Treasury Department, the Council of Economic Advisers, and a number of other departments as needed. The Director of National Intelligence (DNI), who is under the NSC, is responsible for coordinating the nation's foreign intelligence effort. His regular contacts include the CIA, as well as the Defense Intelligence Agency (DIA), the National Security Agency (NSA), the State Department's Bureau of Intelligence and Research (INR), and other elements of the intelligence community. However, these groups are not represented individually in the current NSC structure. As part of the Executive Office of the President, the NSC does not have the same regular relationship with Congress and its committees that the member departments and agencies have. Most briefings on intelligence matters are undertaken by the CIA and DIA or by the DNI; information on diplomatic and military matters comes primarily from the Departments of State and Defense. As noted above, the National Security Adviser is not subject to confirmation by the Senate. Over the years there has been a considerable number of congressional hearings and reports relating to the NSC. However, many have had to do with topics peculiar to a given period: wiretaps against NSC staff members allegedly ordered by Dr. Kissinger, the unauthorized transfer of NSC documents to officials in the Joint Chiefs of Staff, and information on Al Qaeda prior to 9/11. Annual hearings are held concerning the NSC budget, and there have been occasional hearings concerning NSC organization and procedures. Very few of these hearings and reports have served as briefings for Congress on current issues which the NSC might have been considering. NSC appropriations are handled by the Subcommittees on Financial Services and General Government of the House and Senate Appropriations Committees. As has been noted, Congress's role in NSC matters and its relationship with the NSC are limited. The Senate does not approve the appointment of the National Security Adviser, although it does confirm statutory NSC members. Congress does have authority over the designation of those positions that are to have statutory NSC membership, as well as budgetary authority over the NSC. In 2007, as part of the Energy Independence and Security Act of 2007 ( P.L. 110 - 140 , §932) Congress added the Secretary of Energy to the NSC. However, Congress has little direct say in matters of NSC organization, procedure, role, or influence, although a number of hearings on these topics have been held. The NSC is not a primary and regular source of national security information for Congress. National security information is for the most part provided by those departments and agencies that are represented on the NSC. The NSC, as a corporate entity, rarely testifies before or briefs Congress on substantive questions, although in some Administrations informal briefings have been provided. The NSC is an organ devoted to the workings of the executive branch in the broad area of national security. Its role is basically that of policy analysis and coordination and, as such, it has been subject to limited oversight and legislative control by Congress. Both in its staff organization and functioning, the NSC is extremely responsive to the preferences and working methods of each President and Administration. It would be difficult to design a uniform NSC structure that would meet the requirements of chief executives who represent a wide range of backgrounds, work styles, and policy agendas although some observers believe that the general pattern established in the final years of the Reagan Administration and followed by successive Presidents is likely to endure. There is unlikely to be a desire to drastically reduce the role of the NSC staff and most observers suggest that elevating the policymaking role of the National Security Adviser at the expense of the Secretary of State has left Presidents subject to strong criticism. The NSC has traditionally focused on foreign and defense policy issues. In the aftermath of the end of the Cold War, many observers argue that the major national security concerns of the United States may no longer be centered on traditional diplomatic and military issues. They suggest, further, that international economic, banking, environmental, and health issues, among others, will be increasingly important to the country's national security. These types of concerns, however, have not been regularly part of the NSC's primary areas of responsibility. The heads of federal agencies most directly concerned with such issues have not been members of the NSC. In the 1970s, Maxwell Taylor, who President Kennedy had appointed Chairman of the JCS, argued that a National Policy Council should replace the NSC and concern itself with broad areas of international and domestic policy. William Hyland, an NSC official in the Reagan Administration, argued in 1980 that a bad defect in the [NSC] system is that it does not have any way of addressing international economic problems. The big economic agencies are Treasury, to some extent OMB, the Council of Economic Advisers, Commerce, Labor, and Agriculture. They are not in the NSC system, but obviously energy problems, trade, and arms sales are foreign policy issues. Every Administration tries to drag them in, usually by means of some kind of a subcommittee or a separate committee. The committee eventually runs up against some other committee. There is friction, and policies are made on a very ad hoc basis by the principal cabinet officers. In early 1992, Professor Ernest May of Harvard University testified to the Senate Select Committee on Intelligence: In the early 1980s, the greatest foreign threat was default by Mexico and Brazil. That could have brought down the American banking system. Despite good CIA analysis and energetic efforts by some NSC staffers, the question did not get on the NSC agenda for more than two years. And then, the policy issues did not get discussed. The agencies concerned with money and banking had no natural connection with either the NSC or the intelligence community. We have no reason to suppose that agencies concerned with the new [post Cold War] policy issues will be any more receptive. In the George H. W. Bush Administration, there remained a strong conviction that defense and foreign policy issues would remain vital and somewhat separate from other interests and that the NSC was the proper forum for them to be addressed. Before he became President Bush's National Security Adviser, Brent Scowcroft stated at a forum on national security policy organization: First of all, if there is a consensus ... that the NSC net ought to be spread ever wider, I am not a part of it. There are many things that the NSC system can do better, and it has enough on its plate now. I would not look toward its spreading its net wider. As noted above, the Clinton Administration implemented its determination to coordinate foreign and domestic economic policies more closely. The National Economic Council, established by Executive Order 12835 on January 25, 1993, was designed to "coordinate the economic policy-making process with respect to domestic and international economic issues." Close linkage with the NSC were to be achieved by having the Assistant to the President for Economic Policy also sit on the NSC, supplemented by assigning staff to support both councils. The goal was to ensure that the economic dimensions of national security policy would be properly weighed in the White House decision-making process. Observers consider that cooperation between the NSC and the NEC was productive and contributed to the enhancement of both national security and economic policymaking although one senior NSC official has noted that efforts to deal with the 1997 Asian financial crisis were initially coordinated by U.S. international economic policymakers with little input from national security and foreign policy agencies. The post-Cold War era has seen a much closer relationship between traditional national security concerns with international issues that have a significant law enforcement component such as terrorism and narcotics smuggling. The increasing intermingling of national security and law enforcement issues could cause major difficulties for the NSC staff and the National Security Adviser who is not a law enforcement official. The Justice Department will inevitably view with concern any incursion into what is regarded as the Attorney General's constitutional responsibilities. The NSC also coordinates with the Office of Drug Control Policy whose responsibilities also encompass both law enforcement and foreign policy considerations. In dealing with international terrorism or narcotics production and transport from foreign countries, however, diplomatic and national security issues are often involved. Apprehending a terrorist group may require cooperation from a foreign government that has its own interests and concerns. Narcotics production may be entwined in the social and economic fabric of a foreign country to an extent that precludes the country from providing the sort of cooperation that would be expected from a major ally. During the Clinton Administration, the Attorney General's representatives have been included in NSC staff deliberations when law enforcement concerns were involved. Nonetheless, observers note public disagreements between Justice Department and State Department, for instance, regarding cooperation (or the lack thereof) from Saudi Arabia or Yemen. Clearly, the President has constitutional responsibilities for both national security and law enforcement, but the status of any other official to make necessary trade-offs is unclear. Observers suggest that in some future cases the need to establish a single U.S. position may require different ways of integrating national security and law enforcement concerns. The Obama Administration took a significant step in this direction by establishing a single National Security Staff composed of the staffs of both the National Security Council and the Homeland Security Council. Today's international terrorist threat can encompass not only physical attacks on U.S. physical structures such as the World Trade Center, but also cyber-attacks on critical infrastructures, the computerized communications and data storage systems on which U.S. society has become reliant. Since such systems are in most cases owned and operated by corporations and other commercial entities, the role of the NSC is necessarily constrained. Much depends on law enforcement as well as voluntary cooperation by the private sector. The Clinton Administration created the position of National Coordinator for Security, Infrastructure Protection, and Counterterrorism who reported to the President through the National Security Adviser. The Intelligence Reform Act of 2004, however, established the National Counterterrorism Center (NCTC) outside the NSC structure. In the Obama Administration, the role of the Assistant to the President for Homeland Security and Counterterrorism, John Brennan, has proven to be an influential one. In dealing with policies related to the protection of critical infrastructures, the National Security Adviser will have an important role, but one inherently different from the traditional responsibilities of the office. The position could involve in coordination of responses to threats both in the United States and from abroad and among the federal government, the states, and the private sector. It is clear to all observers that such coordination involves much uncharted territory, including a concern by some that the National Security Adviser might become overly and inappropriately involved in law enforcement matters. The NSC was created by statute, and its membership has been designated and can be changed by statute. The NSC has also been subject to statutorily approved reorganization processes within the executive branch, as when it was placed in the Executive Office by a Reorganization Plan in August 1949. Nonetheless, the NSC has been consistently regarded as a presidential entity with which Congress is rarely involved. The internal organization and roles of the NSC have been changed by Presidents and by National Security Advisers in response to their preferences and these changes have not usually been subject to congressional scrutiny. The role of the National Security Adviser has, however, become so well established in recent years that Congress has been increasingly prepared to grant the incumbent significant statutory responsibilities. The Foreign Intelligence Surveillance Act and other legislation provides for statutory roles for the National Security Adviser. Executive Orders provide other formal responsibilities. The position has become institutionalized and the exercise of its functions has remained an integral part of the conduct of national security policy in all recent administrations. Some observers believe that these established duties which extend beyond the offering of advice and counsel to the President will inevitably lead to a determination to include the appointment of a National Security Adviser among those requiring the advice and consent of the Senate. Advice and consent by the Senate is seen as providing a role for the legislative branch in the appointment of one of the most important officials in the federal government. Another cited advantage of this proposal would be the increased order, regularity, and formalization that are involved in making appointments that are sent to the Senate. Proponents argue that this would ultimately provide greater accountability for NSC influence and decisions. Opponents on the other hand, might point to the danger of unnecessary rigidity and stratification of organization and the potential that appointments might be excessively influenced by political considerations. There is also a potential that the NSC staff might become irrelevant if it loses the trust of a future President or if its procedures become so formalized as to stultify policymaking. Should the Adviser be subject to Senate confirmation, it is argued that an important prerogative of the President to choose his immediate staff would be compromised. In addition, the incumbent could be required or expected to make routine appearances before congressional oversight committees, arguably undermining the primary purpose of the National Security Adviser which is to provide the President with candid advice on a wide range of issues, often on an informal and confidential basis. One historian has summed up the role of the National Security Adviser: The entire national security system must have confidence that the [National Security Adviser] will present alternate views fairly and will not take advantage of propinquity in the coordination of papers and positions. He must be able to present bad news to the president and to sniff out and squelch misbehavior before it becomes a problem. He must be scrupulously honest in presenting presidential decisions and in monitoring the implementation process. Perhaps most important, he must impart the same sense of ethical behavior to the Staff he leads. In a recent assessment, two informed observers listed tasks for which the Adviser and staff uniquely are responsible: Staffing the president's daily foreign policy activity: his communications with foreign leaders and the preparation and conduct of his trips overseas; Managing the process of making decisions on major foreign and national security issues; Driving the policymaking process to make real choices, in a timely manner; and Overseeing the full implementation of the decision the president has made. The increasing difficulties in separating national security issues from some law enforcement and international economic concerns has led some observers to urge that the lines separating various international staffs at the White House be erased and that a more comprehensive policymaking entity be created. It is argued that such reforms could most effectively be accomplished without legislation. President Obama put one major recommendation into practice in May 2009 when he combined the staffs of the National Security Council and the Homeland Security Council. Such initiatives raise complex questions, including the role of congressional oversight. Whereas Congress has traditionally deferred to White House leadership in national security matters, to a far greater extent than in international economic affairs, there might be serious questions about taking formal steps to place resolution of a wide range of international policies, including economic and law enforcement issues, in the hands of officials who receive little congressional oversight. It is likely, in any event, that Congress will continue to monitor the functioning of the staff and the Adviser in the context of U.S. policymaking in a changing international environment. The Project for National Security Reform (PNSR) was established with congressional support to study the adequacy of the organization of the government for dealing with national security issues. Its membership was initially comprised of former officials with extensive national security experience, including former National Security Adviser Brent Scowcroft. The November 2008 report, Forging a New Shield , addressed the functions of the NSC along with other parts of the "national security system." PNSR argued that the current organizational structure is ill-coordinated and is placing the nation at risk in an international environment that requires agile and coordinated efforts by all instruments of power. To replace the National Security Council and the Homeland Security Council, PNSR recommended the creation of a President's Security Council and a Senate-confirmed Director of National Security who would have broader responsibilities than the existing National Security Adviser. The Director would "direct the implementation of national security missions identified by the present as inherently interagency." The office of the new Director of National Security would be comprised of some 500 people. A number of members of the PNSR effort joined the Obama Administration, including National Security Adviser James Jones and DNI Dennis Blair although both subsequently departed. Some of the principal PNSR initiatives would require legislative changes, but, as yet, a broad consensus has not emerged that would result in substantial realignments of organizational authorities in the executive branch or committee jurisdictions in the legislative branch. The most comprehensive source concerning the genesis and development of the NSC through 1960 is contained in a collection of hearings, studies, reports and recommendations complied by Senator Henry M. Jackson and published as U.S. Congress. Senate. Committee on Government Operations. Subcommittee on National Policy Machinery. Organizing for National Security , 3 Vols. 86 th and 87 th Congress. Washington, Government Printing Office. [1961]. Presidential memoirs are also valuable. Other useful sources are: Anderson, Dillon. "The President and National Security." Atlantic Monthly , January 1966. Bock, Joseph G. "The National Security Assistant and the White House Staff: National Security Policy Decisionmaking and Domestic Political Considerations, 1947-1984." Presidential Studies Quarterly , Spring 1986. Pp. 258-279. Bowie, Robert R. and Richard H. Immerman. Waging Peace: How Eisenhower Shaped an Enduring Cold War Strategy . New York: Oxford University Press.1998. Brown, Cody M. The National Security Council: A Legal History of the President's Most Powerful Advisers . Washington: Project for National Security Reform.2008. Brzezinski, Zbigniew. Power and Principle: Memoirs of the National Security Adviser, 1977-1981 . New York: Farrar, Straus, Giroux. 1983. ——"The NSC's Midlife Crisis". Foreign Policy , Winter 1987-1988. Pp. 80-99. Bock, Joseph G., and Clarke, Duncan L. "The National Security Assistant and the White House Staff: National Security Policy Decisionmaking and Domestic Political Considerations, 1947-1984." Political Science Quarterly , Spring 1986. Pp. 258-279. Brown, Cody M. The National Security Council: A Legal History of the President's Most Powerful Advisers . Washington: Project for National Security Reform. 2008. Bumiller, Elisabeth. Condoleezza Rice: An American Life: A Biography . New York: Random House. 2007. Burke, John P. Honest Broker: the National Security Advisor and Presidential Decision Making . College Station, TX: Texas A & M University Press. 2009. Caraley, Demetrios. The Politics of Military Unification . New York: Columbia University Press. [1966]. Clark, Keith C., and Laurence S. Legere, eds. "The President and the Management of National Security". Report for the Institute for Defense Analyses. New York: Praeger. [1966]. See especially pp. 55-114. Commission on the Organization of the Executive Branch of the Government. National Security Organization . Washington: Government Printing Office. [1949]. Commission on the Organization of the Government for the Conduct of Foreign Policy. Report . Washington: Government Printing Office. [1975]. Cutler, Robert. No Time for Rest . Boston: Little, Brown. 1966. ——"The Development of the National Security Council". Foreign Affairs , April 1956. Pp. 441-58. Daalder, Ivo H., and Destler, I.M. In the Shadow of the Oval Office: Profiles of the National Security Advisers and the Presidents They Served—from JFK to George W. Bush. New York: Simon and Schuster. 2009. Destler, I.M. "Can One Man Do?" Foreign Policy , Winter 1971-72. Pp. 28-40. ——"National Security Advice to U.S. Presidents: Some Lessons from Thirty Years." World Politics , January 1977. Pp. 143-76. —— Presidents, Bureaucrats and Foreign Policy: The Politics of Organization . Princeton: Princeton University Press. [1972]. ——Lake, Anthony; and Gelb, Leslie H. Our Own Worst Enemy: The Unmaking of American Foreign Policy . New York: Simon and Schuster. 1984. Falk, Stanley L., and Theodore W. Bauer. "The National Security Structure." Washington: Industrial College of the Armed Forces. [1972]. Gates, Robert M. From the Shadows: the Ultimate Insider's Story of the Five Presidents and How They Won the Cold War . New York: Simon & Schuster. 1996. Greenstein, Fred I. and Richard H. Immerman. "Effective National Security Advising: Recovering the Eisenhower Legacy." Political Science Quarterly , Fall 2000. Pp. 335-345. Haig, Alexander M., Jr. Caveat: Realism, Reagan, and Foreign Policy . New York: Macmillan. 1984. Hammond, Paul Y. "The National Security Council as a Device for Interdepartmental Coordination: An Interpretation and Appraisal". American Political Science Review , December 1960. Pp. 899-910. Humphrey, David C. "NSC Meetings during the Johnson Presidency". Diplomatic History , Winter 1994. Pp. 29-45. Hunter, Robert E. Organizing for National Security . Washington: Center for Strategic and International Studies. 1988. Inderfurth, Karl F. and Johnson, Loch K., eds. Decisions of the Highest Order: Perspectives of the National Security Council . Pacific Grove, CA: Brooks/Cole Publishing Co. 1988. Johnson, Robert H. "The National Security Council: The Relevance of its Past to its Future". Orbis , Fall 1969. Pp. 709-35. Kissinger, Henry A. White House Years . Boston: Little, Brown. 1979. —— Years of Renewal . New York: Simon & Schuster. 1999. —— Years of Upheaval . Boston: Little, Brown. 1982. Kolodziej, Edward A. "The National Security Council: Innovations and Implications". Public Administration Review . November/December 1969. Pp. 573-85. Korb, Lawrence J. and Hahn, Keith D., eds. National Security Policy Organization in Perspective . Washington: American Enterprise Institute. 1981. Laird, Melvin R. Beyond the Tower Commission . Washington: American Enterprise Institute. 1987. Lake, Anthony. 6 Nightmares . Boston: Little, Brown. 2000. —— Somoza Failing . Boston: Houghton Mifflin. 1989. Lay, James S., Jr. "National Security Council's Role in the U.S. Security and Peace Program". World Affairs , Summer 1952. Pp. 33-63. Leacacos, John P. "Kissinger's Apparat". Foreign Policy , Winter 1971-72. Pp. 3-27. Lord, Carnes. "NSC Reform for the Post-Cold War Era," Orbis , Summer 2000. Pp. 433-450. McFarlane, Robert C. "Effective Strategic Policy." Foreign Affairs , Fall 1988. Pp. 33-48. ——with Richard Saunders and Thomas C. Shull. "The National Security Council: Organization for Policy Making." Proceedings of the Center for the Study of the Presidency . Vol. 5. 1984. Pp. 261-273. ——Head, Richard G., and Frisco W. Short. Crisis Resolution, Presidential Decision Making in the Mayaguez and Korean Confrontations . Boulder, CO: Westview Press. 1978. Menges, Constantine C. Inside the National Security Council: The True Story of the Making and Unmaking of Reagan's Foreign Policy . New York: Simon and Schuster. 1988. Mulcahy, Kevin V. and Crabb, Cecil V. "Presidential Management of National Security Policy Making, 1947-1987". In The Managerial Presidency , ed. by James P. Pfiffner. Pacific Grove, CA: Brooks/Cole. 1991. Pp. 250-264. Nelson, Anna Kasten. "President Truman and the Evolution of the National Security Council." Journal of American History , September 1985. Pp. 360-378. ——"The 'Top of the Policy Hill': President Eisenhower and the National Security Council." Diplomatic History , Fall 1983. Pp. 307-326. Nixon, Richard M. U.S. Foreign Policy for the 1970's: A New Strategy for Peace . Washington: Government Printing Office. [1970]. —— U.S. Foreign Policy for the 1970's: The Emerging Structure of Peace . Washington: Government Printing Office. [1971]. —— U.S. Foreign Policy for the 1970's: Building for Peace . Washington: Government Printing Office. [1972]. Powell, Colin L. "The NSC System in the Last Two Years of the Reagan Administration". The Presidency in Transition . Ed. by James P. Pfiffner and R. Gordon Hoxie. New York: Center for the Study of the Presidency, 1989. Pp. 204-218. Prados, John. Keepers of the Keys: A History of the National Security Council from Truman to Bush . New York: William Morrow. 1991. Rice, Condoleezza. No Higher Honor: A Memoir of My Years in Washington . New York: Crown Publishers, 2011. Rothkopf, David. Running the World: the Inside Story of the National Security Council and the Architects of American Power . New York: Public Affairs.2004. Rostow, Walt Whitman. The Diffusion of Power: An Essay in Recent History . New York: Macmillan. 1972. Sander, Alfred D. "Truman and the National Security Council, 1945-1947". Journal of American History , September 1972. Pp. 369-388. Schlesinger, Arthur, Jr. "Effective National Security Advising: A Most Dubious Precedent." Political Science Quarterly , Fall 2000. Pp. 347-351. Shoemaker, Christopher C. The NSC Staff: Counseling the Council . Boulder, CO: Westview Press. 1991. Souers, Sidney W. "Policy Formulation for National Security". American Political Science Review , June 1949. Pp. 534-43. Steiner, Barry H. "Policy Organization in American Security Affairs: An Assessment". Public Administration Review , July/August 1977. Pp. 357-67. Thayer, Frederick C. "Presidential Policy Process and 'New Administration': A Search for Revised Paradigms". Public Administration Review , September/October 1971. Pp. 552-61. U.S. Congress. Senate. Committee on Government Operations. Subcommittee on National Security and International Operations. The National Security Council: New role and structure . 91 st Congress, 1 st session. Washington: Government Printing Office. 1969. ——Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition. House of Representatives. Select Committee to Investigate Covert Arms Transactions with Iran. 100 th Congress, 1 st session. Report of the Congressional Committees Investigating the Iran-Contra Affair with Supplemental, Minority, and Additional Views , Senate Report 100-216/House Report 100-433. Washington: Government Printing Office. 1987. ——Committee on Government Operations. Subcommittee on National Security and International Operations. The National Security Council: Comment by Henry Kissinger . March 3, 1970. 91 st Congress, 2d Session. Washington: Government Printing Office. 1970. U.S. Department of State. "The National Security System: Responsibilities of the Department of State." Department of State Bulletin , February 24, 1969. Pp. 163-66. U.S. President's Special Review Board. Report of the President's Special Review Board . Washington: Government Printing Office. 1987. West, Bing. The Strongest Tribe: War, Politics and the Endgame in Iraq . New York. Random House. 2008. Yost, Charles W. "The Instruments of American Foreign Policy," Foreign Affairs , October 1971. Pp. 59-68. Zegart, Amy B. Flawed by Design: the Evolution of the CIA, JCS, and NSC . Stanford, CA: Stanford University Press, 1999. Note: Many of the above entries contain numerous footnotes that identify a wealth of primary and secondary sources too numerous to include here. Of special interest are the oral interviews of former NSC staff personnel conducted from 1998 to 2000 as part of the National Security Council Project undertaken by the Center for International and Security Studies at Maryland and the Brookings Institution; transcripts are available at http://www.cissm.umd.edu/projects/nsc.php . Also useful is the transcript of "A Forum on the Role of the National Security Adviser," cosponsored by the Woodrow Wilson International Center for Scholars and the James A. Baker III Institute for Public Policy of Rice University, available at http://wwics.si.edu/news/docs/nsa.pdf . Appendix A. National Security Advisers
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The National Security Council (NSC) was established by statute in 1947 to create an inter-departmental body to advise the President with respect to the integration of domestic, foreign, and military policies relating to the national security so as to enable the military services and the other departments and agencies of the government to cooperate more effectively in matters involving the national security. Currently, statutory members of the Council are the President, Vice President, the Secretary of State, the Secretary of Defense, and, since 2007, the Secretary of Energy; but, at the President's request, other senior officials participate in NSC deliberations. The Chairman of the Joint Chiefs of Staff and the Director of National Intelligence are statutory advisers. The President clearly holds final decision-making authority in the executive branch. Over the years, however, the NSC staff has emerged as a major factor in the formulation (and at times in the implementation) of national security policy. Similarly, the head of the NSC staff, the National Security Adviser, has played important, and occasionally highly public, roles in policymaking. This report traces the evolution of the NSC from its creation to the present. The organization and influence of the NSC have varied significantly from one Administration to another, ranging from highly structured and formal systems to loose-knit teams of experts. Although it is universally acknowledged that the NSC staff should be organized to meet the particular goals and work habits of an incumbent President, the history of the NSC provides ample evidence of the advantages and disadvantages of different types of policymaking structures. Congress enacted the statute creating the NSC and has altered the character of its membership over the years. Congress annually appropriates funds for its activities, but does not, routinely, receive testimony on substantive matters from the National Security Adviser or from NSC staff. Proposals to require Senate confirmation of the Security Adviser have been discussed but not adopted. The post-Cold War world has posed new challenges to NSC policymaking. Some argue that the NSC should be broadened to reflect an expanding role of economic, environmental, and demographic issues in national security policymaking. The Clinton Administration created a National Economic Council tasked with cooperating closely with the NSC on international economic matters. In the wake of the 9/11 attacks, the George W. Bush Administration established a Homeland Security Council. The Obama Administration has combined the staffs of the Homeland Security Council and the National Security Council into a single National Security Staff, while retaining the two positions of National Security Adviser and Homeland Security Adviser. Although the latter has direct access to the President, the incumbent is to report organizationally to the National Security Adviser.
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Congressional oversight of the intelligence community (IC) enables Members to gain insight into and offer advice on programs and activities that can significantly affect or influence U.S. foreign policy. This In Brief responds to Congress's ongoing interest in oversight of covert action and clandestine activities in particular. The distinction between military and intelligence activities described as covert and clandestine can be confusing. What agencies are authorized to conduct covert action and clandestine activities? What are their legal authorities for doing so? Which military terms describe activities that might seem similar but are distinct from covert action? Prior to 1974, no statute existed that enabled Congress to conduct oversight of the intelligence community. Congress exercised what some have described as "benign neglect" of intelligence. In earlier instances, when it could have exercised greater oversight—such as over the CIA's orchestration of the 1953 coup in Iran—Congress trusted that the executive branch and intelligence community were acting in accordance with the law. Congress also did not question whether particular covert actions or other sensitive intelligence activities were viable as a means of supporting U.S. national security. In the 1970s, controversy over public disclosure of CIA's covert action programs in Southeast Asia and the agency's domestic surveillance of the antiwar movement spurred Congress to become more involved in intelligence oversight. In 1974, the Hughes-Ryan amendment of the Foreign Assistance Act of 1961 (§32 of P.L. 93-559 ) provided the first statutory basis for congressional oversight and notification to Congress of covert action operations. Investigations by two congressional committees—in the Senate, chaired by Idaho Senator Frank Church, and in the House, chaired by Representative Otis Pike—provided the first formal effort to understand the scope of intelligence activities. These committees became the model for a permanent oversight framework that could hold the intelligence community accountable for spending appropriated funds legally and supporting identifiable national security objectives. In 1975, Congress established the Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI). Congress later refined its oversight of the intelligence community when the executive branch directed covert action operations without notifying Congress in advance. In August 1980, out of concern for maintaining operational security, President Carter chose not to inform Congress prior to the attempt to rescue American hostages held by the Iranian regime. In the mid-1980s, the Reagan Administration did not inform Congress about a covert initiative to divert funds raised from the sale of arms to Iran to support the Contras in Nicaragua. Through the Intelligence Authorization Acts (IAA) of 1981 ( P.L. 96-450 ) and 1991 ( P.L. 102-88 ), Congress revised procedures to try to ensure that the executive branch would, in the future, provide timely, comprehensive notification of all covert action and other "significant anticipated intelligence activity." The evolution of congressional oversight of intelligence, which emphasized the exclusive jurisdiction of the SSCI and HPSCI, vice the congressional defense committees, was, however, arguably out of alignment with the evolution of military operations and intelligence activities in the field. In the field, the military and intelligence communities increasingly integrated their activities for greater effect in the post-9/11 environment. A reportable intelligence activity, therefore, was often of interest to the congressional defense as well as intelligence committees. Yet, in Congress, the intelligence and defense committees have different notification standards and processes. The statutory authority for a particular intelligence or defense activity has determined the jurisdiction thereof: Title 50 of the U.S. Code provides the statutory authority for intelligence activities, regardless of which agency carries them out; Title 10 of the U.S. Code provides the statutory authority for military activities. Notification of Congress, therefore, has had the potential for artificially defining intelligence activities as separate and distinct from military activities. As a result, congressional committees may be unevenly informed about both kinds of activities, some of which may be indistinguishable regarding the respective risks they pose in terms of compromise, loss of life, and impact on U.S. national security. Covert action is codified as an activity or activities of the United Sates Government to influence political, economic, or military conditions abroad, where it is intended that the role of the United States will not be apparent or acknowledged publicly. It does not include activities with the primary purpose of acquiring intelligence, traditional counterintelligence activities, traditional activities to improve or maintain the operational security of United States government programs, or administrative activities; traditional diplomatic or military activities or routine support to such activities; traditional law enforcement activities conducted by United States government law enforcement agencies or routine support to such activities; activities to provide routine support of any other overt activities of other United States government agencies abroad. Covert action is generally intended to influence conditions short of an escalation by the United States that might lead to a sizable or extended military commitment. Unlike traditional intelligence collection, covert action is not passive. It has a visible, public impact intended to influence a change in the military, economic, or political environment abroad that might otherwise prove counterproductive if the role of the United States were made known. Covert action also requires a finding by the President, providing written notification to Congress that the impending activity supports "identifiable foreign policy objectives." Covert action cannot be directed at influencing the domestic environment: "No covert action may be conducted which is intended to influence United States political processes, public opinion, policies, or media." While covert action is historically most closely associated with the CIA, the President may authorize other "departments, agencies or entities of the United States Government," such as DOD, to conduct covert action. Offensive cyberspace operations—defined as operations "intended to project power by the application of force in and through cyberspace"—may also be called covert action if they are conducted under authority of Title 50 of the U.S. Code , Section 3093, which provides the statutory provisions for oversight for covert action. Historic examples of covert action include the CIA's orchestration of the 1953 coup in Iran; the 1961 Bay of Pigs invasion of Cuba; the Vietnam-era secret war in Laos; and support to both the Polish Solidarity labor union in the 1970s and 1980s and to the Mujahidin in Afghanistan during the 1980s. These and other examples highlight the mixed record of use of covert action, favorable, unfavorable, or undetermined and still unfolding through second- and third-order effects. The term clandestine activity is not defined by statute . DOD doctrine defines clandestine activities as "operations sponsored or conducted by governmental departments in such a way as to assure secrecy or concealment" that may include relatively "passive" intelligence collection information gathering operations. Unlike covert action, clandestine activities do not require a presidential finding but may require notification of Congress. This definition differentiates clandestine from covert , using clandestine to signify the tactical concealment of the activity. By comparison, covert activities can be characterized as the strategic concealment of the United States' sponsorship of activities that aim to effect change in the political, economic, military, or diplomatic behavior of an overseas target. Because clandestine activities necessarily involve extremely sensitive sources and methods of military operations or intelligence collection, their compromise through unauthorized disclosure can risk the lives of the personnel involved and gravely damage U.S. national security. Examples include intelligence recruitment of, or collection by, a foreign intelligence asset, and military sensitive site exploitation (SSE) of, or surveillance of, a facility in a denied or hostile area. SSE is one of many military operations that can be conducted clandestinely, without the acknowledgement—at least initially—of U.S. sponsorship. These examples of clandestine activities can be further categorized as traditional military activities or routine or other-than-routine support for traditional military activities, operational preparation of the environment (OPE ) , and sensitive military operations , all of which are discussed in more detail below. Clandestine activities can also include defensive or offensive operations in cyberspace, in which both the activity and U.S. sponsorship may be classified. Since 9/11, when military and intelligence activities became increasingly integrated, Congress has taken renewed interest in the two military exceptions to the statutory definition of covert action: traditional military activities and routin e support to traditional military activities. Though neither term is itself defined in statute, Congress's intent regarding traditional military activities and routine support to traditional military activities is relevant to understanding the range of military activities that have notification requirements that are less stringent than for covert action. These terms, which were first cited as exceptions to covert action in P.L. 102-88 , the Intelligence Authorization Act for FY 1991, may include activities that are difficult to distinguish from covert or clandestine intelligence activities. In a joint explanatory statement attached to the conference report for P.L. 102-88 , the conference committee provided an extended discussion of its intent as to the meaning of traditional military activities : It is the intent of the conferees that 'traditional military activities' include activities by military personnel under the direction and control of a United States military commander (whether or not the U.S. sponsorship of such activities is apparent or later to be acknowledged) preceding and related to hostilities which are either anticipated (meaning approval has been given by the National Command Authorities for the activities and or operational planning for hostilities) to involve U.S. military forces, or where such hostilities involving United States military forces are ongoing, and, where the fact of the U.S. role in the overall operation is apparent or to be acknowledged publicly. In this regard, the conferees intend to draw a line between activities that are and are not under the direction and control of the military commander. Activities that are not under the direction and control of a military command er should not be considered as " t raditional military activities [emphasis added]. In the Senate Select Committee on Intelligence (SSCI) report for the FY1991 Intelligence Authorization Act, the SSCI provided an expanded definition of its intent for the concept of routine support , which was considered to be: unilateral U.S. activities to provide or arrange for logistical or other support for U.S. military forces in the event of a military operation that is to be publicly acknowledged. Examples include caching communications equipment or weapons, the lease or purchase from unwitting sources of residential or commercial property to support an aspect of an operation, or obtaining currency or documentation for possible operational uses, if the operation as a whole is to be publicly acknowledged…. Other-than-routine support may be construed as a type of covert action since it includes a range of activities in which the U.S. role is unacknowledged and that may be intended to influence the environment of another country prior to commencement of the principal operation. [T]he [SSCI] would regard as 'other-than-routine' support activities undertaken in another country which involve other than unilateral activities. Examples of such [other-than-routine support] activity include clandestine attempts to recruit or train foreign nationals with access to a target country to support U.S. forces in the event of a military operation; clandestine effects to influence foreign nationals of the target country concerned to take certain actions to influence and effect [sic] public opinion in the country concerned where U.S. sponsorship of such efforts is concealed; and clandestine efforts to influence foreign officials in third countries to take certain actions without the knowledge or approval of their government in the event of a U.S. military operation. Operational Preparation of the Environment (OPE) is a DOD term for a category of traditional military activities conducted in anticipation of, in preparation for, and to facilitate follow-on military operations. It is a term DOD frequently uses, though its definition does not exist in statute. The DOD defines operational preparation of the environment (OPE) as the "conduct of activities in likely or potential areas of operations to prepare and shape the operational environment," with operational environment defined as a "composite of the conditions, circumstances, and influences that affect the employment of capabilities and bear on the decisions of the commander." Joint Publication 3-05, Special Operations , a doctrine issuance of the Joint Staff, describes preparation of the environment as an "umbrella term for operations and activities conducted by selectively trained special operations forces to develop an environment for potential future special operations," with "close-target reconnaissance … reception, staging, onward movement, and integration ... of forces ... [and] infrastructure development" cited as examples of such activities. Congress has expressed concern that the military overuses OPE to describe a range of military activities that can include, among other things, clandestine military intelligence collection that is neither subject to oversight by the congressional intelligence committees nor jurisdiction of the congressional defense committees. In the "Areas of Special Interest" segment of the House Permanent Select Committee on Intelligence (HPSCI) report ( H.Rept. 111-186 ) for its version of the Intelligence Authorization Act for FY2010 ( H.R. 2701 ), the committee indicated that it [noted] with concern the blurred distinction between the intelligence-gathering activities carried out by the [CIA] and the clandestine operations of the [DOD]…. In categorizing its clandestine activities, DOD frequently labels them as [OPE] to distinguish particular operations as traditional military activities and not as intelligence functions. The Committee observes, though, that overuse of this term has made the distinction all but meaningless. The determination as to whether an operation will be categorized as an intelligence activity is made on a case-by-case basis; there are no clear guidelines or principles for making consistent determinations. The Director of National Intelligence himself has acknowledged that there is no bright line between traditional intelligence missions carried out by the military and the operations of the CIA. Clandestine military intelligence-gathering operations, even those legitimately recognized as OPE, carry the same diplomatic and national security risks as traditional intelligence-gathering activities. While the purpose of many such operations is to gather intelligence, DOD has shown a propensity to apply the OPE label where the slightest nexus of a theoretical, distant military operation might one day exist. Consequently, these activities often escape the scrutiny of the intelligence committees, and the congressional defense committees cannot be expected to exercise oversight outside of their jurisdiction. In a section titled "Jurisdictional Statement on Defense Intelligence" under the "Committee Priorities" segment of its report ( H.Rept. 114-573 ) accompanying the Intelligence Authorization Act of 2017 ( H.R. 5077 ), the HPSCI reiterated that it is concerned that many intelligence and intelligence-related activities continue to be characterized as 'battlespace awareness,' 'situational awareness,' and – especially – [OPE].... The continued failure to subject OPE and other activities to Committee scrutiny precludes the Committee from fully executing its statutorily mandated oversight role on behalf of the House and the American people, including by specifically authorizing intelligence and intelligence-related activities as required by Section 504(e) of the National Security Act of 1947 (50 U.S.C. §3094(e)). Therefore, the Committee directs [DOD] to ensure that the Committee receives proper insight and access to information regarding all intelligence and intelligence-related activities of [DOD], including those presently funded outside the MIP. The Committee further encourages [DOD], in meeting this direction, to err on the side of inclusivity and not to withhold information based on arbitrary or overly technical distinctions such as funding source, characterization of the activities in question, or the fact that the activities in question may have a nexus to ongoing or anticipated military operations. Sensitive military operations are defined in statute as (1) lethal operations or capture operations conducted by the U.S. Armed Forces outside a declared theater of active armed conflict, or conducted by a foreign partner in coordination with the U.S. Armed Forces that target a specific individual or individuals, or (2) operations conducted by the armed forces outside a declared theater of active armed conflict in self-defense or in defense of foreign partners, including during a cooperative operation. This statutory definition allows Congress to provide oversight of the sort of military operations that have significant bearing on U.S. foreign and defense policy but are not clearly defined elsewhere in statutory oversight provisions. Sensitive military operations, which can be clandestine, have become an increasingly common feature of the post-9/11 counterterrorism (CT) landscape involving U.S. military intervention in countries such as Yemen, Pakistan, or Somalia that are outside areas of active hostilities (i.e., outside of Afghanistan, Syria, and Iraq). Examples of these operations include a lethal CT drone operation, or a military train , advise, and assist mission where U.S. forces supporting the security forces of a foreign partner nation may have to act in self-defense. It is easier to sort out how the intelligence and military activities defined in this report are categorized (and, consequently, determine how or whether Congress is notified) by first understanding their statutory authorities. The United States Code , which compiles and codifies laws of the United States, is organized into titles by subject matter. Title 10 of the U.S. Code provides much of the legal framework—sometimes referred to as authorities — for the roles, missions, and organization of DOD and the military services. Title 50, among other matters, provides much of the legal framework for many of the roles and responsibilities of the intelligence community, including the operations and functions of the CIA and the legal requirements and congressional notification procedures associated with covert action. References to Title 10 authorities and Title 50 authorities are sometimes used as colloquial shorthand by observers and experts to signify executive decision-making processes, congressional oversight structures, chains of command, legal authorizations to carry out certain types of activities, and legal constraints preventing certain types of activities that govern the respective operations and activities of DOD and the IC. Legal observers, however, have cautioned that such references reinforce a misperception that a clear distinction may be drawn between activities conducted under Title 10 authorities and activities conducted under Title 50 authorities. Some therefore assert that Title 10 and Title 50 authorities should instead be viewed as "mutually reinforcing" rather than "mutually exclusive" authorities. Others further emphasize that Title 10 is not the sole source of legal authorities for U.S. military operations, pointing to the President's authority under Article II of the Constitution as Commander in Chief of the U.S. Armed Forces, as well as laws enacted by Congress, such as the War Powers Resolution of 1973 ( P.L. 93-148 ; 50 U.S.C. §1541-1548) and the 2001 Authorization for Use of Military Force ( P.L. 107-40 ; 50 U.S.C. §1541 note). Some also cite the dual role of the Secretary of Defense under Title 10 and Title 50 to exercise authority, direction, and control over those elements of the IC that reside within the DOD organizational structure as support for the argument that Title 10 and Title 50 should be viewed as "mutually reinforcing."
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While not defined by statute, DOD doctrine describes clandestine activities as "operations sponsored or conducted by governmental departments in such a way as to assure secrecy or concealment" that may include relatively passive intelligence collection information gathering operations. Unlike covert action, clandestine activities do not require a presidential finding but may require notification of Congress. This definition differentiates clandestine from covert, using clandestine to signify the tactical concealment of the activity. By comparison, covert operations are "planned and executed as to conceal the identity of or permit plausible denial by the sponsor." Since the 1970s, Congress has established and continued to refine oversight procedures in reaction to instances where it had not been given prior notice of intelligence activities—particularly covert action—that had significant bearing on United States national security. Congress, for example, had no foreknowledge of the CIA's orchestration of the 1953 coup that overthrew Iran's only democratically elected government, or of the U-2 surveillance flights over the Soviet Union that ended with the Soviet shoot-down of Francis Gary Powers in 1960. Eventually, media disclosures of the CIA's domestic surveillance of the anti-Vietnam War movement and awareness of the agency's covert war in Laos resulted in Congress taking action. In 1974, Congress began its investigation into the scope of past intelligence community activities that provided the basis for statutory provisions for intelligence oversight going forward. The 1974 Hughes-Ryan Amendment to the Foreign Assistance Act of 1961 (§32 of P.L. 93-559) provided the earliest provisions for congressional oversight of covert action. In the late 1970s, Congress established a permanent oversight framework, standing up the House Permanent Select Committee on Intelligence (HPSCI) and the Senate Select Committee on Intelligence (SSCI). These committees were given exclusive oversight jurisdiction of the intelligence community. Recent events in North Korea, Yemen, and elsewhere have underscored the important function Congress can have in influencing the scope and direction of intelligence policy that supports United States national security. However, despite Congress's work during the past decades to establish statutory provisions for conducting intelligence oversight, those efforts have not always achieved Congress's desired result. For example, there has been occasional confusion over whether the congressional intelligence or defense committees have jurisdiction for oversight purposes. This confusion is due in part to overlapping or mutually supporting missions of the military and intelligence agencies, particularly in the post-9/11 counterterrorism environment. Intelligence and military activities fall under different statutory authorities, but they may have similar characteristics that warrant congressional notification (e.g., a need to conceal United States sponsorship and serious risk of exposure, compromise, and loss of life).
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The power of Congress and the executive branch to legislate and implement the conditions for admitting aliens into the United States and permitting them to remain is so broad as to be virtually immune from judicial control. However, this power is still subject to constitutional limitations, including substantive and procedural due process protections. In immigration cases, the degree of judicial review of administrative decisions and actions that may be constitutionally required depends on the relative interests involved. In deciding what degree of judicial review is appropriate in immigration matters, Congress has sought to balance judicial review between fairness to desired immigrants (workers, family, refugees/asylees) and facilitation of the removal of detrimental aliens (national security risks/terrorists, criminals, public charges). Initially, a habeas corpus proceeding provided the primary avenue of judicial review of various immigration determinations. However, in the wake of U.S. Supreme Court decisions construing the Administrative Procedure Act (APA) as applying to and providing an avenue for judicial review of immigration adjudications, Congress amended the Immigration and Nationality Act (INA) of 1952 by adding a judicial review provision in 1961 that provided for review of deportation orders by federal courts of appeals, but only for habeas corpus review of exclusion orders by federal district courts. Concerns about the growing population of undocumented aliens, fraudulent asylum claims, terrorism threats, and crimes of drug, human, and arms trafficking, led to legislation in 1996 and 2005 that limited judicial review, including the availability of habeas corpus proceedings. In the 113 th Congress, H.R. 2278 would generally continue the trend of limiting judicial review; S. 744 would more narrowly limit judicial review in certain instances of employer noncompliance with foreign worker visa programs. On the other hand, S. 744 also provides for judicial review for legalization programs. An "unadmitted and nonresident alien" has no constitutional right to be admitted into the United States. Accordingly, consular officers within the U.S. Department of State (DOS) generally have nonreviewable authority to deny visas. Therefore, the DOS regulations only provide for administrative, supervisory review of visa denials. This doctrine of consular non-reviewability has long been recognized by the courts and has rarely been challenged. However, there is some case law supporting limited judicial review of a visa denial with regard to the First Amendment rights of U.S. citizens to hear and debate the religious and political views of aliens. In Kleindienst v. Mandel , the U.S. Supreme Court held that, when an executive branch officer/agency exercised discretion to not waive the exclusion of an alien as an anarchist and communist advocate for a facially legitimate and bona fide reason, the courts will not look behind the exercise of discretion nor test it by balancing the reason against the First Amendment interests of U.S. citizens who desire to hear the political views of and debate the alien. Some later federal appellate decisions have followed Mandel and extended its holding to visa denials by consular officers or to the assertion of other constitutional rights by U.S. citizens. Although they cannot order a consular officer to grant or deny a visa, courts have differed about whether they have jurisdiction to review consular failure to perform the nondiscretionary duty of deciding to grant or deny a visa and to require a consular officer to make a decision. For a visa revocation, there is no judicial review (including review pursuant to 28 U.S.C. §2241, or any other habeas corpus provision, and 28 U.S.C. §§1361 and 1651), except in the context of a removal proceeding if such revocation provides the sole ground for removal. It appears that courts have generally held that the doctrine of consular nonreviewability applies to revocation of visas issued to aliens who are outside the United States, but that revocation of a visa issued to an alien who is already in the United States is subject to judicial review. Furthermore, federal courts have differed about whether the doctrine of nonreviewability extends to nonconsular officials, including officers of the former Immigration and Naturalization Service and the U.S. Department of Homeland Security (DHS). Judicial review does not provide a broad panacea to aliens subject to removal orders. First, appealing a removal order does not serve to stay the removal order absent a court order. Second, there is no judicial review of removal determinations based on particular grounds of inadmissibility or deportability, including a public health ground certified by a medical officer and certain criminal grounds such as aggravated felonies, drug offenses, and firearm offenses. Finally, a court cannot review the denial of most types of relief from removal that are granted at the discretion of the immigration officer or immigration judge, including a waiver of inadmissibility, cancellation of removal, voluntary departure, and adjustment of status to lawful permanent resident. These bars to judicial review of removal determinations do not preclude a federal appellate court from reviewing constitutional claims or questions of law raised in matters that are otherwise nonreviewable. In the exception to the bar on judicial review of denials of discretionary administrative relief from removal, federal appellate courts can review an asylum determination, when an alien faces persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion, which serves a humanitarian objective, except for determinations for aliens arriving without proper travel documents who may potentially be subject to expedited removal under INA §235. However, there are restrictions on the scope and standards of judicial review of asylum determinations: (1)the administrative denial of relief is conclusive unless manifestly contrary to law; and (2) a court cannot reverse an administrative determination about the availability of evidence corroborating eligibility for removal relief. On the other hand, relief from removal is mandatory if the alien meets the eligibility requirements for either (1) withholding of removal under INA§241(b)(3), when the alien's life or freedom would be threatened in the alien's country because of the alien's race, religion, nationality, membership in a particular social group, or political opinion, or (2) protection under the U.N. Convention Against Torture when there are substantial grounds for believing the alien would be in danger of being subjected to torture. Therefore, a federal appellate court may review denials of these types of relief. Generally, judicial review of removal orders is available in the federal appellate court for the judicial circuit in which the removal proceedings were completed. Judicial review of all questions of law and fact, including interpretation of constitutional and statutory provisions, that arise from a removal action or proceeding must be consolidated in a direct appeal of a final removal order to a federal circuit court of appeals; no habeas corpus review is permitted by any federal court. The U.S. Supreme Court called this jurisdictional consolidation provision the "zipper" clause for judicial review of removals. Except as explicitly provided in the INA judicial review provisions, courts may not review claims arising from Attorney General (or the Secretary of Homeland Security) decisions or actions to initiate removal proceedings, adjudicate cases, or execute removal orders against any alien. Federal district courts have a limited role in the judicial review of removal orders. With regard to U.S. nationality claims, if there is a genuine issue of material fact concerning whether the person appealing the removal order is a U.S. national, the federal appellate court will transfer the proceeding to the federal district court in whose jurisdiction the appellant resides for a new hearing and a declaratory judgment on that issue as if brought under 28 U.S.C. §2201, establishing federal court jurisdiction to declare the rights of the plaintiff. In addition, the District Court for the District of Columbia has jurisdiction to review challenges to the constitutionality of the statute and/or implementing regulations for expedited removal of certain inadmissible aliens or to the legality under other laws of the regulations and other administrative guidelines. An appeal from the decisions described above would be made to the federal appellate court for the circuit in which the district court issuing the decision is located. In contrast to aliens in the United States, aliens outside the United States (or at its borders or ports of entry) are generally not due any procedural rights with respect to their ability to enter the United States. With a limited exception for certain permanent resident aliens who are returning to the United States, aliens whom the government is seeking to exclude from entry are not guaranteed an expulsion process that comports with constitutional standards. The governing principle generally remains that due process for aliens seeking admission to the United States at a port of entry and for aliens who entered illegally without inspection consists of "[w]hatever the procedure authorized by Congress is." Generally, if an immigration officer determines that an arriving alien is inadmissible, that alien is removable without further hearing or review. The exception occurs when an arriving alien asserts an asylum claim, in which case, the alien will be referred to an asylum officer who determines whether the alien has a credible fear of persecution for race, religion, nationality, membership in a particular social group, or political opinion. If the asylum officer decides that an alien has a credible fear of persecution, the alien is placed into regular removal proceedings where asylum claims will be given full consideration. If the asylum officer decides that an alien does not have a credible fear of persecution, the officer may order removal without further review unless the alien requests review by an immigration judge of the credible fear determination. A credible fear review by an immigration judge must take place no later than 7 days after the initial negative credible fear determination. The immigration judge may place the alien into regular removal proceedings if the immigration judge reverses the negative determination of the asylum officer. Similarly if an alien makes a claim under oath, subject to the penalty of perjury, to already being a lawful permanent resident, refugee, or asylee, and if an immigration officer verifies such a claim, the alien will be not be placed in expedited removal but may be placed in regular removal proceedings. If the immigration officer cannot verify the claim, the case will be referred to an immigration judge who may determine the claim not to be valid and affirm expedited removal. If the immigration judge determines that it is valid, DHS may place the alien in regular removal proceedings. For those who are not placed in regular removal proceedings, there is judicial review in habeas corpus proceedings under INA §242, but this is limited to determinations of whether the petitioner is an alien, was ordered removed under the expedited removal provisions of INA §235(b)(1), and can prove by a preponderance of evidence that the alien is a lawful permanent resident or currently in refugee/asylee status in the United States. Additionally, an immigration officer or judge may order the removal of an arriving alien suspected of being inadmissible for certain national security grounds. Under such circumstances, the Attorney General can affirm the removal without any further review or hearing after the Attorney General reviews the case and consults with federal security agencies. In addition to expedited removal of certain arriving aliens, the immigration laws provide for expedited removal of aliens convicted of committing aggravated felonies, criminal offenses that are grounds for deportation and also result in various other immigration consequences, including the expedited removal process. A removal proceeding can be held while an alien convicted of an aggravated felony is incarcerated to enable expeditious removal upon the completion of the alien's sentence of imprisonment. A removal order against an alien who is not a lawful permanent resident and is convicted of an aggravated felony cannot be executed until 14 calendar days after the date of the removal order in order to allow the alien an opportunity to apply for judicial review under INA §242. At the time of imposing a criminal sentence against an alien who is deportable, a federal district court has jurisdiction to enter a judicial removal order simultaneously; the issuance or denial of a judicial removal order may be appealed by the defendant deportable alien or the Attorney General to the federal court of appeals. The INA has two different detention provisions, one for the arrest and detention of removable aliens generally, with special provisions for criminal aliens, and another for the mandatory detention of suspected terrorists. Judicial review in both instances is very limited. Under the general arrest and detention provision, discretionary determinations regarding release on bond or parole is not reviewable. Under the provision for mandatory detention of suspected terrorists, judicial review of actions and determinations, regarding certification as a terrorist and continued detention with periodic review, is exclusively available through habeas corpus proceedings pursuant to the specific guidelines of that provision, notwithstanding the guidelines of 28 U.S.C. §2241, the main habeas corpus provision. The final order shall be subject to review, on appeal, by the United States Court of Appeals for the District of Columbia Circuit, and no other court of appeals. In INS v. St. Cyr and Calcano-Martinez v. IN S, concerning the removal requirements and restrictions on judicial review enacted in IIRIRA, the Supreme Court held that there is a strong presumption in favor of judicial review of administrative actions; therefore, in the absence of a clear statement of congressional intent to repeal habeas corpus jurisdiction over removal-related matters, such review was still available after the 1996 changes. Furthermore, the Court also found that eliminating any judicial review, including habeas review, without any substitute for review of questions of law including constitutional issues, would raise serious constitutional questions. Therefore, it chose a statutory construction (habeas review was not eliminated) which would not raise serious constitutional questions. Subsequent to these decisions, §106 of the REAL ID Act expressly limited the use of habeas corpus petitions in removal matters, while providing for federal appellate court consideration of constitutional claims or other legal issues that formerly may have been raised in a habeas corpus petition in cases where direct review was unavailable. Section 106 further provided that, for INA purposes, any elimination of judicial review by other INA provisions included the elimination of habeas corpus petitions. Section 242(e) of the INA expressly allows habeas review for very limited purposes for expedited removal determinations made pursuant to INA §235(b), which was discussed above in " Expedited Removal of Inadmissible Arriving Aliens ." Any review beyond the immigration judge's decisions under INA §235(b)(1), including administrative review by the Board of Immigration Appeals, is limited to habeas corpus review in the federal courts under INA §242(e). This permits habeas review only with regard to (1) whether the petitioner is an alien; (2) whether the petitioner was ordered removed under INA §235(b); and (3) whether the petitioner can prove by a preponderance of the evidence that he or she is a lawful permanent resident or currently has refugee/asylee status in the United States and is thus entitled to further review. Under 28 U.S.C. §2241, habeas petitions may be filed initially in a district court, a circuit court of appeals, or in the U.S. Supreme Court, but they are generally filed in a district court because court rules and policy restrict initiation in the appellate courts. District court decisions may then be appealed to the circuit courts of appeals and the U.S. Supreme Court. In 1990, amendments to the INA established an administrative process for naturalization that previously had been adjudicated by federal courts. While these amendments retained judicial review for naturalization denials and delays in the administrative process, they require a denied applicant to request an administrative hearing. Once the administrative process has been exhausted, the applicant may appeal the denial to the federal district court in whose jurisdiction he or she resides for a de novo review. Applicants may also request federal district court hearings regarding delays in naturalization determinations if more than 120 days have elapsed after the U.S. Citizenship and Immigration Services (USCIS) has conducted a naturalization examination; depending on its findings, the court may remand the case to the agency, with instructions, for a determination or the court may adjudicate the naturalization case itself. Upon an affidavit showing good cause to revoke a naturalization because it was procured illegally, by concealment of a material fact, or by willful misrepresentation, a U.S. attorney is required to initiate denaturalization proceedings in any federal district court in whose jurisdiction the naturalized citizen resides. However, the provision for judicial denaturalization proceedings does not restrict in any way the power of DHS to reopen or vacate a naturalization order administratively. Expatriation is the loss of nationality by a U.S. citizen regardless of whether the citizenship was acquired by birth or naturalization. Unlike denaturalization/revocation, expatriation does not involve fraudulent or illegal procurement of citizenship. Rather, expatriation results when a U.S. citizen voluntarily commits certain acts, enumerated in the expatriation statute, with the specific intent of relinquishing U.S. citizenship. Expatriation does not necessarily entail administrative adjudication or determination. However, unless there is an explicit, written renunciation of citizenship, expatriation is typically determined and disputed when a U.S. citizen is denied rights and privileges of a U.S. citizen such as a U.S. passport. Such a denial may be reviewed in an action for declaratory judgment brought by the nationality claimant under INA §360 and 28 U.S.C. §2201. As noted above, genuine issues of U.S. nationality that arise in removal proceedings are transferred to a federal district court for resolution. The judicial review provisions and related litigation for the legalization program under the Immigration Reform and Control Act of 1986 (IRCA) remain relevant in light of the legalization provisions of S. 744 , the Senate-passed bill known as the Border Security, Economic Opportunity, and Immigration Modernization Act. Under INA §245A(f)(3) and pertinent regulations, there is a single level of administrative appellate review via the Administrative Appeals Unit of the USCIS. Pursuant to INA §245A(f)(4), judicial review of IRCA legalization denials is only available as review of a deportation order under former INA §106, since denial of legalization would generally lead to the initiation of deportation proceedings against the unauthorized alien. The statutory standard of review requires that judicial review can only be based on the administrative record established by the administrative appellate review and that the determinations and fact findings of this administrative record are conclusive unless the legalization applicant can show that there was abuse of discretion or that the administrative findings were directly contrary to clear and convincing facts in the record as a whole. In 1996, the IIRIRA amended the IRCA judicial review provision to limit judicial review to cases where a person had actually filed a legalization application within the period defined by IRCA or had attempted to file a complete application and fee with a legalization officer but the officer refused to accept them. Aside from such cases, there is no judicial or administrative review of a denial of legalization based on the late filing of an application. It is worth noting that the IRCA legalization program had led to a spate of litigation challenging different aspects of the program's implementation. The U.S. Supreme Court interpreted the statute and implementing regulations for the IRCA legalization program as not precluding judicial review of the legalization process, given the strong presumption that Congress intends judicial review. H.R. 2278 , as reported by the Senate Judiciary Committee, would further limit judicial review of visa denial or revocation by the DHS, as opposed to the DOS; voluntary departure, a form of removal relief; reinstatement of previously issued removal orders for aliens who illegally reenter the United States after being removed or having departed pursuant to a removal order; and naturalization delays or denials. Section 405 of the bill would bar judicial review of a visa denial or revocation by DHS for security purposes and apply to denials and revocations before, on, and after the effective date of the bill's enactment. Although the INA already bars judicial review of post-removal denials of voluntary departure and court-ordered stays of removal pending consideration of a voluntary removal claim, §601 of the bill would further restrict courts from tolling the period permitted for voluntary departure. Section 603 of the bill would increase limits on judicial review of removal order reinstatements, already barred in general, by explicitly barring review of reinstated orders because of constitutional claims or questions of law raised in an appeal. Section 203 of the bill would revise judicial review of naturalization delays by restricting courts to reviewing the reason for the delay and eliminating current jurisdiction to take and decide a naturalization case on its merits. This provision would also eliminate the current de novo standard for judicial review of naturalization denials and limit judicial review of the DHS determination regarding certain naturalization requirements, including good moral character, understanding of and attachment to the Constitution, and disposition to the good order and happiness of the United States. Section 204 of the bill would authorize administrative denaturalization by the Attorney General of persons engaged in certain terrorism-related activities. Although the bill does not bar judicial review of such denaturalization, currently and historically, denaturalization has solely been a function of the federal courts. In contrast, S. 744 , as passed by the Senate, provides for judicial review of the various legalization avenues that the bill would establish; it does not include new restrictions on judicial review regarding removal/detention or visa denial or revocation, although it does include limits on judicial review in other contexts, such as penalties for employer noncompliance with various requirements for employing foreign workers. During the Senate Judiciary mark-up of the bill, some amendments to limit judicial review of legalization denials were rejected, as well as one to limit judicial review of DHS visa denial or revocation for security purposes. In the Senate report accompanying the bill, the Committee noted that a number of advocacy groups warned that restricting judicial review of legalization programs would eliminate "the important backstop of the Federal court system to determine whether the executive branch properly implemented the bill." During the mark-up, some Senators "voiced concern that the amendment would undermine the Constitutional system of checks and balances by eliminating independent oversight of a significant administrative program that will affect millions of people. They also emphasized the risk of error in the program, and the resulting need for judicial review." Minority views in the bill's report expressed concern about the "unnecessarily broad judicial review of the denial of any application, which would necessarily create a litany of litigation and undermine the enforcement of our immigration laws," and the "unlimited judicial review the bill creates for the new legalization and other visa programs." S. 744 contains some provisions restricting judicial review in the contexts other than the removal/detention and immigration benefits such as visa issuance and naturalization. For example, §4306 of the bill would bar judicial review of the finding of a violation of the L-visa nonimmigrant program for intracompany transferee executives or managers by L-visa employers. Although it does not bar judicial review, §3101 of the bill would revise the judicial review provision of INA §274A, concerning the unlawful employment of aliens, by specifying certain deadlines and standards for judicial review of determinations of violations and penalties against non-compliant employers. Finally, §4506 of the bill would bar judicial review of determinations related to the visa waiver program, including visa refusals, a decision to designate or not designate a country as a visa waiver program country, and DOS computation of visa refusal rates or DHS computation of visa overstay rates on which a designation is based.
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Congress has plenary or sovereign power over the conditions for admitting aliens into the United States and permitting them to remain. This power is so completely entrusted to the political branch to legislate and implement as to be largely free from judicial review. However, this power is still subject to constitutional limitations, including substantive and procedural due process protections. In immigration cases, due process may be a flexible concept and the particular procedures that may be constitutionally required depend on the relative interests involved. Historically, immigration policy has sought to encourage and enable the admission and integration of desirable immigrants (workers, family, refugees/asylees), while discouraging and preventing the entry of undesirable aliens (national security risks/terrorists, criminals, public charges). Accordingly, in deciding what degree of judicial review is appropriate in immigration matters, Congress has sought a balance between a system that is fair to desired immigrants, yet facilitates the removal of undesired aliens. Initially, a habeas corpus proceeding provided the primary avenue of judicial review of various immigration determinations. In the wake of Supreme Court decisions construing the Administrative Procedure Act as applying to and providing an avenue for judicial review of immigration adjudications, Congress amended the Immigration and Nationality Act (INA) of 1952 by adding a judicial review provision in 1961 that provided for review by federal courts of appeal for deportation orders, but only for habeas corpus review of exclusion orders by federal district courts. Beginning with the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) and the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), legislation and administrative actions have focused on reducing immigration litigation by limiting and streamlining both administrative appeal and judicial review procedures regarding removal of aliens and by rendering aliens in certain categories ineligible for certain types of relief from removal. Even when an alien may be considered for discretionary relief, judicial review of denials of relief from removal is restricted, as is review of removal orders issued to criminal aliens or national security risks. Also, the REAL ID Act restricted habeas review and certain other non-direct judicial review in response to U.S. Supreme Court holdings that such review was still available after the 1996 acts. In the 113th Congress, S. 744 and H.R. 2278, among other bills, would generally continue the trend of limiting judicial review; however, S. 744 provides for judicial review of its legalization programs. This report will summarize judicial review for immigration matters, including visa denials and revocations; removal orders and detention; naturalization delays, denials, and revocations; expatriation; and legalization denials. Administrative adjudications such as removal proceedings or determination of immigration benefits such as naturalization are beyond the scope of this report.
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A broad range of plans that involve benefits to workers not in the form of cash currently exist,including a wide variety of plans that are for retirement purposes (and that employees cannot receiveuntil they leave the firm). These plans receive tax benefits in that contributions and earnings are nottaxed to individuals until received as pensions (or payments on separation). These plans fall into twobasic types: defined benefit plans (where workers are guaranteed a certain benefit related to earningsand years of service) and defined contribution plans, where employees receive benefits based on thesize of assets and accumulated earnings. For most types of plans, contributions to these plans aretypically made by employers, and thus do not permit employees to choose between them and cashwages. For a variety of reasons, defined benefit plans, which once dominated the pension landscape, have been in a decline over the past quarter of a century and defined contribution plans are on theincrease. This rise in defined contribution plans particularly reflects a popular form of definedcontribution plan: a 401(k) plan, where individual accounts are maintained, both employers andemployees contribute, and employee contributions are voluntary. Employees have some choice inthe allocation of their own contributions. Employer stock may be one of the choices; employercontributions may also be made in the form of employer stock. While all pension plans are subject to regulations of some type, the restrictions are greatest for defined benefit plans. Defined benefit plans are also covered by pension insurance, which insuresagainst total loss of assets. Some of the restrictions on plans, particularly defined benefit plans, weredesigned to insure sound investments and to make sure that the plans were not simply a tax shelterfor high ranking employees and managers. Only defined benefit plans have restrictions on theamount of employer stock that can be held (10%). For defined contribution plans, employees bearthe risk of loss of investment or low returns. Some types of plans with retirement features(Employee Stock Ownership Plans, or ESOPs) must hold assets primarily in the form of employerstock. Plans may be combined. Tax benefits are also provided for acquiring employer stock that is not restricted to retirement plans. These benefits include benefits for stock options and stock purchase plans: the former aregenerally directed to high ranking employees and managers, while the latter are generally availableto all employees. (1) Why should firms pay employee compensation in the form of pension or profit sharing plans(or other fringe benefits) rather than in cash? Does the existence of these plans hinge solely orlargely on tax benefits? In this section we briefly discuss several reasons that firms might desire topay compensation, or that individuals might like to receive it, in the form of pensions or stock. Thefirst three reasons are largely associated with defined benefit pension plans while the last two areassociated with profit-sharing or stock ownership plans. Defined contribution plans not in the formof stock may, indeed, have largely arisen from a desire to exploit tax benefits, as it is difficult todiscern another reason for using them. One reason for the popularity of these retirement plans might be that collective plans, such as pension plans, could be considered desirable because of administrative savings and risk reduction. Pension plans are also often constructed to provide insurance elements, such as disability andsurvivor payments and life annuities. Insurance of this nature is often not efficiently provided inprivate markets because of adverse selection. (Adverse selection occurs when individuals sortthemselves out due to private knowledge of risks. For example, a person with a terminal illnessmight desire to buy life insurance but would not purchase a life annuity.) While administrative savings could apply to any plan, risk-pooling and insurance elements would tend to apply most strongly to defined benefit pensions plans with diversified assets andwould not apply to stock ownership plans which tend to increase risk. Administrative and riskreduction benefits have probably declined over time with the current availability of large mutualfunds and the benefits are particularly less important for defined contribution plans that do not haveunique elements of insurance and risk reduction associated with defined-benefit plans. Investment in human capital is generally under-provided in a market economy, because individuals cannot engage in involuntary servitude or commit to a certain form of employment toinsure that future earnings are used to repay human capital investments. These problems apply bothto general education and to certain types of on-the-job training. Returns to on-the-job training thatteaches skills specific to the firm can only be exploited by remaining with the firm. However,returns to on-the-job training that teaches skills transferable to other jobs can be realized by eitherstaying with the firm or moving to another firm. It is in the interest of the firm to retain employeeswhen the firm has invested in their training and whose net product is low or even negative in theearly period of the career. Defined benefit pension plans that are not quickly vested, and whosebenefits become greatest when spending a long career with a company, can be used to allow firmsand employees to mutually exploit gains from these types of human capital investment. (Government pension regulations which require early vesting and portability as ways to protectworker retirement security and guard against tax sheltering may, however, have eroded this benefit.) Pension plans may also be a way of encouraging employees to retire as their marginal product falls, without undermining morale by firing older workers who have become less productive (or,these days, placing the employer in the position of potentially violating the law). Defined benefitpension plans are particularly effective because workers who have reached full retirement and remainat work forgo their pensions, and their net wage is reduced, creating a powerful substitution effectthat encourages retirement while also offsetting lost income. Defined contribution plans permitretirement but do not create as powerful an incentive to retire and thus do not perform this functionas well. Another problem that large firms with many stockholders and/or employees face is the problem of a misalignment of shareholder and worker interests. In the case of managers, this problem is oftenreferred to as the principal-agent or agency cost problem: managers who run the company as anagent for shareholders may make decisions that do not necessarily maximize stockholder profits. Moreover, large firms may find it difficult to monitor the performance of workers; in particular theycannot easily distinguish between the effects of work effort versus outside influences onproductivity. One way that firms may attempt to remedy this problem is through use of stock options(which provide employees an incentive to increase the firm's value) and stock ownership plans,which provide some alignment with the shareholders' objectives. Of course, in theory, this approachwould not be particularly beneficial for the rank and file employees of large firms, where additionalwork effort by any one employee would have a negligible effect on the value of that employee'sstock. Stock options and ownership could have an effect on top management, whose actions haveimportant consequences, and on closely held firms. Moreover, many managers believe that employerownership boosts employee loyalty and morale. (2) Employee stock ownership can also work against shareholder interests and economic efficiency. Firms where employees hold a large fraction of stock are more impervious to hostile takeovers, asemployees and managers may otherwise fear loss of pay and jobs in such a circumstance. However,threats of takeovers are also a market mechanism that may keep the principal-agent problem undercontrol and both takeover threats and actual takeovers may lead to a more efficient company. Reducing takeovers may be advantageous for managers and workers but may not be desirablesocially. Providing compensation in the form of stock is often considered cheaper because it does not reduce current cash-flow. Such an approach may be particularly attractive to new and fast growingfirms, where access to capital markets is difficult and initial profitability is low. This motive maylead to more economic efficiency if capital markets consistently overestimate expected risk. It maylead to less efficient markets if the dilution of stock makes information on the firm's profitabilitymore difficult to assess by investors. The previous section has suggested private motives even in the absence of tax benefits fordefined benefit pension plans and for stock ownership plans, but there does not appear to be a strongprivate rationale for defined contribution plans not held in the form of employer stock. Clearlyanother reason for pension and profit sharing plans that may play a crucial role in encouraging theseplans, particularly defined contribution plans not invested in employer stock, is the tax benefitsassociated with them. Amounts contributed to a pension plan and their earnings are not subject totax until received as pensions, usually many years into the future. The combination of deferral of taxon the initial contribution and deferral of tax on earnings is the equivalent of an exemption ofearnings from tax, and is thus a valuable tax benefit. Why should the government intervene with tax subsidies (and regulations) to shape the compensation package? And why should it intervene with mixed signals, including both benefitsfor and restrictions on ownership of employer stock in pension plans? The first set of rationales for supporting pension plans are also are among the reasons for establishing Social Security: adverse selection in annuity markets and failure of individualoptimization (failure to save a desirable amount). (3) Adverse selection in annuity markets occursbecause individuals expecting to have a shorter life span will avoid the annuities market, therebymaking the annuities unattractive for the average individual. This rationale would justify taxsubsidies to pension plans that provide retirement annuities, early vesting, and mandates for broadcoverage of employees. (The latter rule is probably necessary in any case to prevent the tax benefitsfrom becoming a tax shelter for highly compensated employees.) Of course, it is not clear thatindividuals do not save enough, and it is not clear why using resources (in the form of reduced taxes)to encourage a private pension system that covers about half of workers should be preferred todevoting those resources to an expansion of Social Security. The entire pension system has been shifting away from plans that address these goals: many defined contribution plans have a lump-sum payoff option, and defined benefit plans have beenincreasingly displaced by defined contribution plans. 401(k) plans, which have become verypopular, allow voluntary, not mandatory, contributions. Outside of certain defined benefit plans,the current systems have simply become primarily ways to obtain tax benefits. Of course, arguments are made that these tax benefits have encouraged saving, but neither economic theory nor empirical evidence has confirmed that view. (4) In any case, this rationalesuggests that prudence in investment is important to encourage. In that case, many of the proposalsfor revision, including limits on employer stock holding in any type of pension plan, and reducingor eliminating any required holding period, might be justified. Of course, such an approach alsosuggests that employee stock ownership plan subsidies be discontinued or modified. Some of the rules made to insure safe and broadly available worker pensions have been in conflict with solutions to other economic problems. For example, as noted earlier, a marketeconomy tends to under-invest in human capital. There are obviously massive governmentinterventions through direct spending, low-interest loans, and tax benefits to provide for formaleducation and training. Pension rules may, however, have undermined the use of defined benefitpensions for encouraging spending on on-the-job training. For example, rules mandating earlyvesting are in conflict with objectives to increase on-the-job training (objectives that might be worthyof pursuit by the government as well), although they may be appropriate to increase pension coverageand employee security. Similarly, non-discrimination requirements have been used to prevent theuse of the tax subsidies as a tax shelter for highly compensated employees and increase coverage,even though on-the-job training benefits may not be uniform across employees. Diversification ofassets is consistent, however, with both government and private rationales for defined benefitpension plans. Economic problems arising from principal-agent costs or worker monitoring costs may beargued to justify government subsidies to stock ownership plans to increase efficiency beyond whatprivate markets may do. However, they are unlikely to be addressed by ownership of employerstock among rank and file employees of large companies, where most tax subsidies for pensions aredirected. Moreover, encouraging practices that make companies resistant to takeover may reducerather than increase economic efficiency. Nor is it clear that stock ownership plans benefits inpreserving cash flow outweigh the possible negative effects of using stock as compensation onstockholder information. Thus, the justification for government subsidies to stock ownership is notreally established. As discussed above, the discussion of justifications for government intervention based oneconomic problems suggests rationales for traditional pension plans, particularly those with definedbenefits, but do not necessarily suggest a justification of tax subsidies for plans such as 401(k) plans,where participation by employees is voluntary. These subsidies may not even increase retirementsaving. However, given that subsidies do exist, there does appear to be a case for increasing thesafety of investments by limiting investment in employer stock, while the rationale for supportingemployer stock ownership plans appears weak. If limits on ownership are to be imposed, how should constraints work? It would appear better for administrative and other reasons to impose the limits on the share of contributions made ratherthan the share of assets. A reason for limiting the share of assets in employer stock in defined benefitplans is in part because of pension insurance and because of limits on excess contributions, issuesthat do not exist for 401(k) plans. In the case of a defined contribution plan, a successful employerstock may simply become a larger part of the asset base because it is appreciating rapidly and forcedsales may not be sensible. Other legislative changes might be requirements that employees be ableto sell employer contributed stock immediately or within a few years (which is proposed in somelegislation), disallowing deductions for stock contributions until employees are allowed to sell, oreven prohibiting these types of contributions altogether. It is not clear whether these restrictions willbe successful, however, if ESOPs remain as an option. Another legislative proposal that has been made to increase the security of individual investment plans (which might be used instead of explicit restrictions) is to require firms to provideinvestment advice, since firm managers may have a conflict of interest. Of course, investmentadvice is not costless, and it could significantly discourage the use of these plans in the case of smallfirms. Moreover, virtually any independent investment advisor would counsel against holding alarge part of retirement assets in a single stock, but many advisors would suggest taking on generalstock market risk. If explicit restrictions are imposed on ownership of a single stock, suchindividual advice might not be necessary. Alternatively, a general public information campaign maybe considered. Moreover, the publicity associated with the Enron bankruptcy, along with other firmfailures and the decline in the stock market, may be adequate to alert individuals to the need forportfolio diversification. One criticism that has been made of these proposals is that firms may respond by reducing their contributions. It is not clear that such a reduction would occur or should be a problem if it did (andmany contributions are currently made in cash rather than stock). If stock contributions have anyvalue, then they are likely to substitute for cash wages. It is not clear that policy should be concernedabout employer matches in a risky asset as a substitution for cash wages, particularly when theparticipation is voluntary, both on the part of individuals contributing to plans and firms setting upplans. The beneficiaries in both cases are only part of the population (and the more affluent part). An argument could be made that the revenue derived from increased taxes on cash wages might bebetter used for other purposes.
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The loss of retirement assets held in Enron stock by Enron employees has stimulated proposals to restrict the holding of employer stock in retirement plans, and other proposals to regulate theseplans. Stock in the Enron plan came from firm contributions in the form of stock that was notallowed to be sold and from voluntary investment by employees. This report focuses on rationalesfor providing employer retirement plans and for holding (or not holding) employer stock in theseplans, both from the perspective of the private sector and of government policy. Retirement plans fall into two types: defined benefit plans, where a pension based on earningsand years of service is provided; and defined contribution plans, where individuals receive benefitsbased on accumulated principal and interest. Either plan can hold employer stock, but holdings arelimited to 10% of assets in the case of defined benefit plans. These plans receive tax subsidies, asdo employee stock purchase plans and certain types of stock options. The analysis suggests that there are economic reasons that firms and employees may engage in pension and profit sharing (or stock ownership) plans even in the absence of tax subsidies. Pensionplans, primarily defined benefit plans, may be attractive for administrative and risk-reductionreasons, for dealing with inadequate investment in on-the-job training, and for smoothing theretirement of older workers. Stock options and stock ownership plans may be useful for addressinginconsistency in objectives between shareholders and managers and worker monitoring problems,although these benefits are not likely to accrue to stock ownership by the rank and file of largecompanies. These employee stock ownership plans may also deter hostile takeovers, which mayundermine economic efficiency and stockholder interests. Stock contributions are also popularbecause they do not reduce cash flow, which has both benefits and costs from an economic efficiencyperspective. Government subsidies to plans may be justified to increase retirement incomes and access to annuities because of a shortfall in optimal savings and certain economic problems with self selectionin purchasing annuities. These objectives also underlie the justification of Social Security. Pursuingthese goals may actually conflict with another worthy objective, on-the-job training. However,objectives that are addressed via employee stock ownership do not appear important in shaping thenature of large, broadly-based, retirement plans. Diversification of plan assets and prudentinvestment portfolios do appear consistent with rationales for government intervention. Attempts to address this issue might take several forms: restrictions on shares of employer stock in plans, prohibiting employer stock contributions or lifting restrictions on sale, denying a taxdeduction on employer contributions until they could be sold, and requiring independent investmentadvice. The last proposal is not costless and could undermine participation for small firms. Foradministrative and other reasons, it may be rational to impose share restrictions on allocations ofcontributions, rather than on assets. There are no plans to update this report.
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Though only about three times the size of Washington, DC, and with a population of 5.5 million, the city-state of Singapore punches far above its weight in both economic and diplomatic influence. Its stable government, strong economic performance, educated citizenry, and strategic position along key shipping lanes make it a major player in regional affairs. For the United States, Singapore is a crucial partner in trade and security cooperation, as the Obama Administration executes its rebalance to Asia strategy. Singapore's value has only grown as the Administration has given special emphasis to the Association of Southeast Asian Nations (ASEAN) as a platform for multilateral engagement. Singapore's heavy dependence on international trade makes maintaining regional stability one of its foremost priorities. As a result, the nation is a firm supporter of both U.S. trade policy and the U.S. security role in Asia. However, the country also maintains close relations with China. As an English colony, Singapore was a trading post for the East India Company, but in 1959, Singapore gained a large degree of self-rule. That same year, Lee Kuan Yew, who was head of the People's Action Party (PAP), was elected prime minister. Singapore's leaders decided that, given the city-state's small size, it should unite with Malaysia. That merger took place in 1963, but the federation was short-lived. Disputes arose between Singapore leaders and those from Malaysia's ruling party, the United Malays National Organization (UMNO), over economic management and several other issues. UMNO advocated preferential policies to support ethnic Malays over the country's sizeable Indian and Chinese populations, and objected to PAP moves to seek greater influence across the merged federation. Many in Malaysia felt that Singapore, with a majority ethnic-Chinese population, could gain greater economic dominance over the federation. In 1965, the Malaysian Parliament expelled Singapore from the federation. Despite concerns about Singapore's economic prospects and its scant resource base, the economy quickly grew. Because of its location on the Strait of Malacca—one of the world's busiest maritime thoroughfares—Singapore's port soon became one of the world's busiest, and the country attracted foreign businesses and investment. Now, Singapore's GDP per capita exceeds that of the United States, Japan, and Hong Kong. The PAP has won every general election since the end of the colonial era in 1959, aided by a fragmented opposition, Singapore's economic success, and electoral procedures, such as group districting, which strongly favor the ruling party. Opposition parties tallied their best results in Singapore's history in 2011 Parliamentary elections, garnering about 40% of the popular vote and leading PAP leaders to vow reforms that would respond to public concerns about widening wealth disparities and the country's expanding reliance on foreign laborers. In September 2015, following several gradual policy shifts including the imposition of some limits on foreign labor and improved benefits for the poor and elderly, the PAP won nearly 70% of the popular vote in nationwide polls, leaving it with 83 of Parliament's 89 seats. Singapore's parliamentary-style government is headed by the prime minister and cabinet, who represent the majority party in Parliament. The president serves as a ceremonial head of state, a position currently held by Tony Tan Keng Yam. Lee Hsien Loong has served as Prime Minister since 2004. Lee is the son of former Prime Minister Lee Kuan Yew, who stepped down in 1990 after 31 years at the helm. The senior Lee, who died in May 2015, still is widely acknowledged as the architect of Singapore's success as a nation. He resigned his post as "Minister Mentor" following the 2011 elections, citing a need to pass leadership on to the next generation. In 2010, changes to the constitution guaranteed that more non-PAP members would be represented in the Parliament. The electoral reforms were seen as an acknowledgement by the PAP that it must adjust to a more open and diverse Singapore. The country's leaders have acknowledged a "contract" with the Singaporean people, under which individual rights are curtailed in the interest of maintaining a stable, prosperous society. Supporters praise the pragmatism of Singapore, noting its sustained economic growth and high standards of living. Others criticize the approach as stunting creativity and entrepreneurship, and insist that Singapore's leaders must respond to an increasingly sophisticated and well-educated public's demand for greater liberties for economic survival. Singapore's economy depends heavily on trade and exports, particularly in consumer electronics, information technology products, pharmaceuticals, and financial services. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004—the United States' first bilateral FTA with an Asian country—and trade has increased significantly as a result. In 2015, Singapore was the 17 th -largest U.S. trading partner. Two-way goods trade amounted to $47 billion, with the United States exporting $28 billion to Singapore and importing $18 billion. Singapore is the largest U.S. trading partner in ASEAN, and the country remains a substantial destination for U.S. foreign direct investment (FDI). In 2012, the latest year for which FDI information is available, $138.6 billion was invested from the United States in Singapore. According to the World Bank, the country's Gross National Income Per Capita is $52,090, one of the highest levels in the world. Singapore and the United States are among the 12 countries on both sides of the Pacific that are part of the proposed Trans-Pacific Partnership (TPP), the centerpiece of the Obama Administration's economic rebalance to Asia, which awaits ratification by each of its members. Singapore was one of four nations that negotiated the TPP's predecessor agreement, the Trans-Pacific Strategic and Economic Partnership (P4) in 2006. (The others were Brunei, Chile, and New Zealand.) Singapore's economy is heavily dependent on trade, with annual trade volumes amounting to around three times its annual GDP. Singapore actively encouraged U.S. participation in an expansion of that agreement, and has strongly urged the United States to ratify the proposed agreement, on both strategic and economic grounds. Singapore has concluded at least 18 FTAs, and is pursuing several more. One of them is the Regional Comprehensive Economic Partnership (RCEP). It comprises 16 Asian nations, and negotiations are ongoing, even though some of the participants are simultaneously working on the TPP. Singapore also was a signatory to the Chinese-led Asian Infrastructure Investment Bank (AIIB). The 2005 "Strategic Framework Agreement" and a 2015 enhanced "Defense Cooperation Agreement" formalize the bilateral security and defense relationship between the United States and Singapore. The 2005 agreement was the first of its kind with a non-ally since the Cold War, and the two pacts build on the U.S. strategy of "places-not-bases" in the region, a concept that allows the U.S. military access to facilities on a rotational basis without bringing up sensitive sovereignty issues. The agreements allow the United States to operate resupply vessels from Singapore and to use a naval base, a ship repair facility, and an airfield on the island-state. The 2015 agreement allows the United States to operate surveillance aircraft from Singapore facilities. The U.S. Navy also maintains a logistical command unit—Commander, Logistics Group Western Pacific—in Singapore that serves to coordinate warship deployment and logistics in the region. Changi Naval Base is the only facility in Southeast Asia that can dock a U.S. aircraft carrier. Singapore also hosts the Shangri-La Dialogue, an annual defense forum where defense ministers and military officials from 26 nations can discuss transnational security concerns, such as the threat of trans-national terrorism and the South China Sea disputes. Singapore and the United States have increased bilateral exercises and training, including combined air combat exercises with fighter units from other countries' air forces, as well as enhanced joint urban training at Singapore's sophisticated Murai Urban Training Facility. Singapore forces also train regularly in the United States. An April 2012 agreement outlines bilateral initiatives to strengthen global cargo security procedures; in 2003, Singapore was the first Asian country to join the Container Security Initiative (CSI), a series of bilateral, reciprocal agreements that allow U.S. Customs and Border Patrol officials at selected foreign ports to pre-screen U.S.-bound containers. Singapore also was a founding member of the Proliferation Security Initiative (PSI), a program that aims to interdict weapons of mass destruction-related shipments. In April 2013, the USS Freedom , a U.S. Navy littoral combat ship (LCS), arrived in Singapore to begin an eight-month deployment in Southeast Asia. In 2016, the U.S. Navy deployed two of the vessels to Changi Naval Base, with plans to add two more in the coming years. The stationing of the LCS is emblematic of the role that Singapore can play in the U.S. "pivot" to the region. The vessel is the first U.S. Navy ship to be designed to fight close to shore in shallow waters, to carry a smaller crew, and to boast flexible capabilities that include anti-mine and anti-submarine missions. The smaller size also makes the LCS more amenable to doing exercises with countries that have smaller-scale naval forces. Singapore's combination of sophisticated facilities and political standing in the region allows it to host such U.S. naval assets. The United States and Singapore engage in ongoing law enforcement cooperation. Singapore is a transit point for a wide range of individuals, including suspected terrorists from neighboring countries, and its active port is a trans-shipment point. In the past, some U.S. officials have expressed concerns about the strength of cooperation. The State Department's 2013 country report on terrorism, however, said that cooperation has "benefited from improved working level dialogue on many of the issues that had previously impeded the development of more strategic and productive agency-to-agency relationships." Among U.S. priorities are improvements in Singapore's port security, where the Department of Homeland Security hopes to see Singapore make greater use of advance manifests to screen containers through its busy port, and improvements to the bilateral extradition treaty. Singapore was a founding member of ASEAN, the region's leading multilateral body, which allows Southeast Asia's mostly smaller countries to influence regional diplomacy, particularly vis-à-vis China. Renewed U.S. engagement in the Asia Pacific under the Obama Administration has pleased Singapore and may have allowed it more diplomatic space to stand up to Beijing on key issues. Singapore has praised the Administration's "rebalancing" effort toward Asia, yet has been careful to warn that anti-China rhetoric or efforts to "contain" China's rise will be counterproductive. At the same time, Singapore leaders have publicly told Chinese audiences that deeper tensions between China and the United States are detrimental to the broader Asia region. Maintaining strong relations with both China and the United States is a keystone of Singapore's foreign policy. Singapore often portrays itself as a useful balancer and intermediary between major powers in the region. In the South China Sea dispute, for example, in 2011, Singapore—a non-claimant—called on China to clarify its island claims, characterizing its stance on the issue as neutral, yet concerned because of the threat to maritime stability. At the same time, Singapore was hosting a port visit by a Chinese surveillance vessel, part of an ongoing exchange on technical cooperation on maritime safety with Beijing. China's economic power makes it a crucial component of trade policy for all countries in the region, but Singapore's ties with Beijing are multifaceted and extend to cultural, political, and educational exchanges as well. China is Singapore's largest trading partner, and Singapore signed on to the Chinese-led Asian Infrastructure Investment Bank (AIIB). There also are frequent high-level visits between Singapore and China. Singapore adheres to a one-China policy, but has an extensive relationship with Taiwan and has managed it carefully to avoid jeopardizing its strong relations with Beijing. Taiwan and Singapore have held large-scale military exercises annually for over 30 years and, in 2010, announced the launch of talks related to a free-trade pact under the framework of the World Trade Organization. Singapore does not have territorial claims in the South China Sea, but its trade-dependent economy means it has a direct interest in managing tensions and maintaining freedom of navigation in the increasingly tense waters. Singapore diplomacy towards the maritime disputes between China and Southeast Asian states generally stresses the importance of refraining from provocative behavior, conducting active diplomacy to lower tensions, and resolving disputes in accordance with international law, including the United Nations Convention on the Law of the Sea (UNCLOS). Beginning in 2015, Singapore has served as ASEAN's rotating country coordinator for ASEAN-China dialogue, with the responsibility of brokering common ASEAN positions on the disputes. In that role, it is generally cautious about promoting consensus between ASEAN's ten members, who have widely different interests and approaches to the disputes. However, Singapore officials have occasionally spoken strongly about actions they see as provocative or liable to increase tensions. While the PAP has been elected by a comfortable majority in every election since Singapore's founding, the government "has broad powers to limit citizens' rights," according to the U.S. State Department's 2015 Country Report on Human Rights Practices. The State Department noted that "the government could and did censor the media (from television shows to websites) if it determined that the content would undermine social harmony or criticized the government." It also noted that Singapore's broad Internal Security Act (ISA) permits preventive detention without normal judicial review, although "in recent years, the government has used it against alleged terrorists and not against persons in the political opposition." PAP's ideology stresses the government's role in enforcing social discipline and harmony, and the party, in the past, has been particularly concerned about racial tensions in Singapore. In the 1960s, there were several race riots in the country, pitting ethnic Malays against ethnic Chinese. (Singapore's population is 74% Chinese, 13% Malay, and 9% Indian. ) Race riots, since then, have been relatively rare. Yet in December 2013 a traffic accident, which killed an Indian national, sparked widespread rioting in Singapore's Little India district, involving over 400 people. The police were able to regain control, but the incident may have pointed to frustrations among Singapore's migrant laborers. Greater, and generally freer, use of the Internet may be threatening to some of the leadership; in the past the government attempted to tighten control over bloggers, who may not exercise the same restraint as the mainstream media in limiting criticism of the ruling party or touching on sensitive issues such as race in Singapore's multi-ethnic environment. In 2015, a teenage blogger was arrested for posting a video criticizing Lee Kuan Yew after his death. He was convicted on charges of obscenity and insulting religious feelings, and was sentenced to four weeks imprisonment. International watchdog agencies criticize Singapore's control of the press as well. Singaporean officials have used defamation suits to intimidate reporters and news outlets, including The Economist and The New York Times , and in 2016 Reporters Without Borders ranked Singapore 154 th out of 180 countries in terms of press freedom, below other nations in the region, including Burma, Malaysia, and Thailand. New media controls have been stepped up as well: in 2013 the government issued new regulations for online news sites that report on Singapore, prompting international Internet companies with a presence in the city-state to criticize the move as backward-looking.
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A former trading and military outpost of the British Empire, the tiny Republic of Singapore has transformed itself into a modern Asian nation and a major player in the global economy, though it still substantially restricts political freedoms in the name of maintaining social stability and economic growth. Singapore's heavy dependence on international trade makes regional stability and the free flow of goods and services essential to its existence. As a result, the island nation is a firm supporter of the U.S. security role in Asia, but it also maintains close relations with China. The Obama Administration's strategy of rebalancing U.S. foreign policy priorities to the Asia Pacific enhances Singapore's role as a key U.S. partner in the region. A formal strategic partnership agreement between the United States and Singapore outlines access to military facilities, cooperation in counterterrorism and counter-proliferation, joint military exercises, policy dialogues, and shared defense technology. Singapore also supports U.S. international trade policy. Singapore and the United States are among the 12 countries on both sides of the Pacific involved in the Trans-Pacific Partnership (TPP), which is the centerpiece of the Obama Administration's economic rebalance to Asia. In 2015, Singapore was the 17th-largest U.S. trading partner with $47 billion in total two-way goods trade, and the country remains a substantial destination for U.S. foreign direct investment. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004, and since then trade has burgeoned between the two countries. Singapore's People's Action Party (PAP) has won every general election since the end of the colonial era in 1959, aided by a fragmented opposition, Singapore's economic success, and electoral procedures that strongly favor the ruling party. Some point to changes in the political and social environment that may herald more political pluralism, including generational changes and an increasingly international outlook among Singaporeans. However, the PAP maintains a dominant political position. In September 2015, it won nearly 70% of the popular vote in nationwide Parliamentary elections that left it with 83 of the 89 seats in Parliament. In March 2015, Lee Kuan Yew, who was Singapore's Prime Minister from 1959 to 1990, passed away. He was—and still is—considered the founder of modern Singapore, and he is credited with transforming Singapore from an English colony into one of the world's wealthiest and least corrupt countries. His son, Lee Hsien Loong, is Singapore's current Prime Minister.
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The July 2004 report of the National Commission on Terrorist Attacks Upon the United States(also known as the 9/11 Commission) concluded that the key officials responsible for determiningalien admissions (consular officers abroad and immigration inspectors in the United States) were notconsidered full partners in counterterrorism efforts prior to September 11, 2001, and as a result,opportunities to intercept the September 11 terrorists were missed. (1) The 9/11 Commission contendedthat "(t)here were opportunities for intelligence and law enforcement to exploit al Qaeda's travelvulnerabilities." The report went on to state: "Considered collectively, the 9/11 hijackers included known al Qaeda operatives who could have been watchlisted; presented fraudulent passports; presented passports with suspicious indicators ofextremism; made detectable false statements on visa applications; made false statements to border officials to gain entry into the United States;and violated immigration laws while in the United States." (2) The 9/11 Commission issued several recommendations that directly pertain to immigration law and policy. These recommendations are: Targeting travel is at least as powerful a weapon against terrorists as targeting their money. The United States should combine intelligence, operations, and law enforcement in astrategy to intercept terrorists, find terrorist travel facilitators, and constrain terroristmobility. The U.S. border security system should be integrated into a larger network ofscreening points that includes our transportation system and access to vital facilities, such as nuclearreactors. The Department of Homeland Security, properly supported by the Congress,should complete, as quickly as possible, a biometric entry-exit screening system, including a singlesystem for speeding qualified travelers. The U.S. government cannot meet its own obligations to the American peopleto prevent the entry of terrorists without a major effort to collaborate with othergovernments. (3) These recommendations have broad implications for immigration law and policy. Also, as Congress has moved on the Commission's recommendations, immigration-related reforms have beena key component of major legislative proposals. This report summarizes the major proposed reformsconsidered and adopted in the 108th Congress. Of the several bills that sought to implement recommendations of the 9/11 Commission in the108th Congress, two passed their respective Houses, and both of these proposed revisions toimmigration law: H.R. 10 , the 9/11 Recommendations Implementation Act, asamended, introduced by the Speaker of the House of Representatives Dennis Hastert and passed bythe House as S. 2845 on October 8, 2004 (House-passed S. 2845 ); and S. 2845 , the National Intelligence Reform Act of 2004, as amended, introduced bySenators Susan Collins and Joseph Lieberman and passed by the Senate on October 8, 2004(Senate-passed S. 2845 ). Certain immigration-related provisions of these bills weresignificant sources of contention by lawmakers, curtailing immediate agreement of a compromisebill. The conference report on S. 2845 passed the House on December 7 and the Senateon December 8, 2004. (4) The Intelligence Reform andTerrorism Prevention Act of 2004 ( P.L.108-458 ), a compromise bill signed on December 17, 2004 includes some - but not all - of theimmigration provisions that were originally under consideration. The major areas that were under consideration in these comprehensive reform proposals are briefly discussed below. References to CRS reports that analyze these issues in depth are listed foreach major area. (5) Summaries of the immigrationprovisions in P.L. 108-458 concludes the report. As mentioned above, actions to identify and intercept terrorists who are attempting to enter or leave the United States are a key component of the 9/11 Commission's recommendations. In 1996,Congress required the development of an automated entry and exit data system to track the arrivaland departure of aliens, but such a system has yet to be fully implemented. Following the 9/11terrorist attacks, Congress enacted additional measures, including the USA PATRIOT Act ( P.L.107-56 ) and the Enhanced Border Security and Visa Reform Act of 2002 ( P.L. 107-173 ), toencourage the more expeditious development of an automated entry and exit data system, and tofurther require that biometric identifiers be used in passports, visas, and other travel documents toimprove their security. To keep inadmissible aliens abroad, the Illegal Immigration Reform andImmigrant Responsibility Act of 1996 (IIRIRA, P.L. 104-208 , Division C) required theimplementation of a pre-inspection program at selected locations overseas under which immigrationofficers inspect aliens before their final departure to the United States, and authorized assistance toair carriers at selected foreign airports to help in the detection of fraudulent documents. A number of proposals were made in the 108th Congress to improve the accurate monitoring of persons entering and exiting the United States. Many of these proposals were not specific toaliens, but covered all persons traveling to or from the United States. These proposals included: hastening the development and installation of a biometric entry and exit data system that is integrated with various databases and data systems that process or contain informationon aliens <108>[House-passed, Senate-passed]; requiring the Secretary of Homeland Security to issue a notice of proposedrulemaking to allow for the pre-flight comparison of passenger records for any flight to or from theUnited States with the integrated terrorist watch list, and establishing an appeals process allowingfor modification of records [House-passed]; requiring the Secretary of Homeland Security to implement a watchlist forpassengers of cruise ships [Senate-passed]; authorizing DHS to establish permanent pre-enrollment programs that subjectparticipants, who may be either aliens and citizens of the United States, to criminal and watch-listscreenings and fingerprint checks, so that the inspections of such program participants may beexpedited at ports of entry [House-passed]; improving the security of passports and other travel documents, includingthrough the strengthening of security requirements for "breeder" documents that are used to obtainpassports or other travel documents [House- and Senate-passed]; encouraging the adoption of international standards for the uniform translationof names into the Roman alphabet for purposes of travel documents and security systems[House-passed]; expanding pre-inspection programs in foreign countries and assistance to aircarriers at selected foreign airports in the detection of fraudulent documents [House- andSenate-passed]; improving the security of the visa issuance process by providing consularofficers and immigration inspectors greater training in detecting terrorist indicators, terrorist travelpatterns and fraudulent documents [House- and Senate-passed]; improving the security of the visa issuance process by, among other things, (1)establishing an Office of Visa and Passport Security within the State Department to develop astrategic plan to disrupt the operations of individuals and organizations engaged in travel documentfraud, (2) increasing the number of consular officers, (3) codifying that all applications for temporaryvisas be adjudicated by a consular officer, (4) providing consular officers greater training in detectingfraudulent documents, and (5) stationing anti-fraud specialists at consular posts overseas[House-passed]; requiring persons applying for nonimmigrant visas between the ages of 12 and65 to be interviewed by consular officer prior to visa issuance, subject to waiver in certaincircumstances [Senate-passed]; authorizing and encouraging the President to enter into internationalagreements to curtail terrorist travel by upgrading verification and information-sharing systems[House- and Senate-passed]; limiting the President's ability to waive general statutory requirementsrequiring U.S. citizens traveling abroad or attempting to enter the United States to bear a valid U.S.passport, so that such a waiver can only be exercised with respect to U.S. citizens traveling to orfrom foreign contiguous territories who are bearing identification documents designated by DHS as(1) reliable proof of U.S. citizenship, and (2) of a type that may not be issued to an unlawfullypresent alien within the United States [House-passed]; amending the present waiver authority concerning document requirements forarriving nationals from foreign contiguous countries or adjacent islands, so that such waivers mayonly be granted (in non-emergency situations) through a joint determination by the Secretary ofHomeland Security and Secretary of State on the basis of reciprocity, and then only if the arrivingforeign national is in possession of identification documents deemed secure by the Secretary ofHomeland Security [House-passed]; and requiring the Secretary of State, in consultation with DHS, expeditiously todevelop and implement a plan for the use of biometric passports. This plan would require U.S.citizens and foreign nationals from contiguous territories or adjacent islands (i.e., aliens currentlywaived in � 214(d)(4) of INA) to present biometric passports, or some other type of secure biometrictravel document, for travel into the United States [Senate-passed]. For further discussion of these and related topics, see CRS Report RL32399 , Border Security: Inspections Practices, Policies, and Issues ; CRS Report RL32188 , Monitoring Foreign Students inthe United States: The Student and Exchange Visitor Information System (SEVIS) , CRS Report RL32234 , U.S. Visitor and Immigrant Status Indicator Technology Program (US-VISIT) ; CRS Report RL31512 , Visa Issuances: Policy, Issues, and Legislation ; and CRS Report RL32221 , VisaWaiver Program . A primary area of difference between House-passed and Senate-passed versions of S. 2845 concerned grounds for alien exclusion, removal, and relief from removal, asonly the House-passed bill dealt extensively with these areas. The Immigration and Nationality Act(INA) establishes admission and removal criteria for all foreign nationals seeking to enter and/orremain in the United States, and also provides certain discretionary and non-discretionary forms ofrelief from removal, such as granting asylum or withholding removal to a country where an alien islikely to face serious persecution or torture. Starting with the Anti-Drug Abuse Act of 1988 ( P.L.100-690 ) and continuing through the Antiterrorism and Effective Death Penalty Act of 1996 ( P.L.104-132 ) and the IIRIRA, Congress has expanded the grounds of inadmissibility and deportation andthe use of expedited removal, while it has also restricted relief from removal and judicial review ofremoval decisions. Subsequently, the Supreme Court has held that there is a strong presumption infavor of judicial review of administrative actions, and therefore, in the absence of a clear statementof congressional intent to repeal habeas corpus jurisdiction over removal-related matters, suchreview is still considered available. (6) Furthermore,the Court found that eliminating any judicialreview, including habeas review, without any substitute form of review for pure questions of lawwould raise serious constitutional questions. (7) Exclusion and Removal. After the 9/11 terrorist attacks, Congress further expanded the terrorism grounds for inadmissibility, removal, andmandatory detention in the USA PATRIOT Act in response to concerns that loopholes andinadequacies in the immigration laws were contributing to the ability of terrorists and theiraccomplices to travel to and remain in the United States. House-passed<108> S. 2845 soughtto broaden the scope of terror-related activity making an alien inadmissible or deportable, and limitthe availability of relief from removal in certain circumstances. These proposals included: barring aliens who are engaged or have engaged in terrorist activity from having their removal withheld (except for in cases of aliens seeking relief under regulationsimplementing the U.N. Convention against Torture), and also denying such relief to aliens found bythe Attorney General to have engaged in other terror-related activity (i.e., incitement or espousal ofterrorist activities) [House-passed]; expanding grounds making of terror-related activity making an alieninadmissible and deportable, including receiving military-type training by or on behalf of anorganization designated as a terrorist organization at the time of training[House-passed]; expanding the definitions of "engaged in terrorist activity" and "terroristorganization," which are used to describe certain grounds for inadmissibility and deportability, toinclude a broader scope of conduct relating to providing money or material support to a terroristorganization [House-passed]; providing for the inadmissibility and removability of aliens who havecommitted, ordered, assisted, incited, or otherwise participated in acts of genocide, torture, orextrajudicial killings abroad, or who have committed severe violations of religious freedom whileserving as a foreign government official [House-passed]; clarifying that an alien may be removed to his country of citizenship, birth, orresidence, unless such a country physically prevents the alien from entering the country or unlessremoval to such a country would be prejudicial to the United States[House-passed]; providing the Secretary of Homeland Security with greater discretion indeciding the countries to which an inadmissible or deportable alien may be removed [House-passed]; expanding the class of aliens arriving in the United States subject to immediateremoval without further hearing or review, by increasing the prior continuous U.S. physical presencerequired for exemption from such removal from two years to five years [House-passed]; providing that an alien currently being prosecuted for a crime or serving acriminal sentence is not subject to immediate removal, presumably to ensure effective exercise ofU.S. criminal jurisdiction [House-passed]; eliminating habeas review and other non-direct judicial review for certainremoval decisions and clarifying that in all immigration provisions restricting judicial review, suchrestrictions include habeas and other non-direct review, but that such restrictions do not precludefederal appellate court consideration of constitutional claims or other purely legal issues raised inaccordance with current statutory procedures [House-passed]; and precluding courts from staying a removal order pending judicial review, unlessthe alien shows by clear and convincing evidence that the entry or execution of such order isprohibited as a matter of law [House-passed]. Asylum and Other Forms of Relief from Removal. The United States has long held to the principle that it will not return aforeign national to a country where his life or freedom would be threatened. Aliens seeking asylummust demonstrate a well-founded fear that if returned home, they will be persecuted based upon oneof five characteristics: race, religion, nationality, membership in a particular social group, orpolitical opinion. In addition, regulations implementing the United Nations Convention AgainstTorture and Other Cruel, Inhuman or Degrading Treatment or Punishment (hereafter referred to asTorture Convention) prohibit the return of any person to a country where there are "substantialgrounds" for believing that he or she would be in danger of being tortured. Proposals to modifyasylum and other forms of relief from removal include found in House-passed and Senate-passedversions of S. 2845 included: establishing more stringent standards for asylum applicants accused by their home countries of being involved in terrorist or guerrilla-related activities, by requiring theseapplicants to demonstrate that their race, religion, nationality, membership in a particular socialgroup, or political opinion was or will be a central reason for their persecution[House-passed]; expressly providing that aliens who are a danger to the community or nationalsecurity of the United States and who are ordered removed may be indefinitely detained pendingremoval, in the Secretary of Homeland Security's nonreviewable discretion, and subject to reviewevery six months by the Secretary [House-passed]. For additional background, see CRS Report RL32564 , Immigration: Terrorist Grounds for Exclusion of Aliens ; CRS Report RL32276 , The U.N. Convention Against Torture: Overview of U.S.Implementation Policy Concerning the Removal of Aliens ; and CRS Report RL32621 , U.S.Immigration Policy on Asylum Seekers . There has been some concern that the acquisition of U.S. identification documents by terrorist aliens may facilitate their ability to engage in terrorist activities. The 9/11 Commission noted that"[a]ll but one of the 9/11 hijackers acquired some form of U.S. identification document, some byfraud...[and] these forms of identification would have assisted them in boarding commercial flights,renting cars, and other necessary activities." (8) Accordingly, the Commission recommended thatnational standards be set for the issuance of birth certificates and drivers' licenses to prevent theirfraudulent acquisition. The adoption of national standards for the issuance of drivers' licenses and other forms of identification has long been the subject of controversy. Although not technically an immigrationpolicy, the concern over these forms of identification -- often referred to as "breeder documents"-- has often been linked with immigration legislation. Pursuant to � 656 of the IIRIRA, Congressprovided standards for acceptance of state drivers' licenses and birth certificates when used forfederal purposes. Many opponents alleged that this provision was a step towards the creation of anational identification card, and it was subsequently repealed in 2000. In response to the 9/11 Commission's recommendations, however, a number of proposals were made to increase federal oversight over and improve the security of drivers' licenses, birthcertificates, and other state-issued forms of identification. Proposals were also made to improve thesecurity of Social Security documents and verify the identity of persons applying for benefits underthe INA. These proposals to improve identification verification procedures and the security ofpersonal identification documents included: barring federal agencies from accepting, for any official purpose, state-issued drivers' licenses or other identification cards unless a state fulfills certain federal securityrequirements concerning the issuance of such documents [House-passed,Senate-passed]; barring federal agencies from accepting, for any official purpose, state-issueddocuments that do not meet national minimum standards concerning the information and featuresincluded upon the drivers' licenses, identification cards, and birth certificates that states may issue[House-passed, Senate-passed]; barring federal agencies from accepting, for any official purpose, state-issueddocuments that do not meet national minimum issuance and record-keeping standards for theissuance of drivers' licenses, identification cards, and birth certificates by states [House-passed,Senate-passed]; barring federal agencies from accepting, for any official purpose, state-issueddocuments that do not meet certain identification verification procedures to ensure the accuracy ofdrivers' licenses, identification cards, and birth certificates issued (including under H.R. 10the prohibition on the acceptance of any foreign documents except official passports as a means toverify an applicant's identity) [House-passed, Senate-passed]; and providing relevant federal departments with the authority to conduct periodicaudits of each state's compliance with federal requirements concerning the issuance of drivers'licenses, identification cards, and birth certificates [Senate-passed]; making certain grants to states contingent upon their participation in aninterstate compact linking their respective motor vehicle databases[House-passed]; creating electronic birth and death registration systems that rely on a commondata set and exchange protocol, so as to assist officials in assessing the validity of birth certificatesand other records [House-passed]; establishing an electronic interface enabling authorized federal and stateofficials to verify records concerning vital events (i.e., birth, death, or marriage)[House-passed]; restricting the issuance of multiple replacement Social Security cards[House-passed, Senate-passed]; prohibiting a person's Social Security number from being displayed on his orher driver's license or motor vehicle registration [House-passed]; improving the application process for the "enumeration at birth" programwhich provides Social Security numbers to newborns [House-passed]; studying means for requiring photographic identification for Social Securitynumbers [House-passed]; requiring independent verification of any birth record submitted with anapplication for a Social Security account number [House-passed, Senate-passed];and requiring that, for purposes of establishing his or her identity to a federalemployee, an alien present in the United States may present a valid foreign passport or animmigration document issued by DHS or the Department of Justice under the authority ofimmigration laws, and no other document can be used for such purposes[House-passed]. For further background, see CRS Report RS21953, The 9/11 Recommendations Implementation Act (H.R. 10) and the National Intelligence Reform Act of 2004 (S. 2845):National Standards for Drivers' Licenses, Social Security Cards, and Birth Certificates ; CRS Report RL32127, Summary of State Laws on the Issuance of Driver's Licenses to Undocumented Aliens ; CRS Report RL32094 , Consular Identification Cards: Domestic and Foreign Policy Implications,the Mexican Case, and Related Legislation ; CRS Report RS21137(pdf) , National Identification Cards:Legal Issues ; and CRS Report RL30318 , The Social Security Number: Legal Developments AffectingIts Collection, Disclosure and Confidentiality. DHS is the primary federal agency responsible for enforcing immigration laws and securing the border. The DHS Bureau of Customs and Border Protection (CBP) is responsible for patrollingthe U.S. border and conducting immigration and customs inspections at ports of entry, while theDHS Bureau of Immigrations and Customs Enforcement (ICE) investigates immigration andcustoms violations in the interior of the country. Employees in other federal agencies also play asignificant role in enforcing immigration laws and protecting border security, such as consularofficers in the State Department who are responsible for screening aliens seeking visas to enter theUnited States from abroad. In issuing its recommendations to improve homeland security, the 9/11Commission noted the importance of a border security system that can adequately identify personsattempting to enter the United States. A number of proposals made in response to the 9/11Commission's findings called for the allocation of additional resources to improve border security. Of the bills implementing the 9/11 Commission recommendations, the proposals included: increasing the number of full-time border patrol agents, immigration and customs-enforcement investigators, and consular officers [House-passed,Senate-passed]; directing the Secretary of Homeland Security to increase Detention andRemoval Operations (DRO) bed space [House-passed]; improving the training of immigration enforcement officials within DHS andconsular personnel within the State Department [House-passed,Senate-passed]; acquiring and deploying to all consulates, ports of entry, and immigrationbenefits offices, technologies (including biometrics) to facilitate document authentication anddetection of potential terrorist indicators on travel documents [House-passed, Senate-passed]; expanding and increasing appropriations for pre-inspection at foreign airportsof passengers traveling to the United States [House-passed]; expediting construction to fill two gaps in the 14 mile long barrier at the SanDiego border [House-passed]; directing the Secretary of Homeland Security to develop and implement a planfor continuous surveillance of the Southwest border of the United States by remotely piloted aircraft[Senate-passed]; and requiring the Secretary of Homeland Security to carry out an advancedtechnology security pilot program on the Northern border of the United States[Senate-passed]. For additional background on the roles of various agencies in protecting border security, see CRS Report RL32562 , Border Security: The Role of the U.S. Border Patrol ; CRS Report RL32399 , Border Security: Inspections Practices, Policies, and Issues ; CRS Report RL32566 , Border andTransportation Security: Appropriations for FY2005 ; CRS Report RL32369 , Immigration-RelatedDetention: Current Legislative Issues ; and CRS Report RL32256 , Visa Policy: Roles of theDepartments of State and Homeland Security. At the heart of the INA are the rules on which aliens may enter and remain in the United States, the conditions of their stay, and the procedures for their entry and removal. In support of thisstructure, federal law has concomitantly imposed civil and criminal penalties on a variety ofactivities -- i.e., smuggling or harboring illegal aliens, committing immigration-related documentfraud to secure either entry into the United States or a benefit under the INA -- that facilitate orfurther violations of the legal immigration system. House-passed S. 2845 proposed toheighten criminal penalties for conduct violating or facilitating the violation of U.S. immigrationlaw, which include increasing the criminal and immigration-related penalties for document fraud,alien smuggling, and making false claims of U.S. citizenship. For additional background, see CRS Report RL32480 , Immigration Consequences of Criminal Activity ; CRS Report RL32657 , Immigration-Related Document Fraud: Overview of Civil, Criminal,and Immigration Consequences ; and, CRS Report RS21043, Immigration: S Visas for Criminaland Terrorist Informants. The Intelligence Reform and Terrorism Prevention Act of 2004, the compromise version of S. 2845 that ultimately was enacted into law, included some - but not all - of theimmigration provisions in both the House and Senate versions of S. 2845 . The majorfeatures of the immigration-related provisions in the act are briefly discussed below. Monitoring of Persons Entering and Leaving the United States. The Intelligence Reform and Terrorism Prevention Act requires accelerateddeployment of the biometric entry and exit system to process or contain certain data on aliens andtheir physical characteristics. It requires an in-person consular interview of most applicants fornonimmigrant visas between the ages of 14 and 79, and also requires an alien applying for anonimmigrant visa to completely and accurately respond to any request for information containedin his or her application. The act also expands the pre-inspection program that places U.S.immigration inspectors at foreign airports, increasing the number of foreign airports where travelerswould be pre-inspected before departure to the United States. Moreover, it requires individualsentering into the United States (including U.S. citizens and visitors from Canada and other WesternHemisphere countries) to bear a passport or other documents sufficient to denote citizenship andidentity. The act requires improvements in technology and training to assist consular and immigration officers in detecting and combating terrorist travel. It (1) establishes the Human Smuggling andTrafficking Center, which includes an interagency program devoted to countering terrorist travel;(2) requires the Secretary of Homeland Security, in consultation with the Director of the NationalCounter Terrorism Center, to establish a program to oversee DHS's responsibilities with respect toterrorist travel; and (3) establishes a Visa and Passport Security Program within the Bureau ofDiplomatic Security at the Department of State. Grounds for Alien Exclusion, Removal, and Relief from Removal. The Intelligence Reform and Terrorism Prevention Act makes any aliendeportable who has received military training from or on behalf of an organization that, at the timeof training, was a designated terrorist organization. It also makes the revocation of a nonimmigrantvisa by the State Department grounds for removal. The visa revocation, however, is reviewable ina removal proceeding in cases where visa revocation provides the sole ground for removal. The actmakes inadmissible and deportable any alien who (1) has ordered, incited, assisted, or participatedin conduct that would be considered genocide under U.S. law; (2) committed or participated in anact of torture or an extrajudicial killing; or (3) while serving as a foreign official, was responsiblefor or directly carried out, at any time, particularly severe violations of religious freedom. The actalso requires the Government Accountability Office to conduct a study evaluating the degree thatweaknesses in the current U.S. asylum system have been or could be exploited by aliens involvedin terrorist-related activity. Security of Personal Identification Documents. The Intelligence Reform and Terrorism Prevention Act requires the establishment of new standardsaimed at ensuring the integrity for federal use of birth certificates, state-issued driver's licenses andidentification cards, and social security cards. States may receive grants to assist them inimplementing the proposed birth certificate and driver's license standards. Allocation of Additional Resources to Improve Enforcement. The act authorizes the Secretary of State to increase the number ofconsular officers by 150 per year from FY2006 through FY2009 above the number of such positionsfor which funds were allotted for the preceding fiscal year. It also increases the numbers of borderpatrol agents by not less than 2,000, in each year FY2006 through FY2010, and requires a numberof agents equaling at least 20% of each year's increase in agents to be assigned to the northernborder. The act also increases the number of ICE investigators by not less than 800 in each yearFY2006 through FY2010, and requires an increase in the number of beds available for immigrationdetention and removal operations by not less than 8,000 over the same period. Further, the actestablishes a pilot program to test advanced technologies to improve border security between portsof entry along the northern border of the United States. It also requires the Secretary of HomelandSecurity to submit to the President and Congress a plan for the systematic surveillance of thesouthwest border of the United States by remotely piloted aircraft, and to implement such plan asa pilot program. Penalties for Immigration-Related Fraud and Alien Smuggling. The Intelligence Reform and Terrorism Prevention Act increasescriminal penalties for alien smuggling in certain circumstances and requires the Secretary ofHomeland Security to develop an outreach program in the United States and overseas to educate thepublic about the penalties for illegally bringing in and harboring aliens.
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Reforming the enforcement of immigration law is a core component of the recommendations made by the National Commission on Terrorist Attacks Upon the United States (also known as the9/11 Commission). The 19 hijackers responsible for the 9/11 attacks were foreign nationals, manyof whom were able to obtain visas to enter the United States through the use of forged documents. Incomplete intelligence and screening enabled many of the hijackers to enter the United Statesdespite flaws in their entry documents or suspicions regarding their past associations. According tothe Commission, up to 15 of the hijackers could have been intercepted or deported through morediligent enforcement of immigration laws. The 9/11 Commission's immigration-related recommendations focused primarily on targeting terrorist travel through an intelligence and security strategy based on reliable identification systemsand effective, integrated information-sharing. As Congress has considered these recommendations,however, possible legislative responses have broadened to include significant and possiblyfar-reaching changes in the substantive law governing immigration and how that law is enforced,both at the border and in the interior of the United States. In response to the Commission's recommendations, several major bills were introduced proposing significant revisions to U.S. immigration law and policy. The two notable bills that wouldrevise immigration laws were H.R. 10 , the 9/11 Recommendations Implementation Act,as amended, introduced by the Speaker of the House of Representatives Dennis Hastert, and passedby the House as S. 2845 on October 8, 2004, and S. 2845 , the NationalIntelligence Reform Act of 2004, as amended, introduced by Senators Susan Collins and JosephLieberman and passed by the Senate on October 8, 2004. The Intelligence Reform and TerrorismPrevention Act of 2004 ( P.L. 108-458 ), a compromise version of these bills that included some - butnot all - of the immigration provisions under consideration, was signed on December 17, 2004. This report briefly discusses some of the major immigration areas that were under consideration in the above-mentioned comprehensive reform proposals, including asylum, biometric trackingsystems, border security, document security, exclusion, immigration enforcement, and visa issuances. It refers to other CRS reports that discuss these issues in depth and will be updated as needed.
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During 2007, both the House and Senate established new earmark transparency procedures for their separate chambers. They provide for public disclosure of approved earmarks and the identification of their congressional sponsors. In addition, they require disclosure of further information from each congressional sponsor, such as a certification that the sponsor has no financial interest in the earmark. Each House has also established procedures regarding new spending earmarks added to conference reports. The House originally established its procedures through adoption of two House resolutions. On January 5, 2007, the House completed action on H.Res. 6 (110 th Congress), adopting the 110 th Congress rules package, including new provisions in House Rule XXI to require public disclosure of approved earmarks, their sponsors, and the additional information. On June 18, 2007, the House adopted a standing order, H.Res. 491 (110 th Congress), to require transparency for new spending earmarks added to conference reports on the 12 annual regular appropriations bills. On January 6, 2009, the House adopted the rules package for the 111 th Congress, H.Res. 5 (111 th Congress), which incorporated the provisions of H.Res. 491 into House Rule XXI, clause 9. In the Senate, Rule XLIV was adopted through the Honest Leadership and Open Government Act of 2007 ( P.L. 110-81 ), which became law on September 14, 2007. The new rule provides for public disclosure of each "congressionally directed spending item," its sponsors, and "no financial interest" certifications. It also includes a procedure to strike certain new items of spending added to conference reports. This report describes and compares the procedures and requirements in House and Senate rules, including the House requirement regarding the use of earmarks as leverage for votes. In addition, individual House and Senate committees may have additional requirements for earmarks submitted for their consideration, but these are not covered in this report. When submitting an earmark request, there may also be other considerations relevant to the individual Member's request, such as whether the earmark should be included in the text of the bill or the committee report accompanying the bill. Committees may make an administrative distinction between these two categories in terms of the submission of earmark requests, and there may be policy implications of an earmark's placement in either the bill text or the committee report as well. For purposes of the procedures discussed below, both House and Senate rules provide definitions for spending earmarks, limited tax benefits, and limited tariff benefits. The spending earmark definitions in House Rule XXI, clause 9, and Senate Rule XLIV are identical, except the identification of earmark requesters. For purposes of all the disclosure requirements above, a spending earmark is a provision in legislation or report language that meets specific criteria. First, the provision or language is primarily included at the request of a Representative, Delegate, the Resident Commissioner, or Senator under the House rule (or a Senator under the Senate rule). Second, the provision or language provides, authorizes, or recommends a specific amount of discretionary budget authority, credit authority, or other spending authority for certain purposes (1) with or to an entity, or (2) targeted to a specific state, locality, or congressional district. The purposes are a contract, grant, loan, loan guarantee, loan authority, or other expenditure. Finally, any of the above spending set asides that are selected through a statutory or administrative formula-driven or competitive-award process are excluded. The definition is broad. It includes earmarks funded or recommended in appropriations legislation, as well as other non-appropriations legislation (such as authorizations), conference reports, and accompanying report language. The definitions in the House and Senate rules are identical. Such tariff benefits are defined as "a provision modifying the Harmonized Tariff Schedule of the United States in a manner that benefits 10 or fewer entities." This definition targets provisions in "miscellaneous duty suspension bills" or "miscellaneous tariff bills" (MTBs), which seek to temporarily reduce or eliminate tariffs on imports of particular commodities. The vast majority of tariff suspensions are on chemicals, raw materials, or other components used in the manufacturing process. In contrast to the previous definitions, the House and Senate definitions of limited tax benefits are somewhat different. Under the Senate rule a limited tax benefit is defined as a revenue provision that provides a tax deduction, credit, exclusion, or preference to a particular beneficiary or limited group of beneficiaries under the tax code and contains eligibility criteria that are not uniform in application with respect to potential beneficiaries of the provision. The House rule is more specific, and uses the term limited tax benefit to apply to (1) a revenue-losing provision that provides a tax deduction, credit, exclusion, or preference to no more than 10 beneficiaries under the tax code and contains eligibility criteria that are not uniform in application with respect to potential beneficiaries of the provision; or (2) a tax provision that provides one beneficiary with transitional relief from a change to the tax code. The rules in both the House and Senate include parliamentary procedures regarding greater transparency of congressional sponsors of earmarks. This rule prohibits House consideration of legislation, certain amendments, or conference reports, unless either a list of earmarks in such legislation, amendment, conference report, or any accompanying report language and the name of any House Member who requested an earmark(s) on the list is made available; or a statement that there are no earmarks is made available. Only selected amendments to legislative measures are covered under this rule: amendments in committee-reported legislation and manager's amendments. A manager ' s amendment is an amendment offered at the outset of consideration for amendment by a member of a committee of initial referral, under the terms of a special rule. Major legislation is typically brought up on the House floor by a special rule, which provides the terms for consideration of the measure, and may also limit consideration of floor amendments, specify the order for consideration of specific amendments, or waive various House rules. After the House adopts a special rule, by a majority vote, Members consider the measure on the House floor. House Rule XXI, clause 9, does not cover certain forms of amendments, such as an amendment between the Houses, an amendment automatically agreed to upon adoption of a special rule, an amendment offered during floor consideration, or a committee amendment in the nature of a substitute made in order as original text for purposes of amendment. Under the House rule, the required list of earmarks (and congressional sponsors) or statement that there are no earmarks must be disclosed in specified public documents. For committee-reported legislation and conference reports, either a list or statement must be included in the applicable report language. Regarding non-reported legislation, the chair of each committee of initial referral is required to have a list or a statement printed in the Congressional Record prior to consideration of the legislation. The proponent of a manager's amendment must also have a list or statement printed in the Congressional Record prior to consideration of the amendment. While the House has established rules designed to provide time for Members to review the contents of committee reports, conference reports, and joint explanatory statements before floor consideration, the House may waive these requirements. In cases in which a committee provides time for review, Members have an opportunity, for example, to draft amendments striking specific earmarks in a reported bill or lobby against a conference report. Under House Rule XIII, clause 4(a), committee-reported legislation may not generally be considered on the House floor until the accompanying committee report has been available to Members for at least three calendar days. House Rule XXII, clause 8(a), provides a similar three-day availability requirement for conference reports. The conference report and attached joint explanatory statement must be available in the Congressional Record for at least three calendar days prior to consideration, and copies of the conference report and joint explanatory statement must be available for at least two hours before consideration. The House, however, typically adopts special rules providing for consideration of conference reports that waive all points of order, including these. The earmark and sponsor disclosure requirements are not self-enforcing; a Member must raise a point of order on the House floor against consideration of the legislation, amendment, or conference report. A point of order raised under this subsection may be based only on the failure to include a list of earmarks (and sponsors) or a statement that there are no earmarks in the report language or Congressional Record , as applicable. In response to a parliamentary inquiry, the Speaker pro tempore explained that the rule ... does not contemplate a question of order relating to the content of the statement offered in compliance with the rule. Argument concerning the adequacy of the list or the probity of a disclaimer is a matter that may be addressed by debate on the merits of the measure or by other means collateral to the review of the chair. Each committee, therefore, is left solely responsible for determining the contents of the list. The House rule prohibits House consideration of a special rule that waives the public disclosure requirements, and includes a special procedure to implement this prohibition. If a Member raises a point of order against considering a special rule that includes such a waiver, the presiding officer does not rule on the point of order. Instead the House decides, by majority vote, whether to consider the special rule. The House rule provides 20 minutes of debate, equally divided and controlled by the initiator of the point of order and an opponent. No other intervening motion is allowed, except one that the House adjourn. This procedure effectively allows the House to decide by a separate vote whether to allow this public disclosure requirement to be waived. This rule provides different procedures from the House, but it is also intended to improve public disclosure of earmarks including the name of each Senator who requested any identified earmark. Senate Rule XLIV prohibits a vote on a motion to proceed to consider any committee-reported legislative measure (and any amendment included in the text of the reported bill) or non-reported Senate legislative measure, unless the chair of the applicable committee or the Majority Leader (or designee) provides certain certifications. Similarly, the Senate can not vote on adoption of a conference report unless the chair or Majority Leader (or designee) makes a similar certification. The chair or Majority Leader must certify that a list (or a chart or other similar form) of all earmarks (including those in the applicable measure, conference report, or accompanying report language, if any) and the name of each Senator who submitted a request for each item listed has been available on a publicly accessible congressional website for at least 48 hours before such vote. In the case of measures, they must also certify that the list of earmarks (and Senate sponsors) on the congressional website are in a searchable format. Lists associated with conference reports should also be in a searchable format, but only to the extent technically feasible. If the presiding officer sustains a point of order against a vote on a motion to proceed, consideration on the motion is suspended until a certification is made and the sponsor (or designee) of the motion requests consideration to resume. Under Rule XLIV, paragraph 3, if a point of order is sustained against a conference report, it would be set aside. These rules are not self-enforcing; a Senator must raise a point of order against the vote. Senate Rule XLIV provides two procedures to waive these requirements and restricts appeals of the presiding officer's rulings on such points of order. Unlike the House, the Senate does not have a generally applicable mechanism to waive its rules. Although a waiver motion is available for points of order under the Budget Act and similar requirements, the Senate standing rules must typically be waived by unanimous consent (that is, no Senator objects to a unanimous consent request to waive a rule). Senate Rule XLIV, however, incorporates a waiver motion similar to that used under the Budget Act, and allows any Senator to make a motion to waive any of these points of order. An affirmative vote of three-fifths of all Senators (60, if there are no vacancies) is required to adopt the motion. Senators may debate the motion for up to one hour, with the time equally divided and controlled by the Majority and Minority Leaders (or their designees). These points of order may also be waived if the Majority and Minority Leaders jointly agree that "such a waiver is necessary as a result of a significant disruption to Senate facilities or to the availability of the Internet." The Senate rule places restrictions on consideration of appeals of the chair's rulings on these points of order. Any Senator may appeal the presiding officer's ruling on most Senate rules. Such appeals are generally debatable, and debate may be ended by cloture (requiring three-fifths vote of all Senators to adopt the cloture motion) or by a motion to table, which would uphold the chair's ruling. The appeal procedure included in Rule XLIV allows only one appeal and limits debate to one hour. Amendments in the reported bill or offered from the floor that include earmarks are covered under the rule, but the procedures differ. Those amendments in the text of the reported bill are subject to the same point of order described above that applies to reported measures. Regarding amendments offered from the floor, the rule recommends that the sponsor of an amendment that includes an additional earmark ensure, as soon as practicable, that (1) a list of each earmark and (2) the name of any Senator requesting each earmark on the list be printed in the Congressional Record . This includes full-substitute amendments offered from the floor. As in the House, amendments between the Houses are not covered under this rule. Both House and Senate rules require earmark sponsors to provide similar information on each earmark to the committee of jurisdiction, but these rules include different public disclosure requirements regarding the information. Neither requirement is enforced by points of order. These rules require each Member requesting an earmark in legislation (conference report or accompanying report language) to submit specific written information to the chair and ranking member of the committee of jurisdiction. Each sponsor shall submit in writing (1) the sponsor's name; (2) in the case of a spending earmark, the name and address of the intended recipient or, if there is no specifically intended recipient, the intended location of the activity; (3) in the case of a limited tax or tariff benefit, the sponsor must identify the individual or entities reasonably anticipated to benefit, to the extent known by the sponsor; (4) the purpose of the earmark; and (5) a certification of no pecuniary interest in such earmark. While the House rule requires a certification that neither the Member nor the Member's spouse have any financial interest in the earmark, the Senate rule requires a certification that neither the Senator nor the Senator's immediate family have any pecuniary interest, consistent with paragraph 9 of the rule. Regarding the differing House and Senate public availability requirements, in the House, the applicable committee is to make "open to public inspection" the Member's written statement on any earmark included in a measure or conference report. Each House committee has the discretion to determine its own public disclosure procedures. The Senate rule, on the other hand, recommends that each committee make available only the certification of "no pecuniary interest" for each earmark included in a Senate measure reported or considered by the Senate, conference report, or report language, if any. In addition, under the Senate rule, committees are to make the certifications available for public inspection on the Internet, as soon as practicable. The Senate rule specifically recommends that the committees of jurisdiction include on these lists applicable classified spending earmarks to the greatest extent practicable, consistent with the need to protect national security (including intelligence sources and methods). The information for each earmark identified should include an unclassified program description, spending amount, and name of Senate sponsor. The House rule does not include a specific provision on classified earmarks. Public disclosure of these earmarks and their sponsors are made under the disclosure requirements as discussed above. House Rule XXI, clause 9(b), and Senate Rule XLIV, paragraph 8, both address certain spending earmarks, sometimes referred to as "air-drops," added in a conference report (and joint explanatory statement under the House rule) that were not specified in the House- or Senate-passed versions of the applicable bill (or in the accompanying House or Senate committee reports in the House rule). The House rule provides a public disclosure requirement for such earmark add-ons similar to the transparency requirement affecting earmarks, in general, associated with conference reports discussed above (see " House Rule XXI, clause 9 " section). The Senate rule, by contrast, provides a procedure to strike certain spending add-ons, including applicable spending earmarks. This rule highlights new earmarks added in conference by requiring a list and congressional sponsors. It prohibits House consideration of a conference report to a regular appropriations bills, unless either a list of new earmarks added to the conference report or joint explanatory statement and the name of any Member who requested an earmark(s) on the list is included in the joint explanatory statement; or a statement that there are no earmarks is made available. In response to the original version of this rule ( H.Res. 491 , 110 th Congress), the House Appropriations Committee has generally been identifying earmark add-ons in the required list of general earmarks (and sponsors) associated with conference reports to regular appropriations bills. Clause 9(b) provides two major differences to the procedure requiring a list of earmarks, in general, and congressional earmark sponsors associated with conference reports discussed above, under the " House Rule XXI, clause 9 " section. First, the "airdropped-earmark" requirement only applies to conference reports to the 12 annual regular appropriations bills, instead of all spending measures as well as tariff and revenue measures. Second, upon a point of order, the House decides, by majority vote, whether to consider the conference report with "airdropped" earmarks; as opposed to a ruling by the chair. The House decides to consider such a conference report by the same procedures the House decides to consider a special rule waiving these points of order: up to a 20-minute debate, equally divided and controlled (see above, " House Rule XXI, clause 9 " section). Due to this provision, the House can debate and vote on whether to consider a conference report (or special rule waiving this requirement) even when the clause 9(b) may not have been violated. The Senate rule establishes a new procedure to strike certain new spending earmarks, as well as other spending, added to conference reports. It applies to provisions providing funds (both discretionary and direct (or mandatory) spending), but not provisions authorizing or re-authorizing funds. The rule also does not apply to limited tax or tariff benefits added in conference. The provision in Senate Rule XLIV concerning conference is not directed against congressionally directed spending items, as are the provisions concerning disclosure described above, but instead allows any Senator to raise a point of order against any provision or provisions in a conference report that contain a specific spending level for a specific program, project, activity, or account when no specific funding level was provided for the applicable item in the House- or Senate-passed versions of the measure. The Presiding Officer may sustain points of order against one or more provisions in the conference report. This rule does not apply to language in joint explanatory statements, only those provisions in the legislative text of conference reports. The rule supplements Senate Rule XXVIII, which generally prohibits conferees from including in a conference report a new matter not dealt with in either the House- or Senate-passed versions of a measure. Under current Senate practice and precedents, however, earmarks air-dropped into conference reports are not typically interpreted as new matter. Rule XXVIII provides that in cases in which one of the versions of the bill is an amendment in the nature of a substitute, which is typically the case, the conferees may include a germane modification of the subjects in disagreement. Under existing precedents, earmarks added to a conference report are often considered germane modifications. For example, regular appropriations measures provide funding to each department and large independent agency by distributing the spending among several accounts. Funding levels for programs, projects, or activities within an account, such as most earmarks included in legislative text, are generally considered germane modifications. A Senator may raise a point of order under Rule XLIV against any provision or provisions in a conference report that contain a specific spending level for a specific program, project, activity, or account when no specific funding level was provided for the applicable item in the House- or Senate-passed versions of the measure. If a point of order is sustained, the offending provision is stricken from the conference report. After all points of order have been dealt with, the Senate decides whether to send to the House the remaining text of the conference report. The decision is debatable under the same limitations that may apply to the conference report, and no amendments are allowed. The Senate may waive this point of order with regard to a single provision or all provisions constituting new directed spending or appeal the Presiding Officer's ruling by a supermajority vote. Three-fifths of all Senators must vote to waive the rule or overrule the Presiding Officer's decision. Under this Senate rule, any Senator may propose a motion to waive all points of order provided in this rule with respect to a pending measure or motion. A three-fifths vote of all Senators is required to adopt the motion. All motions to waive all such points of order against the pending measure or motion are collectively debatable for no more than one hour, equally divided and controlled by the Senate Majority and Minority Leaders (or their designees). Such motions are not amendable. The House rule prohibits a Member from conditioning the inclusion of an earmark in a measure, conference report, or report language on any vote cast by another Member. There is no similar Senate requirement.
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During 2007, both the House and Senate established new earmark transparency procedures for their separate chambers. They provide for public disclosure of approved earmarks and the identification of their congressional sponsors. In addition, they require disclosure of further information from each congressional sponsor, such as a certification that the sponsor has no financial interest in the earmark. Each House has also established procedures regarding new spending earmarks added to conference reports. The House originally established its procedures through adoption of two House resolutions. On January 5, 2007, the House completed action on H.Res. 6 (110th Congress), adopting the 110th Congress rules package, including new provisions in House Rule XXI to require public disclosure of approved earmarks, their sponsors, and the additional information. On June 18, 2007, the House adopted a standing order, H.Res. 491 (110th Congress), to require transparency for new spending earmarks added to conference reports on the 12 annual regular appropriations bills. On January 6, 2009, the House adopted the rules package for the 111th Congress, H.Res. 5 (111th Congress), which incorporated the provisions of H.Res. 491 into House Rule XXI, clause 9. In the Senate, Rule XLIV was adopted through the Honest Leadership and Open Government Act of 2007 (P.L. 110-81), which became law on September 14, 2007. The new rule provides for public disclosure of each "congressionally directed spending item," its sponsors, and "no financial interest" certifications. It also includes a procedure to strike certain new items of spending added to conference reports. The House rule generally prohibits consideration of a measure, manager's amendment, or conference report unless a list of earmarks and the name of each sponsoring Member (or a statement that there are no earmarks) is available before consideration. The Senate rule prohibits a vote on a motion to proceed to consider a measure or a vote on adoption of a conference report, unless the chair of the committee or Majority Leader certifies that a complete list of earmarks and the name of each Senator requesting each earmark is available on a publicly accessible congressional website 48 hours before the vote. Both House and Senate rules require earmark sponsors to provide similar information on each earmark to the committee of jurisdiction, but these rules include different public disclosure requirements regarding the information. Neither requirement is enforced by points of order. In the House, the applicable committee is to make "open to public inspection" the Member's entire written statement on certain approved earmarks. The Senate rule requires the applicable committee to make available on the Internet the certifications of no financial interest. With regard to certain spending earmarks first specified in conference, the House requires public disclosure of those earmarks and the names of those Members that requested each earmark identified. The Senate rule provides a procedure to strike certain new items of spending, including earmarks, from a conference report.
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The U.S. military is supported partly by civilian high technology services and products, most often in the form of communications systems and computer software. In future conflicts that involve cyberwarfare between nations, the distinction between U.S. military and civilian targets may be blurred and civilian computer systems may increasingly be seen as viable targets vulnerable to attack by adversaries. Computer networking technology has also blurred the boundaries between cyberwarfare, cybercrime, and cyberterrorism. Officials in government and industry now say that cybercrime and cyberattack services available for hire from criminal organizations are a growing threat to national security as well as to the U.S. economy. New and sophisticated cybercrime tools could operate to allow a nation state or terrorist group to remain unidentified while they direct cyberattacks through the Internet. Many experts point out that past incidents of conventional terrorism have already been linked with cybercrime, and that computer vulnerabilities may make government and civilian critical infrastructure systems seem attractive as targets for cyberattack. Some experts argue that the government of Estonia may have already experienced this type of cyberattack directed against their systems and websites in April, 2007. This report explores the possible connections between cybercriminals and terrorist groups that want to damage the U.S. economy or national security interests. The report also examines the effects of a coordinated cyberattack against the U.S. critical infrastructure, including use of cybercrime tools that could possibly take advantage of openly-publicized cyber vulnerabilities. Trends in cybercrime are described, showing how malicious Internet websites, and other cybercrimes such as identity theft are linked to conventional terrorist activity. Congress may wish to explore the possible effects on the U.S. economy and on the U.S. military that could result from a coordinated attack against civilian and military computers and communications systems, whether due to cybercrime or cyberterrorism. Congress may also wish to explore the difficulties associated with establishing doctrine for selecting an appropriate military or law enforcement response after such an attack. It is clear that terrorist groups are using computers and the Internet to further goals associated with spreading terrorism. This can be seen in the way that extremists are creating and using numerous Internet websites for recruitment and fund raising activities, and for Jihad training purposes. Several criminals who have recently been convicted of cybercrimes used their technical skills to acquire stolen credit card information in order to finance other conventional terrorist activities. It is possible that as criminals and terrorist groups explore more ways to work together, a new type of threat may emerge where extremists gain access to the powerful network tools now used by cybercriminals to steal personal information, or to disrupt computer systems that support services through the Internet. There are several effective methods for disrupting computer systems. This report focuses on the method known as cyberattack, or computer network attack (CNA), which uses malicious computer code to disrupt computer processing, or steal data. A brief description of three different methods are shown here. However, as technology changes, future distinctions between these methods may begin to blur. An attack against computers may (1) disrupt equipment and hardware reliability, (2) change processing logic, or (3) steal or corrupt data. The methods discussed here are chosen based on the technology asset against which each attack mode is directed, and the effects each method can produce. The assets affected or effects produced can sometimes overlap for different attack methods. Conventional kinetic weapons can be directed against computer equipment, a computer facility, or transmission lines to create a physical attack that disrupts the reliability of equipment. The power of electromagnetic energy, most commonly in the form of an electromagnetic pulse (EMP), can be used to create an electronic attack (EA) directed against computer equipment or data transmissions. By overheating circuitry or jamming communications, EA disrupts the reliability of equipment and the integrity of data. Malicious code can be used to create a cyberattack, or computer network attack (CNA), directed against computer processing code, instruction logic, or data. The code can generate a stream of malicious network packets that can disrupt data or logic through exploiting a vulnerability in computer software, or a weakness in the computer security practices of an organization. This type of cyberattack can disrupt the reliability of equipment, the integrity of data, and the confidentiality of communications. Labeling a "cyberattack" as "cybercrime" or "cyberterrorism" is problematic because of the difficulty determining with certainty the identity, intent, or the political motivations of an attacker. "Cybercrime" can be very broad in scope, and may sometimes involve more factors than just a computer hack. "Cyberterrorism" is often equated with the use of malicious code. However, a "cyberterrorism" event may also sometimes depend on the presence of other factors beyond just a "cyberattack." Various definitions exist for the term "cyberterrorism", just as various definitions exist for the term "terrorism." Security expert Dorothy Denning defines cyberterrorism as "... politically motivated hacking operations intended to cause grave harm such as loss of life or severe economic damage." The Federal Emergency Management Agency (FEMA) defines cyberterrorism as "unlawful attacks and threats of attack against computers, networks, and the information stored therein when done to intimidate or coerce a government or its people in furtherance of political or social objectives." Others indicate that a physical attack that destroys computerized nodes for critical infrastructures, such as the Internet, telecommunications, or the electric power grid, without ever touching a keyboard, can also contribute to, or be labeled as cyberterrorism. Thus, it is possible that if a computer facility were deliberately attacked for political purposes, all three methods described above (physical attack, EA, and cyberattack) might contribute to, or be labeled as "cyberterrorism." Cybercrime is crime that is enabled by, or that targets computers. Some argue there is no agreed-upon definition for "cybercrime" because "cyberspace" is just a new specific instrument used to help commit crimes that are not new at all. Cybercrime can involve theft of intellectual property, a violation of patent, trade secret, or copyright laws. However, cybercrime also includes attacks against computers to deliberately disrupt processing, or may include espionage to make unauthorized copies of classified data. If a terrorist group were to launch a cyberattack to cause harm, such an act also fits within the definition of a cybercrime. The primary difference between a cyberattack to commit a crime or to commit terror is found in the intent of the attacker, and it is possible for actions under both labels to overlap. Botnets are becoming a major tool for cybercrime, partly because they can be designed to very effectively disrupt targeted computer systems in different ways, and because a malicious user, without possessing strong technical skills, can initiate these disruptive effects in cyberspace by simply renting botnet services from a cybercriminal. Botnets, or "Bot Networks," are made up of vast numbers of compromised computers that have been infected with malicious code, and can be remotely-controlled through commands sent via the Internet. Hundreds or thousands of these infected computers can operate in concert to disrupt or block Internet traffic for targeted victims, harvest information, or to distribute spam, viruses, or other malicious code. Botnets have been described as the "Swiss Army knives of the underground economy" because they are so versatile. Botnet designers, or "botmasters", can reportedly make large sums of money by marketing their technical services. For example, Jeanson Ancheta, a 21-year-old hacker and member of a group called the "Botmaster Underground", reportedly made more than $100,000 from different Internet Advertising companies who paid him to download specially-designed malicious adware code onto more than 400,000 vulnerable PCs he had secretly infected and taken over. He also made tens of thousands more dollars renting his 400,000-unit "botnet herd" to other companies that used them to send out spam, viruses, and other malicious code on the Internet. In 2006, Ancheta was sentenced to five years in prison. Botnet code was originally distributed as infected email attachments, but as users have grown more cautious, cybercriminals have turned to other methods. When users click to view a spam message, botnet code can be secretly installed on the users' PC. A website may be unknowingly infected with malicious code in the form of an ordinary-looking advertisement banner, or may include a link to an infected website. Clicking on any of these may install botnet code. Or, botnet code can be silently uploaded, even if the user takes no action while viewing the website, merely through some un-patched vulnerability that may exist in the browser. Firewalls and antivirus software do not necessarily inspect all data that is downloaded through browsers. Some bot software can even disable antivirus security before infecting the PC. Once a PC has been infected, the malicious software establishes a secret communications link to a remote "botmaster" in preparation to receive new commands to attack a specific target. Meanwhile, the malicious code may also automatically probe the infected PC for personal data, or may log keystrokes, and transmit the information to the botmaster. The Shadowserver Foundation is an organization that monitors the number of command and control servers on the Internet, which indicates the number of bot networks that are being controlled online at a given time. From November 2006 through May 2007, approximately 1,400 command and control servers were found to be active on the Internet. The number of individual infected drones that are controlled by these 1,400 servers reportedly grew from half a million to more than 3 million from March to May 2007. Symantec, another security organization, reported that it detected 6 million bot-infected computers in the second half of 2006. Some botnet owners reportedly rent their huge networks for US$200 to $300 an hour, and botnets are becoming the weapon of choice for fraud and extortion. Newer methods are evolving for distributing "bot" software that may make it even more difficult in the future for law enforcement to identify and locate the originating "botmaster." Some studies show that authors of software for botnets are increasingly using modern, open-source techniques for software development, including the collaboration of multiple authors for the initial design, new releases to fix bugs in the malicious code, and development of software modules that make portions of the code reusable for newer versions of malicious software designed for different purposes. This increase in collaboration among hackers mirrors the professional code development techniques now used to create commercial software products, and is expected to make future botnets even more robust and reliable. This, in turn, is expected to help increase the demand for malware services in future years. Traditionally, botnets organize themselves in an hierarchical manner, with a central command and control location (sometimes dynamic) for the botmaster. This central command location is useful to security professionals because it offers a possible central point of failure for the botnet. However, in the near future, security experts believe that attackers may use new botnet architectures that are more sophisticated, and more difficult to detect and trace. One class of botnet architecture that is beginning to emerge uses peer-to-peer protocol , which, because of its decentralized control design, is expected to be more resistant to strategies for countering its disruptive effects. For example, some experts reportedly argue that a well-designed peer-to-peer botnet may be nearly impossible to shut down as a whole because it may provide anonymity to the controller, who can appear as just another node in the bot network. In the Spring of 2007, government computer systems in Estonia experienced a sustained cyberattack that has been labeled by various observers as cyberwarfare, or cyberterror, or cybercrime. On April 27, officials in Estonia moved a Soviet-era war memorial commemorating an unknown Russian who died fighting the Nazis. The move stirred emotions, and led to rioting by ethnic Russians, and the blockading of the Estonian Embassy in Moscow. The event also marked the beginning of a series of large and sustained Distributed Denial-Of-Service (DDOS) attacks launched against several Estonian national websites, including government ministries and the prime minister's Reform Party. In the early days of the cyberattack, government websites that normally receive around 1,000 visits a day reportedly were receiving 2,000 visits every second. This caused the repeated shut down of some websites for several hours at a time or longer, according to Estonian officials. The attacks, which flooded computers and servers and blocked legitimate users, were described as crippling, owing to Estonia's high dependence on information technology, but limited resources for managing their infrastructure. Security experts say that the cyberattacks against Estonia were unusual because the rate of the packet attack was very high, and the series of attacks lasted weeks, rather than hour or days, which is more commonly seen for a denial of service attack. Eventually, NATO and the United States sent computer security experts to Estonia to help recover from the attacks, and to analyze the methods used and attempt to determine the source of the attacks. This event can serve to illustrate how computer network technology has blurred the boundaries between crime, warfare, and terrorism. A persistent problem during and after any cyberattack is accurate identification of the attacker, by finding out whether it was sponsored by a nation, or was the independent work of a few unconnected individuals, or was initiated by a group to instill frustration and fear by damaging the computerized infrastructure and economy. The uncertainty of not knowing the initiator also affects the decision about whom should ultimately become a target for retaliation, and whether the response should come from law enforcement or the military. Initially, the Russian government was blamed by Estonian officials for the cyberattacks, and there were charges of cyberwarfare. Other observers argued that the cyberattack involved collusion between the Russian government and trans-national cybercriminals who made their large botnets available for short-term rent, either to individuals or to larger groups. They argue that as the rented time expired, the intensity of the persistent cyberattacks against Estonia also began to fall off. However, not all security experts agree, and it remains unclear at this time whether the cyberattacks were sanctioned or initiated by the Russian government, or if a criminal botnet was actually involved. After some investigation, network analysts later concluded that the cyberattacks targeting Estonia were not a concerted attack, but instead were the product of spontaneous anger from a loose federation of separate attackers. Technical data showed that sources of the attack were worldwide rather than concentrated in a few locations. The computer code that caused the DDOS attack was posted and shared in many Russian language chat rooms, where the moving of the war memorial was a very emotional topic for discussion. These analysts state that although access to various Estonian government agencies was blocked by the malicious code, there was no apparent attempt to target national critical infrastructure other than internet resources, and no extortion demands were made. Their analysis thus far concluded that there was no Russian government connection to the attacks against Estonia. However, investigation into the incident continues, and officials from the United States view some aspects of the event as a possible model for future cyberwarfare or cyberterrorism directed against a nation state. In January 2008, a court in Estonia convicted and fined a local man for bringing down a government website, as part of the extended cyberattack in 2007. The 20-year-old, who is apparently an ethnic Russian Estonian, used his home PC to carry out the attack. The investigation continues, and so far, he is the only person convicted for participating in the cyberattack against Estonia. Cybercrime is usually conducted through a connection to the Internet, but can also involve unauthorized removal of data on small, portable flash drive storage devices. Cybercrime, usually in the form of network hacking, has involved persons with strong technical skills, often motivated by the desire to gain popularity among their technology peers. However, the growing trend is now to profit from these network cyberattacks by targeting specific systems, often through collaboration among criminals and technical experts. The motives that drive these cybercriminal groups now may differ from those of their paying customers, who may possess little or no technical skills. New technologies continue to outpace policy for law enforcement. Problems of coordination among agencies of different countries, along with conflicting national policies about crime in cyberspace, work to the advantage of cybercriminals who can choose to operate from geographic locations where penalties for some forms of cybercrime may not yet exist. Sophisticated tools for cyberattack can now be found for sale or for rent on the Internet, where highly-organized underground cybercrime businesses host websites that advertise a variety of disruptive software products and malicious technical services. High-end cybercrime groups use standard software business development techniques to keep their products updated with the latest anti-security features, and seek to recruit new and talented software engineering students into their organizations. Where illicit profits are potentially very large, some high-end criminal groups have reportedly adopted standard IT business practices to systematically develop more efficient and effective computer code for cybercrime. Studies also show that organized crime groups now actively recruit college engineering graduates and technical expert members of computer societies, and sponsor them to attend more information technology (IT) courses to further their technical expertise. However, in some cases, targeted students may not realize that a criminal organization is behind the recruitment offer. Cyberattacks are increasingly designed to silently steal information without leaving behind any damage that would be noticed by a user. These types of attacks attempt to escape detection in order to remain on host systems for longer periods of time. It is also expected that as mobile communication devices are incorporated more into everyday life, they will be increasingly targeted in the future for attack by cybercriminals. Malicious code, such as viruses or Trojan Horses, are used to infect a computer to make it available for takeover and remote control. Malicious code can infect a computer if the user opens an email attachment, or clicks an innocent-looking link on a website. For example, users who visited the popular MySpace and YouTube websites in 2005, and who lacked important software security patches, reportedly may have had their PCs infected if they clicked on a banner advertisement which silently installed malicious code on their computers to log keystrokes or capture sensitive data. During the first half of 2006, the Microsoft Security Team reported that it had removed 10 million pieces of malicious software from nearly 4 million computers and web servers. Recently, analysts at Google tested several million web pages for the presence of malicious software, and determined that 4.5 million of the web pages examined were suspicious in nature. After further testing of the 4.5 million web pages, over 1 million were found to launch downloads of malicious software, and more than two thirds of those programs were "bot" software that, among other things, collected data on banking transactions and then emailed the information to a temporary email account. Researchers at the San Jose, Calif.-based security firm, Finjan Inc., after reviewing security data from the first quarter of 2007, found that more malware is hosted on servers in countries such as the U.S. and U.K., than in other countries with less developed e-crime law enforcement policies. Findings from the Finjan 2007 Web Security Trends Report are based on an analysis of more than 10 million unique websites from Internet traffic recorded in the UK, and include the following: Attacks that involve the use of code obfuscation through diverse randomization techniques are growing more numerous and complex, making them virtually invisible to pattern-matching/signature-based methods in use by traditional antivirus products. Criminals are displaying an increasing level of sophistication when embedding malicious code within legitimate content with less dependence on outlaw servers in unregulated countries. Finjan found that 90% of the websites examined containing malware resided on servers located in the U.S. or U.K. "The results of this study shatter the myth that malicious code is primarily being hosted in countries where e-crime laws are less developed," Finjan CTO Yuval Ben-Itzhak reportedly stated. Botnets and other examples of malicious code can operate to assist cybercriminals with identity theft. Current FBI estimates are that identity theft costs American businesses and consumers $50 billion a year. Individual users are often lured into clicking on tempting links that are found in email or when visiting websites. Clicking on titles such as "Buy Rolex watches cheap," or "Check out my new Photos," can take advantage of web browser vulnerabilities to place malicious software onto a users system which allows a cybercriminal to gather personal information from the user's computer. Malicious code can scan a victim's computer for sensitive information, such as name, address, place and date of birth, social security number, mother's maiden name, and telephone number. Full identities obtained this way are bought and sold in online markets. False identity documents can then be created from this information using home equipment such as a digital camera, color printer, and laminating device, to make official-looking driver's licences, birth certificates, reference letters, and bank statements. Identity theft involving thousands of victims is also enabled by inadequate computer security practices within organizations. MasterCard International reported that in 2005 more than 40 million credit card numbers belonging to U.S. consumers were accessed by computer hackers. Some of these account numbers were reportedly being sold on a Russian website, and some consumers have reported fraudulent charges on their statements. Officials at the UFJ bank in Japan reportedly stated that some of that bank's customers may also have become victims of fraud related to theft of the MasterCard information. In June 2006, officials from the U.S. Department of Energy acknowledged that names and personal information belonging to more than 1,500 employees of the National Nuclear Security Administration (NNSA) had been stolen in a network intrusion that apparently took place starting in 2004. The NNSA did not discover the security breach until one year after it had occurred. Some sources report that stolen credit card numbers and bank account information are traded online in a highly structured arrangement, involving buyers, sellers, intermediaries, and service industries. Services include offering to conveniently change the billing address of a theft victim, through manipulation of stolen PINs or passwords. Observers estimated that in 2005 such services for each stolen MasterCard number cost between $42 and $72. Other news articles report that, in 2007, a stolen credit card number sells online for only $1, and a complete identity, including a U.S. bank account number, credit-card number, date of birth, and a government-issued ID number now sells for just $14 to $18. As of January 2007, 35 states have enacted data security laws requiring businesses that have experienced an intrusion involving possible identity theft to notify persons affected, and to improve security for protection of restricted data. However, existing federal and state laws that impose obligations on information owners, may require harmonization to provide protections that are more uniform. Cyber espionage involves the unauthorized probing to test a target computer's configuration or evaluate its system defenses, or the unauthorized viewing and copying of data files. However, should a terrorist group, nation, or other organization use computer hacking techniques for political or economic motives, their deliberate intrusions may also qualify them, additionally, as cybercriminals. If there is disagreement about this, it is likely because technology has outpaced policy for labeling actions in cyberspace. In fact, industrial cyber espionage may now be considered a necessary part of global economic competition, and secretly monitoring the computerized functions and capabilities of potential adversary countries may also be considered essential for national defense. U.S. counterintelligence officials reportedly have stated that about 140 different foreign intelligence organizations regularly attempt to hack into the computer systems of U.S. government agencies and U.S. companies. Cyber espionage, which enables the exfiltration of massive amounts of information electronically, has now transformed the nature of counterintelligence, by enabling a reduced reliance on conventional spying operations. The Internet, including satellite links and wireless local networks, now offers new, low cost and low risk opportunities for espionage. In 2001, a Special Committee of Inquiry established by the European parliament accused the United States of using its Echelon electronic spy network to engage in industrial espionage against European businesses. Echelon was reportedly set up in 1971 as an electronic monitoring system during the Cold War. European-Union member Britain helps operate the system, which includes listening posts in Canada, Australia, and New Zealand. Echelon is described as a global spy system reportedly capable of intercepting wireless phone calls, e-mail, and fax messages made from almost any location around the world. Source: BBC News, July 6, 2000, at http://news.bbc.co.uk/ 1/ hi/ world/ europe/ 820758.stm . The European parliament Special Committee reported that information gathered on Echelon may have helped the United States beat the European Airbus Consortium in selling aircraft to Saudi Arabia in 1994. In 1995, France expelled five American diplomats and other officials, reportedly including the Paris station chief for the CIA, because of suspected industrial espionage activities linked to Echelon. The State Department denied that the U.S. government was engaged in industrial espionage. However, former director of the U.S. Central Intelligence Agency, James Woolsey, has reportedly justified the possibility of industrial espionage by the United States on the basis of the use of bribery by European companies. Officials of the European parliament reportedly expressed outrage about the justification, while not denying that bribery is sometimes used to make sales. Some government officials warn that criminals now sell or rent malicious code tools for cyber espionage, and the risk for damage to U.S. national security due to cyber espionage conducted by other countries is great. One industry official, arguing for stronger government agency computer security practices, stated that, "If gangs of foreigners broke into the State or Commerce Departments and carried off dozens of file cabinets, there would be a crisis. When the same thing happens in cyberspace, we shrug it off as another of those annoying computer glitches we must live with." In 2003, a series of cyberattacks designed to copy sensitive data files was launched against DOD systems, and the computers belonging to DOD contractors. The cyber espionage attack apparently went undetected for many months. This series of cyberattacks was labeled "Titan Rain," and was suspected by DOD investigators to have originated in China. The attacks were directed against the U.S. Defense Information Systems Agency (DISA), the U.S. Redstone Arsenal, the Army Space and Strategic Defense Installation, and several computer systems critical to military logistics. Although no classified systems reportedly were breached, many files were copied containing information that is sensitive and subject to U.S. export-control laws. In 2006, an extended cyberattack against the U.S. Naval War College in Newport, Rhode Island, prompted officials to disconnect the entire campus from the Internet. A similar attack against the Pentagon in 2007 led officials to temporarily disconnect part of the unclassified network from the Internet. DOD officials acknowledge that the Global Information Grid, which is the main network for the U.S. military, experiences more than three million daily scans by unknown potential intruders. Accurate attribution is important when considering whether to retaliate using military force or police action. Some DOD officials have indicated that the majority of cyber attacks against DOD and U.S. civilian agency systems are suspected to originate in China, and these attacks are consistently more numerous and sophisticated than cyberattacks from other malicious actors. The motives appear to be primarily cyber espionage against civilian agencies, DOD contractors, and DOD systems. The espionage involves unauthorized access to files containing sensitive industrial technology, and unauthorized research into DOD operations. Some attacks included attempts to implant malicious code into computer systems for future use by intruders. Security experts warn that all U.S. federal agencies should now be aware that in cyberspace some malicious actors consider that no boundaries exist between military and civilian targets. According to an August 2005 computer security report by IBM, more than 237 million overall security attacks were reported globally during the first half of that year. Government agencies were targeted the most, reporting more than 54 million attacks, while manufacturing ranked second with 36 million attacks, financial services ranked third with approximately 34 million, and healthcare received more than 17 million attacks. The most frequent targets for these attacks, all occurring in the first half of 2005, were government agencies and industries in the United States (12 million), followed by New Zealand (1.2 million), and China (1 million). These figures likely represent an underestimation, given that most security analysts agree that the number of incidents reported are only a small fraction of the total number of attacks that actually occur. The proportion of cybercrime that can be directly or indirectly attributed to terrorists is difficult to determine. However, linkages do exist between terrorist groups and criminals that allow terror networks to expand internationally through leveraging the computer resources, money laundering activities, or transit routes operated by criminals. For example, the 2005 U.K. subway and bus bombings, and the attempted car bombings in 2007, also in the U.K., provide evidence that groups of terrorists are already secretly active within countries with large communication networks and computerized infrastructures, plus a large, highly skilled IT workforce. London police officials reportedly believe that terrorists obtained high-quality explosives used for the 2005 U.K. bombings through criminal groups based in Eastern Europe. A recent trial in the U.K. revealed a significant link between Islamic terrorist groups and cybercrime. In June 2007, three British residents, Tariq al-Daour, Waseem Mughal, and Younes Tsouli, pled guilty, and were sentenced for using the Internet to incite murder. The men had used stolen credit card information at online web stores to purchase items to assist fellow jihadists in the field—items such as night vision goggles, tents, global positioning satellite devices, and hundreds of prepaid cell phones, and more than 250 airline tickets, through using 110 different stolen credit cards. Another 72 stolen credit cards were used to register over 180 Internet web domains at 95 different web hosting companies. The group also laundered money charged to more than 130 stolen credit cards through online gambling websites. In all, the trio made fraudulent charges totaling more than $3.5 million from a database containing 37,000 stolen credit card numbers, including account holders' names and addresses, dates of birth, credit balances, and credit limits. Cybercriminals have made alliances with drug traffickers in Afghanistan, the Middle East, and elsewhere where illegal drug funds or other profitable activities such as credit card theft, are used to support terrorist groups. Drug traffickers are reportedly among the most widespread users of encryption for Internet messaging, and are able to hire high-level computer specialists to help evade law enforcement, coordinate shipments of drugs, and launder money. Regions with major narcotics markets, such as Western Europe and North America, also possess optimal technology infrastructure and open commercial nodes that increasingly serve the transnational trafficking needs of both criminal and terrorist groups. Officials of the U.S. Drug Enforcement Agency (DEA), reported in 2003 that 14 of the 36 groups found on the U.S. State Department's list of foreign terrorist organizations were also involved in drug trafficking. A 2002 report by the Federal Research Division at the Library of Congress, revealed a "growing involvement of Islamic terrorist and extremists groups in drug trafficking", and limited evidence of cooperation between different terrorist groups involving both drug trafficking and trafficking in arms. Consequently, DEA officials reportedly argued that the war on drugs and the war against terrorism are and should be linked. State Department officials, at a Senate hearing in March 2002, also indicated that some terrorist groups may be using drug trafficking as a way to gain financing while simultaneously weakening their enemies in the West through exploiting their desire for addictive drugs. The poppy crop in Afghanistan reportedly supplies resin to produce over 90 percent of the world's heroin, supporting a drug trade estimated at $3.1 billion. Reports indicate that money from drug trafficking in Afghanistan is used to help fund terrorist and insurgent groups that operate in that country. Subsequently, U.S. intelligence reports in 2007 have stated that "al Qaeda in Afghanistan" has been revitalized and restored to its pre-September 11, 2001 operation levels, and may now be in a better position to strike Western countries. Drug traffickers have the financial clout to hire computer specialists with skills for using technologies which make Internet messages hard or impossible to decipher, and which allow terrorist organizations to transcend borders and operate internationally with less chance of detection. Many highly trained technical specialists that make themselves available for hire originally come from the countries of the former Soviet Union and the Indian subcontinent. Some of these technical specialists reportedly will not work for criminal or terrorist organizations willingly, but may be misled or unaware of their employers' political objectives. Still, others will agree to provide assistance because other well-paid legitimate employment is scarce in their region. Links between computer hackers and terrorists, or terrorist-sponsoring nations may be difficult to confirm. Membership in the most highly-skilled computer hacker groups is sometimes very exclusive and limited to individuals who develop, demonstrate, and share only with each other, their most closely-guarded set of sophisticated hacker tools. These exclusive hacker groups do not seek attention because maintaining secrecy allows them to operate more effectively. Some hacker groups may also have political interests that are supra-national, or based on religion, or other socio-political ideologies, while other hacker groups may be motivated by profit, or linked to organized crime, and may be willing to sell their computer services, regardless of the political interests involved. Information about computer vulnerabilities is now for sale online in a hackers' "black market". For example, a list of 5,000 addresses of computers that have already been infected with spyware and which are waiting to be remotely controlled as part of an automated "bot network" reportedly can be obtained for about $150 to $500. Prices for information about computer vulnerabilities for which no software patch yet exists reportedly range from $1,000 to $5,000. Purchasers of this information are often organized crime groups, various foreign governments, and companies that deal in spam. Some experts estimate that advanced or structured cyberattacks against multiple systems and networks, including target surveillance and testing of sophisticated new hacker tools, might require from two to four years of preparation, while a complex coordinated cyberattack, causing mass disruption against integrated, heterogeneous systems may require 6 to 10 years of preparation. This characteristic, where hackers devote much time to detailed and extensive planning before launching a cyberattack, has also been described as a "hallmark" of previous physical terrorist attacks and bombings launched by Al Qaeda. It is difficult to determine the level of interest, or the capabilities of international terrorist groups to launch an effective cyberattack. A 1999 report by The Center for the Study of Terrorism and Irregular Warfare at the Naval Postgraduate School concluded that it is likely that any severe cyberattacks experienced in the near future by industrialized nations will be used by terrorist groups simply to supplement the more traditional physical terrorist attacks. Some observers have stated that Al Qaeda does not see cyberattack as important for achieving its goals, preferring attacks which inflict human casualties. Other observers believe that the groups most likely to consider and employ cyberattack and cyberterrorism are the terrorist groups operating in post-industrial societies (such as Europe and the United States), rather than international terrorist groups that operate in developing regions where there is limited access to high technology. However, other sources report that Al Qaeda has taken steps to improve organizational secrecy through more active and sophisticated use of technology, and evidence suggests that Al Qaeda terrorists used the Internet extensively to plan their operations for September 11, 2001. In past years, Al Qaeda groups reportedly used new Internet-based telephone services to communicate with other terrorist cells overseas. Khalid Shaikh Mohammed, one of the masterminds of the attack against the World Trade Center, reportedly used special Internet chat software to communicate with at least two airline hijackers. Ramzi Yousef, who was sentenced to life imprisonment for the previous bombing of the World Trade Center, had trained as an electrical engineer, and had planned to use sophisticated electronics to detonate bombs on 12 U.S. airliners departing from Asia for the United States. He also used sophisticated encryption to protect his data and to prevent law enforcement from reading his plans should he be captured. Tighter physical security measures now widely in place throughout the United States may encourage terrorist groups in the future to explore cyberattack as way to lower the risk of detection for their operations. However, other security observers believe that terrorist organizations might be reluctant to launch a cyberattack because it would result in less immediate drama and have a lower psychological impact than a more conventional bombing attack. These observers believe that unless a cyberattack can be made to result in actual physical damage or bloodshed, it will never be considered as serious as a nuclear, biological, or chemical terrorist attack. In March 2007, researchers at Idaho National Laboratories (INL) conducted an experiment labeled the "Aurora Generator Test" to demonstrate the results of a simulated cyberattack on a power network. In a video released by the Department of Homeland Security, a power generator turbine, similar to many now in use throughout the United States, is forced to overheat and shut down dramatically, after receiving malicious commands from a hacker. The researchers at INL were investigating results of a possible cyberattack directed against a vulnerability that, reportedly, has since been fixed. The video, however, implied that other multiple power generators sharing similar cyber vulnerabilities could potentially be disabled the same way. In July 2002, the U.S. Naval War College hosted a war game called "Digital Pearl Harbor" to develop a scenario for a coordinated cyberterrorism event, where mock attacks by computer security experts against critical infrastructure systems simulated state-sponsored cyberwarfare. The simulated cyberattacks determined that the most vulnerable infrastructure computer systems were the Internet itself, and the computer systems that are part of the financial infrastructure. It was also determined that attempts to cripple the U.S. telecommunications infrastructure would be unsuccessful because built-in system redundancy would prevent damage from becoming too widespread. The conclusion of the exercise was that a "Digital Pearl Harbor" in the United States was only a slight possibility. However, in 2002, a major vulnerability was discovered in switching equipment software that threatened the infrastructure for major portions of the Internet. A flaw in the Simple Network Management Protocol (SNMP) would have enabled attackers to take over Internet routers and cripple network telecommunications equipment globally. Network and equipment vendors worldwide raced quickly to fix their products before the problem could be exploited by hackers, with possible worldwide consequences. U.S. government officials also reportedly made efforts to keep information about this major vulnerability quiet until after the needed repairs were implemented on vulnerable Internet systems. According to an assessment reportedly written by the FBI, the security flaw could have been exploited to cause many serious problems, such as bringing down widespread telephone networks and also halting control information exchanged between ground and aircraft flight control systems. Security experts agree that a coordinated cyberattack could be used to amplify the effects of a conventional terrorist attack, including a nuclear, biological, or chemical (NBC) attack. However, many of these same experts disagree about the damaging effects that might result from an attack directed against control computers that operate the U.S. critical infrastructure. Some observers have stated that because of U.S. dependency on computer technology, such attacks may have the potential to create economic damage on a large scale, while other observers have stated that U.S. infrastructure systems are resilient and would possibly recover easily, thus avoiding any severe or catastrophic effects. While describing possible offensive tactics for military cyber operations, DOD officials reportedly stated that the U.S. could confuse enemies by using cyberattack to open floodgates, control traffic lights, or scramble the banking systems in other countries. Likewise, some of China's military journals speculate that cyberattacks could disable American financial markets. China, however, is almost as dependent on these U.S. markets as the United States, and might possibly suffer even more from such a disruption to finances. As to using cyberattack against other U.S. critical infrastructures, the amount of potential damage that could be inflicted might be relatively trivial compared to the costs of discovery, if engaged in by a nation state. However, this constraint does not apply to non-state actors like Al Qaeda, thus making cyberattack a potentially useful tool for those groups who reject the global market economy. Supervisory Control And Data Acquisition (SCADA) systems are the computers that monitor and regulate the operations of most critical infrastructure industries (such as the companies that manage the power grid). These SCADA computers automatically monitor and adjust switching, manufacturing, and other process control activities, based on digitized feedback data gathered by sensors. These control systems are often placed in remote locations, are frequently unmanned, and are accessed only periodically by engineers or technical staff via telecommunications links. However, for more efficiency, these communication links are increasingly connected to corporate administrative local area networks, or directly to the Internet. Some experts believe that the importance of SCADA systems for controlling the critical infrastructure may make them an attractive target for terrorists. Many SCADA systems also now operate using Commercial-Off-The-Shelf (COTS) software, which some observers believe are inadequately protected against a cyberattack. These SCADA systems are thought to remain persistently vulnerable to cyberattack because many organizations that operate them have not paid proper attention to these systems' unique computer security needs. The following example may serve to illustrate the possible vulnerability of control systems and highlight cybersecurity issues that could arise for infrastructure computers when SCADA controls are interconnected with office networks. In August 2003, the "Slammer"Internet computer worm was able to corrupt for five hours the computer control systems at the Davis-Besse nuclear power plant located in Ohio (fortunately, the power plant was closed and off-line when the cyberattack occurred). The computer worm was able to successfully penetrate systems in the Davis-Besse power plant control room largely because the business network for its corporate offices was found to have multiple connections to the Internet that bypassed the control room firewall. Other observers, however, suggest that SCADA systems and the critical infrastructure are more robust and resilient than early theorists of cyberterror have stated, and that the infrastructure would likely recover rapidly from a cyberterrorism attack. They cite, for example, that water system failures, power outages, air traffic disruptions, and other scenarios resembling possible cyberterrorism often occur as routine events, and rarely affect national security, even marginally. System failures due to storms routinely occur at the regional level, where service may often be denied to customers for hours or days. Technical experts who understand the systems would work to restore functions as quickly as possible. Cyberterrorists would need to attack multiple targets simultaneously for long periods of time to gradually create terror, achieve strategic goals, or to have any noticeable effects on national security. For more information about SCADA systems, see CRS Report RL31534, Critical Infrastructure: Control Systems and the Terrorist Threat , by [author name scrubbed]. An important area that is not fully understood concerns the unpredictable interactions between computer systems that operate the different U.S. infrastructures. The concern is that numerous interdependencies (where downstream systems may rely on receiving good data through stable links with upstream computers) could possibly build to a cascade of effects that are unpredictable in how they might affect national security. For example, while the "Blaster" worm was disrupting Internet computers over several days in August 2003, some security experts suggest that slowness of communication links, caused by Blaster worm network congestion, may have contributed to the Eastern United States power blackout that occurred simultaneously on August 14. The computer worm could have degraded the performance of several communications links between data centers normally used to send warnings to other utility managers downstream on the power grid. DOD uses Commercial-Off-The-Shelf (COTS) hardware and software products in core information technology administrative functions, and also in the combat systems of all services, as for example, in the integrated warfare systems for nuclear aircraft carriers. DOD favors the use of COTS products in order to take advantage of technological innovation, product flexibility and standardization, and resulting contract cost-effectiveness. Nevertheless, DOD officials and others have stated that COTS products are lacking in security, and that strengthening the security of those products to meet military requirements may be too difficult and costly for most COTS vendors. To improve security, DOD Information Assurance practices require deploying several layers of additional protective measures around COTS military systems to make them more difficult for enemy cyberattackers to penetrate. However, on two separate occasions in 2004, viruses reportedly infiltrated two top-secret computer systems at the Army Space and Missile Defense Command. It is not clear how the viruses penetrated the military systems, or what the effects were. Also, contrary to security policy requirements, the compromised computers reportedly lacked basic anti virus software protection. Security experts have noted that no matter how much protection is given to computers, hackers are always creating new ways to defeat those protective measures. Networked computers with exposed vulnerabilities may be disrupted or taken over by a hacker, or by automated malicious code. Botnets opportunistically scan the Internet to find and infect computer systems that are poorly configured, or lack current software security patches. Compromised computers are taken over to become slaves in a "botnet", which can include thousands of compromised computers that are remotely controlled to collect sensitive information from each victim's PC, or to collectively attack as a swarm against other targeted computers. Even computers that have updated software and the newest security patches may still be vulnerable to a type of cyberattack known as a "Zero-Day exploit." This may occur if a computer hacker discovers a new software vulnerability and launches a malicious attack to infect computers before a security patch can be created by the software vendor and distributed to protect users. Zero-day vulnerabilities in increasingly complex software are regularly discovered by computer hackers. Recent news articles report that zero-day vulnerabilities are now available at online auctions, where buyers and sellers negotiate with timed bidding periods and minimum starting prices. This allows newly-discovered computer security vulnerabilities to be sold quickly to the highest bidder. Computer security expert Terri Forslof, of Tipping Point, has reportedly said that such practices will "...increase the perceived value of vulnerabilities, and the good guys already have trouble competing with the money you can get on the black market." A major threat for organizations is the ease with which data can now be copied and carried outside using a variety of portable storage devices, such as small flash drives. Newer high-density memory stick technology reportedly allows installed computer applications to be run entirely from the flash drive. This means that the entire contents of a PC could possibly be copied to and stored on a small, easily portable, and easily concealed media device. Employees with access to sensitive information systems can initiate threats in the form of malicious code inserted into software that is being developed either locally, or under offshore contracting arrangements. For example, in January 2003, 20 employees of subcontractors working in the United States at the Sikorsky Aircraft Corporation were arrested for possession of false identification used to obtain security access to facilities containing restricted and sensitive military technology. All of the defendants pleaded guilty and have been sentenced, except for one individual who was convicted at trial on April 19, 2004. Vulnerabilities in software and computer system configurations provide entry points for a cyberattack. Vulnerabilities persist largely as a result of poor security practices and procedures, inadequate training in computer security, or technical errors in software products. Inadequate resources devoted to staffing the security function may also contribute to poor security practices. Home PC users often have little or no training in best practices for effectively securing home networks and equipment. Vendors for Commercial-Off-The-Shelf software (COTS) are often criticized for releasing new products with errors that create the computer system vulnerabilities. Richard Clarke, former White House cyberspace advisor until 2003, has reportedly said that many commercial software products have poorly written, or poorly configured security features. In response to such criticism, the software industry reportedly has made new efforts to design products with architectures that are more secure. For example, Microsoft has created a special Security Response Center and now works with DOD and with industry and government leaders to improve security features in its new products. However, many software industry representatives reportedly agree that no matter what investment is made to improve software security, there will continue to be vulnerabilities in future software because products are becoming increasingly more complex. Although software vendors periodically release fixes or upgrades to solve newly discovered security problems, an important software security patch might not get scheduled for installation on an organization's computers until several weeks or months after the patch is available. The job may be too time-consuming, too complex, or too low a priority for the system administration staff. With increased software complexity comes the introduction of more vulnerabilities, so system maintenance is never-ending. Sometimes the security patch itself may disrupt the computer when installed, forcing the system administrator to take additional time to adjust the computer to accept the new patch. To avoid such disruption, a security patch may first require testing on a separate isolated network before it is distributed for installation on all other regular networked computers. Because of such delays, the computer security patches installed in many organizations may lag considerably behind the current cyberthreat situation. Whenever delays are allowed to persist in private organizations, in government agencies, or among PC users at home, computer vulnerabilities that are widely reported may remain unprotected, leaving networks open to possible attack for long periods of time. There has yet been no published evidence showing a widespread focus by cybercriminals on attacking the control systems that operate the U.S. civilian critical infrastructure. Disabling infrastructure controls for communications, electrical distribution or other infrastructure systems, is often described as a likely scenario to amplify the effects of a simultaneous conventional terrorist attack involving explosives. However, in 2006, at a security discussion in Williamsburg, Virginia, a government analyst reportedly stated that criminal extortion schemes may have already occurred, where cyberattackers have exploited control system vulnerabilities for economic gain. And, in December 2006, malicious software that automatically scans for control system vulnerabilities reportedly was made available on the Internet for use by cybercriminals. This scanner software reportedly can enable individuals with little knowledge about infrastructure control systems to locate a SCADA computer connected to the Internet, and quickly identify its security vulnerabilities. The Idaho National Laboratory is tasked to study and report on technology risks associated with infrastructure control systems. Past studies have shown that many, if not most, automated control systems are connected to the Internet, or connected to corporate administrative systems that are connected to the Internet, and are currently vulnerable to a cyberattack. And, because many of these infrastructure SCADA systems were not originally designed with security as a priority, in many cases, new security controls cannot now be easily implemented to reduce the known security vulnerabilities. Following past trends, where hackers and cybercriminals have taken advantage of easy vulnerabilities, some analysts now predict that we may gradually see new instances where cybercriminals exploit vulnerabilities in critical infrastructure control systems. New, automated attack methods have outpaced current methods for tracking the number and severity of cyberattacks and cybercrime intrusions. For example, according to a study by the Cooperative Association for Internet Data Analysis (CAIDA), on January 25, 2003, the SQL Slammer worm (also known as "Sapphire") automatically spread to infect more than 90% of vulnerable computers worldwide within 10 minutes of its release on the Internet, making it the fastest-spreading computer worm in history. As the study reports, the Slammer worm doubled in size every 8.5 seconds and achieved its full scanning rate (55 million scans per second) after about 3 minutes. It caused considerable harm through network outages which led to numerous canceled airline flights and automated teller machine (ATM) failures. The use of automated tools for cybercrime has had a dramatic affect on the Computer Emergency Response Team/ Coordinating Center (CERT/CC). In 2004, CERT/CC announced that it had abandoned its traditional practice of producing an annual report tracking the number of cyber intrusions recorded for each year. For many years prior to 2004, CERT/CC had maintained a database of statistics about security incidents that were reported to it anonymously by businesses and individuals worldwide. The reason given for abandoning its annual tracking report was because the widespread use of new, automated cyberattack tools had escalated the number of network attacks to such a high level, that the CERT/CC organization determined that traditional methods for counting security incidents had become meaningless as a metric for assessing the scope and effects of attacks against Internet-connected systems. The CERT-CC website currently states, "Given the widespread use of automated attack tools, attacks against Internet-connected systems have become so commonplace that counts of the number of incidents reported provide little information with regard to assessing the scope and impact of attacks. Therefore, beginning in 2004, we stopped publishing the number of incidents reported." The FBI estimates that all types of computer crime in the U.S. now costs industry about $400 billion, while officials in the Department of Trade and Industry in Britain say computer crime has risen by 50 percent from 2005 to 2006. As one example of costs associated with a recent computer security breach, TJX, the parent company of TJ Maxx, took a $12 million charge in its fiscal first quarter of 2008 due to the theft of more than 45 million credit and debit card numbers, starting in 2006. The money reportedly went to investigating and containing the intrusion, improving computer security, communicating with customers, and other fees. TJX estimates that, adding damages from future lawsuits, the breach may eventually cost $100 per lost record, or a total of $4.5 billion. It is estimated that only five per cent of cybercriminals are ever arrested or convicted because the anonymity associated with web activity makes them hard to catch, and the trail of evidence needed to link them to a cybercrime is hard to unravel. Studies also show that cybercrime incidents are rarely reported, especially by companies that wish to avoid negative publicity leading to possible loss of confidence by its customers. However, law enforcement officials argue that "maintaining a code of silence" won't benefit a company in the long-run. Steven Martinez, deputy assistant director for the FBI's cyber division, reportedly stated at the 2006 RSI Computer Security Conference that partnerships between law enforcement, the academic community, and the private sector are key to understanding and reducing cybercrime. Each year, the Computer Security Institute (CSI), with help from the FBI, conducts a survey of thousands of security practitioners from U.S. corporations, government agencies, financial institutions, and universities. The CSI/FBI Computer Crime and Security Survey, published annually, is perhaps the most widely-used source of information about how often computer crime occurs and how expensive these crimes can be. The 2006 survey indicated that the average financial loss reported due to security breaches was $167,713, an 18% decrease from the previous year's average loss of $203,606. However, some observers argue that the analyses reported in the CSI/FBI survey may be questionable, because the survey methodology is not statistically valid. This is because the survey is limited only to CSI members, which reduces the likelihood that respondents are a representative sample of all security practitioners, or that their employers are representative of employers in general. In addition, the 2006 CSI/FBI survey points out that most companies are continuing to sweep security incidents under the rug. With the apparent absence of statistically valid survey results concerning the financial costs of computer crime, and with an accompanying lack of clear data about the number and types of computer security incidents reported, it appears that there may be no valid way to currently understand the real scope and intensity of cybercrime. The growing use of botnets and sophisticated malicious code also suggests that the percentage of unreported cybercrime, plus the percentage undetected, may both be going up. The challenge of identifying the source of attacks is complicated by the unwillingness of commercial enterprises to report attacks, owing to potential liability concerns. CERT/CC estimates that as much as 80% of all actual computer security incidents still remain unreported. Law enforcement officials concede they are making little progress in tracing the profits and finances of cybercriminals. Online payment services, such as PayPal and E-Gold, enable criminals to launder their profits and exploit the shortcomings of international law enforcement. Recently, Intermix Media was fined $7.5 million in penalties for distribution of spyware which silently captures personal information from user's PCs. However, some adware and spyware purveyors reportedly can still make millions of dollars per year in profits. Many companies who distribute spyware are difficult to pursue legally because they typically also offer some legitimate services. In many cases, the finances that back cybercrimes are so distributed they are hard for law enforcement to figure out. Some large cybercriminal groups are transnational, with names like Shadowcrew, Carderplanet, and Darkprofits. Individuals in these groups reportedly operate from locations all over the world, working together to hack into systems, steal credit card information and sell identities, in a very highly structured, organized network. Organized crime is also recruiting teenagers who indicate they feel safer doing illegal activity online than in the street. A recent report from the McAfee security organization, titled the "Virtual Criminology Report", draws on input from Europe's leading high-tech crime units and the FBI, and suggests that criminal outfits are targeting top students from leading academic institutions and helping them acquire more of the skills needed to commit high-tech crime on a massive scale. In the future, we may see new and different modes of criminal organization evolve in cyberspace. Cyberspace frees individuals from many of the constraints that apply to activities in the physical world, and current forms of criminal organization may not transition well to online crime. Cybercrime requires less personal contact, less need for formal organization, and no need for control over a geographical territory. Therefore, some researchers argue that the classical hierarchical structures of organized crime groups may be unsuitable for organized crime on the Internet. Consequently, online criminal activity may emphasize lateral relationships and networks instead of hierarchies. Instead of assuming stable personnel configurations that can persist for years, online criminal organization may incorporate the "swarming" model, in which individuals coalesce for a limited period of time in order to conduct a specific task, or set of tasks, and afterwards go their separate ways. The task of law enforcement could therefore become much more difficult. If cybercriminals evolve into the "Mafia of the moment" or the "cartel of the day," police will lose the advantage of identifying a permanent group of participants who engage in a set of routine illicit activities, and this will only contribute to the future success of organized cybercrime. The federal government has taken steps to improve its own computer security and to encourage the private sector to also adopt stronger computer security policies and practices to reduce infrastructure vulnerabilities. In 2002, the Federal Information Security Management Act (FISMA) was enacted, giving the Office of Management and Budget (OMB) responsibility for coordinating information security standards and guidelines developed by federal agencies. In 2003, the National Strategy to Secure Cyberspace was published by the Administration to encourage the private sector to improve computer security for the U.S. critical infrastructure through having federal agencies set an example for best security practices. The National Cyber Security Division (NCSD), within the National Protection and Programs Directorate of the Department of Homeland Security (DHS) oversees a Cyber Security Tracking, Analysis and Response Center (CSTARC), tasked with conducting analysis of cyberspace threats and vulnerabilities, issuing alerts and warnings for cyberthreats, improving information sharing, responding to major cybersecurity incidents, and aiding in national-level recovery efforts. In addition, a new Cyber Warning and Information Network (CWIN) has begun operation in 50 locations, and serves as an early warning system for cyberattacks. The CWIN is engineered to be reliable and survivable, has no dependency on the Internet or the public switched network (PSN), and reportedly will not be affected if either the Internet or PSN suffer disruptions. In January 2004, the NCSD also created the National Cyber Alert System (NCAS), a coordinated national cybersecurity system that distributes information to subscribers to help identify, analyze, and prioritize emerging vulnerabilities and cyberthreats. NCAS is managed by the United States Computer Emergency Readiness Team (US-CERT), a partnership between NCSD and the private sector, and subscribers can sign up to receive notices from this new service by visiting the US-CERT website. Cybercrime is also a major international challenge, even though attitudes about what comprises a criminal act of computer wrongdoing still vary from country to country. However, the Convention on Cybercrime was adopted in 2001 by the Council of Europe, a consultative assembly of 43 countries, based in Strasbourg. The Convention, effective July 2004, is the first and only international treaty to deal with breaches of law "over the internet or other information networks." The Convention requires participating countries to update and harmonize their criminal laws against hacking, infringements on copyrights, computer facilitated fraud, child pornography, and other illicit cyber activities. Although the United States has signed and ratified the Convention, it did not sign a separate protocol that contained provisions to criminalize xenophobia and racism on the Internet, which would raise Constitutional issues in the United States. The separate protocol could be interpreted as requiring nations to imprison anyone guilty of "insulting publicly, through a computer system" certain groups of people based on characteristics such as race or ethnic origin, a requirement that could make it a crime to e-mail jokes about ethnic groups or question whether the Holocaust occurred. The Department of Justice has said that it would be unconstitutional for the United States to sign that additional protocol because of the First Amendment's guarantee of freedom of expression. The Electronic Privacy Information Center, in a June 2004 letter to the Foreign Relations Committee, objected to U.S. ratification of the Convention, because it would "create invasive investigative techniques while failing to provide meaningful privacy and civil liberties safeguards." On August 3, 2006, the U.S. Senate passed a resolution of ratification for the Convention. The United States will comply with the Convention based on existing U.S. federal law; and no new implementing legislation is expected to be required. Legal analysts say that U.S. negotiators succeeded in scrapping most objectionable provisions, thereby ensuring that the Convention tracks closely with existing U.S. laws. Department of Defense (DOD) officials have stated that, while the threat of cyber attack is "less likely" to appear than conventional physical attack, it could actually prove more damaging because it could involve disruptive technology that might generate unpredictable consequences that give an adversary unexpected advantages. The Homeland Security Presidential Directive 7 required that the Department of Homeland Security (DHS) coordinate efforts to protect the cybersecurity for the nation's critical infrastructure. This resulted in two reports in 2005, titled "Interim National Infrastructure Protection Plan," and "The National Plan for Research and Development in Support of Critical Infrastructure Protection", where DHS provided a framework for identifying and prioritizing, and protecting each infrastructure sector. However, some observers question why, in light of the many such reports describing an urgent need to reduce cybersecurity vulnerabilities, there is not an apparent perceived sense of national urgency to close the gap between cybersecurity and the threat of cyberattack. For example, despite Federal Information Security Management Act of 2002 (FISMA), some experts argue that security remains a low priority, or is treated almost as an afterthought at some domestic federal agencies. In 2007, the Government Accountability Office issued a report, titled "Critical Infrastructure Protection: Multiple Efforts to Secure Control Systems Are Under Way, but Challenges Remain," which states that cybersecurity risks have actually increased for infrastructure control systems because of the persistence of interconnections with the Internet, and continued open availability of detailed information on the technology and configuration of the control systems. The report states that no overall strategy yet exists to coordinate activities to improve computer security across federal agencies and the private sector, which owns the critical infrastructure. Some observers argue that, as businesses gradually strengthen their security policies for headquarters and administrative systems, the remote systems that control critical infrastructure and manufacturing may soon be seen as easier targets of opportunity for cybercrime. Cybercrime is obviously one of the risks of doing business in the age of the internet, but observers argue that many decision-makers may currently view it as a low-probability threat. Some researchers suggest that the numerous past reports describing the need to improve cybersecurity have not been compelling enough to make the case for dramatic and urgent action by decision-makers. Others suggest that even though relevant information is available, future possibilities are still discounted, which reduces the apparent need for present-day action. In addition, the costs of current inaction are not borne by the current decision-makers. These researchers argue that IT vendors must be willing to regard security as a product attribute that is coequal with performance and cost; IT researchers must be willing to value cybersecurity research as much as they value research for high performance or cost-effective computing; and, finally, IT purchasers must be willing to incur present-day costs in order to obtain future benefits. Policy issues for cybercrime and cyberterrorism include a need for the following: increase awareness about changing threats due to the growing technical skills of extremists and terrorist groups; develop more accurate methods for measuring the effects of cybercrime; help to determine appropriate responses by DOD to a cyberattack; examine the incentives for achieving the goals of the National Strategy to Secure Cyberspace; search for ways to improve the security of commercial software products; explore ways to increase security education and awareness for businesses and home PC users; and find ways for private industry and government to coordinate to protect against cyberattack. Congress may also wish to consider ways to harmonize existing federal and state laws that require notice to persons when their personal information has been affected by a computer security breach, and that impose obligations on businesses and owners of that restricted information. Seized computers belonging to Al Qaeda indicate its members are becoming more familiar with hacker tools and services that are available over the Internet. Could terrorist groups find it advantageous to hire a cybercrime botnet tailored to attack specific targets, possibly including the civilian critical infrastructure of Western nations? Could cybercrime botnets, used strategically, provide a useful way for extremists to amplify the effects of a conventional terrorist attack using bombs? As computer-literate youth increasingly join the ranks of terrorist groups, will cyberterrorism likely become increasingly more mainstream in the future? Will a computer-literate leader bring increased awareness of the advantages of an attack on information systems, or be more receptive to suggestions from other, newer computer-literate members? Once a new tactic has won widespread media attention, will it likely motivate other rival terrorist groups to follow along the new pathway? Experiences at CERT/CC show that statistical methods for measuring the volume and economic effects of cyberattacks may be questionable. Without sound statistical methods to accurately report the scope and effects of cybercrime, government and legal authorities will continue to have unreliable measures of the effectiveness of their policies and enforcement actions. Figures from several computer security reports now used for measuring annual financial losses to U.S. industry due to intrusions and cybercrime are believed by some observers to be limited in scope or possibly contain statistical bias. Is there a need for a more statistically reliable analysis of trends in computer security vulnerabilities and types of cyberattacks to more accurately show the costs and benefits for improving national cybersecurity? Congress may wish to encourage security experts to find more effective ways to collect data that will enable accurate analysis of trends for cyberattacks and cybercrime. Congress may also wish to encourage security researchers to find better ways to identify the initiators of cyberattacks. If a terrorist group were to use a cybercrime botnet to subvert computers in a third party country, such as China, to launch a cyberattack against the United States, the U.S. response to the cyberattack must be carefully considered, in order to avoid retaliating against the wrong entity. Would the resulting effects of cyberweapons used by the United States be difficult to limit or control? Would a cyberattack response that could be attributed to the United States possibly encourage other extremists, or rogue nations, to start launching their own cyberattacks against the United States? Would an attempt by the U.S. to increase surveillance of another entity via use of cyberespionage computer code be labeled as an unprovoked attack, even if directed against the computers belonging to a terrorist group? If a terrorist group should subsequently copy, or reverse-engineer a destructive U.S. military cyberattack program, could it be used against other countries that are U.S. allies, or even turned back to attack civilian computer systems in the United States? If the effects become widespread and severe, could the U.S. use of cyberweapons exceed the customary rules of military conflict, or violate international laws. Commercial electronics and communications equipment are now used extensively to support complex U.S. weapons systems, and are possibly vulnerable to cyberattack. This situation is known to our potential adversaries. To what degree are military forces and national security threatened by computer security vulnerabilities that exist in commercial software systems, and how can the computer industry be encouraged to create new COTS products that are less vulnerable to cyberattack? Does the National Strategy to Secure Cyberspace present clear incentives for achieving security objectives? Suggestions to increase incentives may include requiring that all software procured for federal agencies be certified under the "Common Criteria" testing program, which is now the requirement for the procurement of military software. However, industry observers point out that the software certification process is lengthy and may interfere with innovation and competitiveness in the global software market. Should the National Strategy to Secure Cyberspace rely on voluntary action on the part of private firms, home users, universities, and government agencies to keep their networks secure, or is there a need for possible regulation to ensure best security practices? Has public response to improve computer security been slow partly because there are no regulations currently imposed? Would regulation to improve computer security interfere with innovation and possibly harm U.S. competitiveness in technology markets? Two of the former cybersecurity advisers to the president have differing views: Howard Schmidt has stated that market forces, rather than the government, should determine how product technology should evolve for better cybersecurity; however, Richard Clarke has stated that the IT industry has done little on its own to improve security of its own systems and products. Some security experts emphasize that if systems administrators received the necessary training for keeping their computer configurations secure, then computer security would greatly improve for the U.S. critical infrastructure. However, should software product vendors be required to create higher quality software products that are more secure and that need fewer patches? Could software vendors possibly increase the level of security for their products by rethinking the design, or by adding more test procedures during product development? Ultimately, reducing the threat to national security from cybercrime depends on a strong commitment by government and the private sector to follow best management practices that help improve computer security. Numerous government reports already exist that describe the threat of cybercrime and make recommendations for management practices to improve cybersecurity. A 2004 survey done by the National Cyber Security Alliance and AOL showed that most home PC users do not have adequate protection against hackers, do not have updated antivirus software protection, and are confused about the protections they are supposed to use and how to use them. How can computer security training be made available to all computer users that will keep them aware of constantly changing computer security threats, and that will encourage them to follow proper security procedures? What can be done to improve sharing of information between federal government, local governments, and the private sector to improve computer security? Effective cybersecurity requires sharing of relevant information about threats, vulnerabilities, and exploits. How can the private sector obtain information from the government on specific threats which the government now considers classified, but which may help the private sector protect against cyberattack? And, how can the government obtain specific information from private industry about the number of successful computer intrusions, when companies resist reporting because they want to avoid publicity and guard their trade secrets? Should cybercrime information voluntarily shared with the federal government about successful intrusions be shielded from disclosure through Freedom of Information Act requests? How can the United States better coordinate security policies and international law to gain the cooperation of other nations to better protect against a cyberattack? Pursuit of hackers may involve a trace back through networks requiring the cooperation of many Internet Service Providers located in several different nations. Pursuit is made increasingly complex if one or more of the nations involved has a legal policy or political ideology that conflicts with that of the United States. Thirty-eight countries, including the United States, participate in the Council of Europe's Convention on Cybercrime, which seeks to combat cybercrime by harmonizing national laws, improving investigative abilities, and boosting international cooperation. However, how effective will the Convention without participation of other countries where cybercriminals now operate freely? (For more on the Convention, see CRS Report RS21208, Cybercrime: The Council of Europe Convention , by [author name scrubbed] (pdf).) H.R. 1525 —The Internet Spyware (I-SPY) Prevention Act of 2007, proposes penalties for unauthorized access to computers, or the use of computers to commit crimes. On May 23, 2007, this bill was received in the Senate and referred to the Committee on the Judiciary. H.R. 1684 —The Department of Homeland Security Authorization Act for Fiscal Year 2008 establishes within the Department of Homeland Security an Office of Cybersecurity and Communications, headed by the Assistant Secretary for Cybersecurity and Communications, with responsibility for overseeing preparation, response, and reconstitution for cybersecurity and to protect communications from terrorist attacks, major disasters, and other emergencies, including large-scale disruptions. The bill directs the Assistant Secretary to do the following: Establish and maintain a capability within the Department for ongoing activities to identify threats to critical information infrastructure to aid in detection of vulnerabilities and warning of potential acts of terrorism and other attacks. Conduct risk assessments on critical information infrastructure with respect to acts of terrorism. Develop a plan for the continuation of critical information operations in the event of a cyber attack. Define what qualifies as a cyber incident of national significance for purposes of the National Response Plan. Develop a national cybersecurity awareness, training, and education program that promotes cybersecurity awareness within the Federal Government and throughout the Nation. Consult and coordinate with the Under Secretary for Science and Technology on cybersecurity research and development to strengthen critical information infrastructure against acts of terrorism. On May 11, 2007, this bill was referred to the Senate Committee on Homeland Security and Governmental Affairs. H.R. 3221 —The New Direction for Energy Independence, National Security, and Consumer Protection Act proposes establishment of the Grid Modernization Commission to facilitate the adoption of Smart Grid standards, technologies, and practices across the Nation's electricity grid. The bill was passed in the House on August 4, 2007. On October 19, 2007, there was a unanimous consent request to consider H.R. 3221 in the Senate, but objection was heard. H.R. 3237 —The Smart Grid Facilitation Act of 2007, proposes to modernize the Nation's electricity transmission and distribution system to incorporate digital information and controls technology. "Smart grid" technology functions will include the ability to detect, prevent, respond to, or recover from cyber-security threats and terrorism. The new Grid Modernization Commission is directed to undertake, and update on a biannual basis, an assessment of the progress toward modernizing the electric system including cybersecurity protection for extended grid systems. On August 24, 2007, the bill was referred to House subcommittee on Energy and Environment.
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Cybercrime is becoming more organized and established as a transnational business. High technology online skills are now available for rent to a variety of customers, possibly including nation states, or individuals and groups that could secretly represent terrorist groups. The increased use of automated attack tools by cybercriminals has overwhelmed some current methodologies used for tracking Internet cyberattacks, and vulnerabilities of the U.S. critical infrastructure, which are acknowledged openly in publications, could possibly attract cyberattacks to extort money, or damage the U.S. economy to affect national security. In April and May 2007, NATO and the United States sent computer security experts to Estonia to help that nation recover from cyberattacks directed against government computer systems, and to analyze the methods used and determine the source of the attacks. (See Larry Greenemeier, "Estonian Attacks Raise Concern Over Cyber 'Nuclear Winter,'" Information Week, May 24, 2007, at http://www.informationweek.com/news/showArticle.jhtml?articleID=199701774.) Some security experts suspect that political protestors may have rented the services of cybercriminals, possibly a large network of infected PCs, called a "botnet," to help disrupt the computer systems of the Estonian government. DOD officials have also indicated that similar cyberattacks from individuals and countries targeting economic, political, and military organizations may increase in the future. (See Jeanne Meserve, "Official: International Hackers Going After U.S. Networks," CNN.com, October 19, 2007, http://www.cnn.com/2007/US/10/19/cyber.threats/index.html. and Sebastian Sprenger, "Maj. Gen. Lord Is a Groundbreaker," Federal Computer Week, October 15, 2007, vol. 21, no. 34, p. 44.) Cybercriminals have reportedly made alliances with drug traffickers in Afghanistan, the Middle East, and elsewhere where profitable illegal activities are used to support terrorist groups. In addition, designs for cybercrime botnets are becoming more sophisticated, and future botnet architectures may be more resistant to computer security countermeasures. (See Tom Espiner, "Security Expert: Storm Botnet 'Services' Could Be Sold," CnetNews.com, October 16, 2007, http://www.news.com/Security-expert-Storm-botnet-services-could-be-sold/2100-7349_3-6213781.html.) This report discusses options now open to nation states, extremists, or terrorist groups for obtaining malicious technical services from cybercriminals to meet political or military objectives, and describes the possible effects of a coordinated cyberattack against the U.S. critical infrastructure. This report will be updated as events warrant.
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A variety of efforts to address climate change are currently underway or being developed on the international, national, and sub-national levels (e.g., individual state actions or regional partnerships). These efforts cover a wide spectrum, from climate change research to mandatory greenhouse gas (GHG) emissions reduction programs. In the 110 th Congress, Members have introduced a number of proposals that would establish a national GHG emissions reduction regime. GHG emissions reduction programs, both ongoing and proposed, vary considerably. The primary variables are scope and stringency: which emission sources are covered by the program and how much emission reduction is required. These factors largely determine the impacts of an emissions reduction program, but other design details can have substantive effects. One such design element is the treatment of offsets. An offset is a measurable reduction, avoidance, or sequestration of GHG emissions from a source not covered by an emission reduction program. If a cap-and-trade program includes offsets, regulated entities have the opportunity to purchase them to help meet compliance obligations. Offsets have generated debate and controversy in climate change policy. If Congress establishes a federal program to manage or reduce GHG emissions, whether and how to address offsets would likely be an important issue. Because most current and proposed programs allow offsets (see tables at the end of the report), offset projects will probably play some part in an emissions reduction program. The first section of this report provides an overview of offsets by discussing different types of offset projects and describing how the offsets would likely be used in an emission reduction program. The next section discusses the supply of offsets that might be available in an emission trading program. The subsequent sections examine the potential offset benefits and the potential concerns associated with offsets. The final section offers considerations for Congress. In addition, the report includes a table comparing the role of offsets in selected emission reduction programs: proposals in the 111 th and 110 th Congresses, U.S. state initiatives, and international programs. Offsets are sometimes described as project-based because they typically involve specific projects or activities whose primary objective is to reduce, avoid, or sequester emissions. Because offset projects can involve different GHGs, they are quantified and described with a standard form of measure: either metric tons of carbon-equivalents (mtC-e) or metric tons of CO 2 -equivalents (mtCO 2 -e). To be credible as offsets, the emissions reduced, avoided, or sequestered must be additional to business-as-usual (i.e., what would have happened anyway). This concept is often called "additionality." If Congress establishes a GHG emission cap-and-trade program, only sources not covered by the cap could generate offsets. Emission reductions from regulated sources (e.g., coal-fired power plants) would either be required or spurred by the emissions cap. In contrast, if agricultural operations were not covered under an emissions cap, a project that collects methane emissions from a manure digester would likely be an additional GHG emission reduction. If offsets are allowed as a compliance option in an emissions trading program, eligible offset projects could generate "emission credits," which could be sold and then used by a regulated entity to comply with its reduction requirement. This approach is part of the European Union's (EU) Emission Trading Scheme (ETS), which EU members use to help meet their Kyoto Protocol commitments. Under the EU ETS, regulated entities can purchase emission credits that are created from approved offset projects. Regulated entities can then apply the credits towards their individual emission allowance obligations. For example, a regulated entity may consider purchasing offsets if the offsets are less expensive than making direct, onsite emission reductions. Assuming the offset is legitimate—i.e., a ton of carbon reduced, avoided, or sequestered through an offset project equates to a ton reduced at a regulated source—the objective to reduce GHG emissions is met. From a global climate change perspective, it does not matter where or from what source the reduction occurs: the effect on the atmospheric concentration of GHGs would be the same. Offsets increase emission reduction opportunities. When offsets are not allowed, incentives to reduce emissions or sequester carbon are limited to the covered sources, and there is little motivation to improve mitigation technologies for non-covered sources. Including offsets in a cap-and-trade program would expand these incentives Offsets could potentially be generated from an activity that emits GHGs or that would remove or sequester GHGs from the atmosphere. This section discusses offsets in four categories. Each category is discussed below with project examples for each group. Some of the categories and examples listed below may be limited by location. If a U.S. law or regulation (other than an emissions cap) governs a specific emission source (e.g., methane from coal mines), that source's emission reductions would not qualify as domestic offsets, unless the reductions made went further than the regulations required. For example, if the source is required by law or regulation to reduce methane emissions by 50%, reductions up to this threshold would not qualify as offsets, but reductions in excess of 50% might qualify as offsets. As more nations establish mandatory caps or require specific technological controls or practices at emission sources, the universe of potential offsets would shrink. Trees, plants, and soils sequester carbon, removing it from the earth's atmosphere. Biological sequestration projects generally involve activities that either increase existing sequestration; or maintain the existing sequestration on land that might otherwise be disturbed and release some or all of the sequestered carbon. This offset category includes sequestration that results from agriculture and forestry activities, and is sometimes referred to as land use, land use change and forestry (LULUCF) projects. Examples of these projects include planting trees on previously non-forested land (i.e., afforestation); planting trees on formerly forested land (i.e., reforestation); limiting deforestation by purchasing forested property and preserving the forests with legal and enforcement mechanisms; setting aside croplands from agricultural production to rebuild carbon in the soil and vegetation; and promoting practices that reduce soil disruption: e.g., conservation tillage and erosion control. Compared to the other offset categories discussed here, biological sequestration projects, particularly forestry projects, offer the most potential in terms of volume. However, this category is arguably the most controversial because several integrity issues are typically (or perceived to be) associated with biological sequestration projects. These issues are discussed in more detail in later sections of this report. Historically, renewable energy—e.g., wind, solar, biomass—has been a more expensive source of energy than fossil fuels. A renewable energy offset project could provide the financial support to make renewable energy sources more economically competitive with fossil fuels. Renewable energy sources generate fewer GHG emissions than fossil fuels, particularly coal. Wind and solar energy produce zero direct emissions. Use of renewable sources would avoid emissions that would have been generated by fossil fuel combustion. These avoided emissions could be sold as offsets. Potential renewable energy offset projects may include constructing wind farms to generate electricity; adding solar panels; retrofitting boilers to accommodate biomass fuels; and installing methane digesters at livestock operations. Domestic renewable energy projects are not likely to qualify as offsets in a national emissions reduction program. In a carbon-constrained context, project developers would be hard-pressed to demonstrate that a renewable energy project would not have happened anyway. In an "economy-wide" cap-and-trade emissions program, energy sector emissions would likely be capped. The cap would make fossil fuels more expensive and renewable energy sources more attractive. However, renewable energy projects may still create credible offsets in nations without GHG emission controls on their energy sectors. A more energy efficient product or system requires less energy to generate the same output. Improvements in energy efficiency generally require a financial investment in a new product or system. These capital investments likely pay off in the long run, but the payback period may be too long or capital financing may be constrained, particularly for small businesses or in developing nations. Examples of possible energy efficiency offset projects include upgrading to more efficient machines or appliances; supporting construction of more energy efficient buildings; replacing incandescent light bulbs with fluorescent bulbs. Similar to renewable energy offsets, domestic energy efficiency offset projects would likely face substantial hurdles in proving their additionality in a carbon-constrained regime. As the price of carbon increases and raises energy prices—both outcomes expected with an emissions cap—the incentive to reduce energy use through energy efficiency improvements will increase. Offset ownership is another potential challenge regarding some energy efficiency offsets. Energy efficiency improvements may occur at a different location than the actual reduction in emissions. For example, a business that runs its operations with purchased electricity will use less electricity if energy efficiency improvements are made, but the actual emission reductions will be seen at a power plant. Thus, the reductions may be counted twice: first as an energy efficiency offset and second as a direct reduction at the power plant. One way to address this potential dilemma is to restrict energy efficiency projects to only those that reduce or avoid on-site combustion of fossil fuels. This approach is used in the few congressional proposals that specifically allow energy efficiency offsets. As with renewable energy projects, there could be energy efficiency projects in nations that do not limit GHG emissions. Multiple sources emit non-CO 2 greenhouse gases. These emissions are often not controlled through law or regulation. These sources—primarily, agricultural, industrial, and waste management facilities—emit GHGs as by-products during normal operations. In many cases, the individual sources emit relatively small volumes of gases. However, there are a large number of individual sources worldwide, and many of the gases emitted have greater global warming potential (GWP) than carbon dioxide. Offset projects in this category would generally provide funding for emission control technology to reduce these GHG emissions. Examples of emission reduction opportunities include the following: methane (CH 4 ) emissions from landfills, livestock operations, or coal mines (GWP = 25) nitrous oxide (N 2 O) emissions from agricultural operations or specific industrial processes (GWP = 298) hydrofluorocarbon (HFC) emissions from specific industrial processes, such as HFC-23 emissions from production of a refrigerant gas (GWP of = 14,800) sulfur hexafluoride (SF 6 ) from specific industrial activities, such as manufacturing of semiconductors (GWP = 22,800) This offset category is broad, as it involves many different industrial activities. As such, some offset types in this category are generally considered high quality, and others that have generated controversy. For example, methane reduction from landfills or coal mines has a reputation as a high quality offset. These projects are relatively easy to measure and verify, and in many cases would likely not occur if not for the financing provided by an offset market. Therefore, the challenge of proving additionality is easier to overcome. Offsets involving abatement of HFC-23 emissions from production of a common refrigerant have spurred controversy. Of the offset types certified through the Kyoto Protocol's Clean Development Mechanism (CDM), HFC-23 offsets represent the greatest percentage: 50% of the certified emission reductions (CERs) have come from HFC-23 abatement projects. Controversy has arisen because the production facilities can potentially earn more money from the offsets (destroying HFC-23 emissions) than from selling the primary material. This creates a perverse incentive to produce artificially high amounts of product to generate a more lucrative by-product. The inclusion of offsets in a cap-and-trade program could potentially provide multiple benefits. Perhaps the primary benefit would be improved cost-effectiveness. The ability to generate offsets, which could be sold as emission credits, would provide an incentive for non-regulated sources to reduce, avoid, or sequester emissions. The inclusion of offsets could expand emission mitigation opportunities, likely reducing compliance costs for regulated entities. Many offset projects have the potential to offer environmental benefits, as well. Developing countries, in particular, may gain if the United States includes international offsets in a GHG emission program. In addition, the offset market may create new economic opportunities and spur innovation as parties seek new methods of generating offsets. These issues are discussed below in greater detail. A central argument in support of offsets is that their use makes an emissions reduction program more cost-effective. A wide range of activities could be undertaken that would generate offsets. Many of these individual activities would likely generate a relatively small quantity of offsets (in terms of tons), but in the aggregate, their climate change mitigation potential is substantial. Arguably, direct regulation of these sources—either through a cap-and-trade program or regulatory command-and-control provisions —may not be cost-effective because of the administrative burden. By allowing these sources to generate offsets and sell the offsets (as emission credits) to regulated entities, several benefits are achieved. First, emissions are reduced, avoided, and/or sequestered at sources that may not have otherwise occurred. Second, the offsets generated increase the compliance options for regulated entities: covered facilities can either make direct, onsite reductions or purchase emission credits generated from offsets. The increased reduction opportunities provided by offsets are expected to lower the cost of compliance. This impact ultimately affects consumers because they are expected to bear the majority of an emission program's costs. A 2008 EPA study analyzed the economic impacts of the Lieberman-Warner Climate Security Act of 2008 ( S. 2191 ), a cap-and-trade proposal that would allow covered sources to use domestic and international credits to each satisfy 15% allotments of their allowance submission. As with other economic models of climate change regulation, the modelers necessarily make many assumptions. Thus, the relative differences between different scenarios are perhaps more useful than the absolute estimates. EPA's study demonstrated a dramatic difference between the offset scenarios. The study found that if offsets are not allowed, the price of carbon would be substantially higher (e.g., 192% higher in 2015) than if offsets could be used as prescribed by the bill ( Figure 1 ). The study also found that international offsets would play a large role, especially in the beginning decades of the program, because there are generally more low-cost offset opportunities in other nations. In later years (as the carbon price rises), domestic offset types, particularly forestry-related offsets, play a larger role. Offset projects may produce benefits that are not directly related to climate change. For example, many of the offset projects that promote carbon sequestration in soil (e.g., conservation tillage) improve soil structure and help prevent erosion. Erosion control may reduce water pollution from nonpoint sources, a leading source of water pollution in U.S. waterbodies. Depending on a project's specific design and how it is implemented, other agriculture and forestry offset projects could potentially yield positive environmental benefits. However, there is some concern that certain projects may produce undesirable impacts, such as depleted soil quality, increased water use, or loss of biodiversity. Many agriculture and forestry offset projects would likely involve land use changes, such as converting farmlands to forests or biofuel production. Determining whether the change imparts net benefits may be a complex evaluation, depending upon, among other things, the current and proposed species of plants and/or trees. Policymakers would likely encounter projects that offer trade-offs: for example, they offset GHG emissions, while imposing an unwanted outcome, such as increased water use, reducing availability downstream. EPA found that the more aggressive offset opportunities—afforestation and biofuels production—are more likely to present the most distinct trade-offs. Most observers would agree that developing nations are unlikely to limit and reduce GHG emissions on a schedule on par with developed nations. With less-regulated emission sources, the universe of eligible offset opportunities would be much larger in developing nations. Offset types, such as renewable energy and/or energy efficiency projects, which could face substantial hurdles to qualify as offsets in the United States, would be eligible offsets from developing nations. These types of projects would likely provide environmental benefits beyond GHG emission reduction—improvements in local air quality—by displacing or avoiding combustion of fossil fuels. Offset projects in developing nations have the potential to promote sustainable development, such as creation of an energy infrastructure that is less carbon-intensive and more energy efficient. In fact, this was one of the objectives in establishing the Clean Development Mechanism (CDM). Whether this objective is being met is a subject of debate. However, recent projections suggest that offset activities that promote sustainable development will account for a larger percentage of emissions credits in the coming years. As a comparison between Figure 2 and Figure 3 indicates, the proportion of renewable energy and energy efficiency projects in the CDM is expected to more than double by 2012. This projected shift would likely improve support for sustainable development objectives. However, offset projects—primarily, HFC and N 2 O reduction from industrial activities—that provide few sustainable development benefits are still expected to account for a considerable proportion of emission credits issued. A federal cap-and-trade emission program that allows offsets as a compliance option may provide economic benefits to particular sectors of the U.S. economy. However, there may be trade-offs, depending on which types of offsets are eligible and whether or not international offsets are allowed. If international offset projects are included in the program, some U.S. business sectors may benefit from the transfer of technology and/or services to support projects in other nations. If international offsets, generally the lowest-cost options, are excluded, the offset projects from the domestic agriculture and forestry sectors would likely gain a greater share of the offsets market, thus generating business opportunities in these sectors. Another potential benefit that is often highlighted is the ability of an offset market to encourage innovation. As the carbon price provides an incentive for regulated entities to find onsite emission reductions (e.g., through efficiency improvements or development of new technologies), the offset market may spur parties to find new ways to reduce, avoid, or sequester emissions from non-regulated sources. However, there is some concern that the drive to find creative offset methods may encourage offset projects that yield unknown, unintended, and possibly harmful, environmental effects. A frequently cited example in this regard is ocean fertilization, which seeks to stimulate phytoplankton growth (and ultimately improve CO 2 sequestration) by releasing iron into certain parts of the surface ocean. Although offsets have the potential to provide benefits under an emissions trading program, several issues associated with offsets have generated concern and some controversy. Perhaps the primary concern regarding offsets is their integrity. To be credible, an offset should equate to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. This issue is critical, if offsets are to be used in an emissions trading program. However, implementing this objective would likely present challenges. This and other concerns are discussed below. If offsets are to be included in an emissions trading program, offset integrity—i.e., whether or not the offsets represent real emission reductions—is critical. Several issues need to be addressed when evaluating offsets. Some of these issues may present implementation challenges, which if not overcome, could damage the integrity of the offset. These issues are discussed below. Additionality means that the offset project represents an activity that is beyond what would have occurred under a business-as-usual scenario. In other words, would the emission reductions or sequestration have happened anyway? Additionality is generally considered to be the most significant factor that determines the integrity of the offset. In the context of an emissions control program, a test of additionality would examine whether the offset project would have gone forward in the absence of the program. An additionality determination would likely consider the following questions: Does the activity represent a common practice or conforms to an industry standard? Is the offset project required under other federal, state, or local laws? Would the project generate financial gain (e.g., be profitable) due to revenues from outside the offset market? Offset credits allow regulated entities to generate GHG emissions above individual compliance obligations. If project developers are able to generate emission credits for projects that would have occurred regardless (i.e., in the absence of the trading program), the influx of these credits into the program would undermine the emissions cap and the value of other, legitimate offset projects. Additionality is at the crux of an offset's integrity, but applying the additionality criterion may present practical challenges. For instance, it may be impossible to accurately determine "what would have happened anyway" for some projects. Assessing a project's additionality may involve some degree of subjectivity, which may lead to inconsistent additionality determinations. Reliable GHG emissions data are a keystone component of any climate change program. If Congress allows offsets as a compliance option, offset data (emissions reduced, avoided, or sequestered) should arguably be as reliable as data from regulated sources. From a practical standpoint, however, achieving this objective may be difficult. It is generally much simpler to measure and quantify an emission reduction from a direct source than from an offset project. Indeed, the more difficult measurement may be the main reason such reductions are not required by a control program. Regulated sources determine their compliance by comparing actual GHG emissions data against their allowed emissions. In contrast, project developers determine offset emission data by comparing the expected reduced, avoided, or sequestered GHG emissions against a projected, business-as-usual scenario (sometimes referred to as a counter-factual scenario). To accomplish this task, offset project managers must establish an emissions baseline: an estimate of the "business-as-usual" scenario or the emissions that would have occurred without the project. If project managers inaccurately estimate the baseline, the offsets sold may not match the actual reductions achieved. For example, an overestimated baseline would generate an artificially high amount of offsets. Baseline estimation may present technical challenges. In addition, project developers have a financial incentive to err on the high side of the baseline determination because the higher the projected baseline, the more offsets generated. Requiring third-party verification (as some proposals do) would potentially address this specific concern. Biological sequestration offset projects may present particular challenges in terms of measurement. The carbon cycle in trees and soils is only partially understood. Variations exist across tree species, ages, soil conditions, geographic locations, and management practices. Estimates of carbon uptake and storage are frequently considered imprecise or unreliable. Further, changes in vegetation cover may have non-emission effects on climate, such as how much of the Sun's energy is reflected or absorbed by the Earth. A recent study in the Proceedings of the National Academy of Sciences stated, "Latitude-specific deforestation experiments indicate that afforestation projects in the tropics would be clearly beneficial in mitigating global-scale warming, but would be counterproductive if implemented at high latitudes and would offer only marginal benefits in temperate regions." To be credible, when an offset is sold, it should be retired and not sold again or counted in other contexts. However, opportunities for double-counting exist. For example, a regulated entity may purchase offsets generated through the development of a wind farm in a nation that has not established GHG emissions targets. The U.S. buyer would count the offsets, which may have been purchased to negate increased, onsite emissions at the regulated source. In addition, the nation, in which the wind farm is located, would likely see an emissions reduction due to the wind farm. If this decrease is reflected in the nation's GHG emissions inventory, the offset project (wind farm) might replace other reduction activities that the nation might have taken to meet its target. Some may argue that double-counting is less of a problem if the offset project occurs in a nation with only a voluntary target (as opposed to a nation subject the Kyoto Protocol). However, the impact would be the same if the nation eventually establishes a mandatory target and takes credit for the earlier reductions associated with the offset project. By taking credit for an earlier reduction, the nation might need to make fewer reductions to be in compliance with the new mandatory program. A tracking system could help avoid such double-counting. Most would agree that a domestic tracking system would be simpler to establish and monitor than a system that follows international offset trading. The latter would require, at a minimum, cooperation with the nations hosting the offset projects. With some offset projects there may be a concern that the emission offsets will be subsequently negated by human activity (e.g., change in land use) or a natural occurrence (e.g., forest fire, disease, or pestilence). This issue is most pertinent to biological sequestration projects, specifically forestry activities. Although many observers expected forestry offsets to play a large role in the CDM, this has not been observed in practice. This result is partially due to concerns of offset permanence in developing nations. Offset buyers need some assurance that the land set aside for forests (and carbon sequestration) will not be used for a conflicting purpose (e.g., logging or urban development) in the future. Although natural events (fires or pests) are hard to control, human activity can be constrained through legal documents, such as land easements. In addition, an offset could come with a guarantee that it would be replaced if the initial reduction is temporary. Permanence may be more difficult to monitor at international projects. In the context of climate change policy, GHG emissions leakage generally refers to a situation in which an emissions decrease from a regulated (i.e., capped) source leads to an emissions increase from an unregulated source. EPA states that leakage "occurs when economic activity is shifted as a result of the emission control regulation and, as a result, emission abatement achieved in one location that is subject to emission control regulation is [diminished] by increased emissions in unregulated locations." Leakage scenarios may involve emission sources from the same economic sector, but located in different countries. Many voice concern that if the United States were to cap emissions from specific domestic industries (e.g., cement, paper), these industries would relocate to nations without emission caps and increase activity (and thus emissions) to compensate for the decreased productivity in the United States. Thus, global net emissions would not decrease, and affected domestic industries would likely see employment losses. In the context of offsets, leakage may occur in an analogous fashion. The opportunity for leakage exists when an offset project decreases the supply of a good in one location, leading to greater production of the good somewhere else. Compared to other offset types, forestry projects, particularly those that sequester carbon by curbing logging, likely present the greatest risk of leakage. For example, an offset project that restricts timber harvesting at a specific site may boost logging at an alternative location, thus reducing the effectiveness of the offset project. Preventing or accounting for leakage from these projects poses a challenge. As discussed above, the inclusion of offsets would likely lower the overall cost of compliance. Although many consider this a desired outcome, some contend that the price of carbon needs to reach levels high enough to promote the long-term technological changes needed to mitigate climate change. Offsets also can delay key industries' investments in transformative technologies that are necessary to meet the declining cap. For instance, unlimited availability of offsets could lead utilities to build high-emitting coal plants instead of investing in efficiency, renewables, or plants equipped with carbon capture and storage. Transaction costs generally refer to the costs associated with an exchange of goods or services. In an offset market, transaction costs may encompass the following: searching for offset opportunities; studying and/or measuring offset projects; negotiating contracts; monitoring and verifying reduced, avoided, or sequestered emissions; seeking regulatory approval; obtaining insurance to cover risk of reversal (i.e., non-permanence). Depending on the price of carbon in the offset market, transaction costs may represent a substantial percentage of the value of the offset. Several studies have examined offset projects in an effort to estimate transaction costs. Generally, the studies' results include a transaction cost range that varies by offset type and project size. For example, a study by the Lawrence Berkeley National Laboratory (LBL) found a transaction cost range of $0.03/mtCO 2 -e to $4.05/mtCO 2 -e. Overall, the various studies found that smaller offset projects (measured by tons of CO 2 -e) may be at a disadvantage because they would likely face proportionately higher transaction costs: the LBL study found that the mean transaction cost for small projects was $2.00/mtCO 2 -e, but only $0.35/mtCO 2 -e for the largest projects. The transaction costs may hinder innovation by serving as an obstacle to small, but promising offset projects. However, transaction costs are inherent in an emissions program that requires project developments to meet certain provisions—additionality, measurement, verification, monitoring—to maintain the integrity of the offset allowed as compliance alternatives. Some argue that offset use, particularly unlimited access to international offset opportunities, raises questions of fairness. Most of the world's GHG emissions (especially on a per capita basis) are generated in the developed nations, while most of the lower-cost offset opportunities are in developing nations. Many observers expect the developing nations to establish mandatory GHG reduction programs several years (if not decades) after developed nations' emission programs are underway. The developed nations are likely to initiate the lower-cost projects and retire the offsets, thus removing the "low-hanging fruit." If and when the developing nations subsequently establish GHG emission caps, the lower-cost compliance alternatives would not be available to them. Some have described this as a form of environmental colonialism. Another concern is that international offsets may serve as a disincentive for developing nations to enact laws or regulations limiting GHG emissions. For instance, if a developing nation established emission caps or crafted regulations for particular emissions sources, reductions from these sources would no longer qualify as offsets. Developing nations may be hesitant to forego the funding provided by offset projects. From a climate change perspective, the location of an emission activity does not matter: a ton of CO 2 (or its equivalent in another GHG) reduced in the United States and a ton sequestered in another nation would have the same result on the atmospheric concentration of GHGs. Moreover, unlike many air pollutants—e.g., acid rain precursors sulfur dioxide and nitrogen oxide, particulate matter, and mercury—a localized increase or decrease of CO 2 emissions does not directly impart corresponding local or regional consequences. This attribute of CO 2 emissions, the primary GHG, allows for offset opportunities. If allowed as part of an emissions reduction program, offsets have the potential to provide various benefits. The ability to generate offsets may provide an incentive for non-regulated sources to reduce, avoid, or sequester emissions (where these actions would not have occurred if not for the offset program); expand emission mitigation opportunities, thus reducing compliance costs for regulated entities; offer environmental co-benefits for certain projects; support sustainable development in developing nations; and create new economic opportunities and spur parties to seek new methods of generating offsets. The main concern with offset projects is whether or not they produce their stated emission reductions. To be credible, an offset ton should equate to a ton reduced from a direct emission source, such as a smokestack or exhaust pipe. If offset projects generate emission credits for activities that would have occurred anyway (i.e., in the absence of the emission trading program), these credits would not satisfy the principle of additionality. For many offset projects, determining additionality will likely pose a challenge. Other offset implementation issues—baseline estimation, permanence, accounting, monitoring—may present difficulties as well. If illegitimate offset credits flow into the trading program, the cap would effectively expand and credible emissions reductions would be undermined. The program would fail to meets its ultimate objective: overall GHG emissions reductions. Offset projects vary by the quantity of emission credits they could generate and the implementation complexity they present. For instance, domestic landfill methane projects are comparatively simple to measure and verify, but offer a relatively small quantity of offsets. In contrast, biological sequestration activities, particularly forestry projects, offer the most offset-generating potential, but many of these projects pose multiple implementation challenges. This may create a tension for policymakers, who might want to include the offset projects that provide the most emission reduction opportunities, while minimizing the use of offset projects that pose more implementation complications. Addressing these challenges may require independent auditing and/or an appreciable level of oversight and administrative support from government agencies. A report from the National Commission on Energy Policy stated, "Proposals that expect to achieve significant (> 10 percent) compliance through offsets in the near term will be obligated to create a substantial enforcement bureaucracy or risk an influx of illegitimate credits." If concerns of legitimacy can be resolved, the next question for policymakers may be whether the potential benefits provided by offsets would outweigh any potential harm. One debate may involve whether including offsets would send the appropriate price signal to encourage the development and deployment of new technologies, such as carbon capture and storage. Policymakers may consider striking a balance between sending a strong price signal and reducing the costs of the emissions reduction program. Another debate may focus on the possible effects of offsets in the developing world (assuming international offsets are allowed in a federal program). On one hand, many of the offset projects may offer significant benefits—more efficient energy infrastructure, improved air quality—to local communities. On the other hand, some maintain that if developed nations use all of the low-cost offsets in developing nations, the developing nations will face higher compliance costs if and when they establish GHG emission reduction requirements. Moreover, there is some concern that international offsets may serve as a disincentive for developing nations to enact laws or regulations limiting GHG emissions because they would lose funding from the offset market. Whether to include international offsets in a federal program raises other considerations as well. The ability to use international offsets for compliance purposes would substantially expand emission reduction opportunities, compared to only allowing domestic offsets. The more emission mitigation opportunities available, the lower the carbon price. This highlights the debate over the balance between overall program costs and price signal for technological development. If eligible in a U.S. program, international offsets from countries without binding reduction targets are likely to dominate in early decades because of their comparatively lower costs. Certain domestic economic sectors, primarily agriculture and forestry (if eligible as offsets), would benefit if international offsets are excluded. However, the inclusion of international offsets may benefit other U.S. economic sectors through the transfer of technology and services to support the projects. Moreover, as noted above, the more offset opportunities, the lower the overall costs of the cap-and-trade program.
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If Congress establishes a greenhouse gas (GHG) emissions reduction program (e.g., cap-and-trade system), the treatment of GHG emission offsets would likely be a critical design element. If allowed as part of an emissions program, offsets could provide cost savings and other benefits. However, offsets have generated concern. An offset is a measurable reduction, avoidance, or sequestration of GHG emissions from a source not covered by an emission reduction program. If allowed, offset projects could generate "emission credits," which could be used by a regulated entity (e.g., power plant) to comply with its reduction requirement. Offsets could include various activities: agriculture or forestry projects: e.g., conservation tillage or planting trees on previously non-forested lands; renewable energy projects: e.g., wind farms; energy efficiency projects: e.g., equipment upgrades; non-CO2 emissions reduction projects: e.g., methane from landfills. Including offsets would likely make an emissions program more cost-effective by (1) providing an incentive for non-regulated sources to generate emission reductions and (2) expanding emission compliance opportunities for regulated entities. Some offset projects may provide other benefits, such as improvements in air or water quality. In addition, the offset market may create new economic opportunities and spur innovation as parties seek new methods of generating offsets. The main concern with offset projects is whether or not they represent real emission reductions. For offsets to be credible, a ton of CO2-equivalent emissions from an offset project should equate to a ton reduced from a covered emission source, such as a smokestack or exhaust pipe. This objective presents challenges because many offsets are difficult to measure. If illegitimate offset credits flow into an emissions trading program, the program would fail to reduce GHG emissions. Another concern is whether the inclusion of offsets would send the appropriate price signal to encourage the development of long-term mitigation technologies. Policymakers may consider a balance between price signal and program costs. If eligible in a U.S. program, international offsets are expected to dominate in early decades because they would likely offer the lowest-cost options. Domestic sectors, such as agriculture and forestry, might benefit if international offsets are excluded. Some object to the use of international offsets due to concerns of fairness: the low-cost options would be unavailable to developing nations if and when they establish GHG emission targets. However, some offset projects may promote sustainable development. On the other hand, international offsets may serve as a disincentive for developing nations to enact laws or regulations controlling GHG emissions because many projects would no longer qualify as offsets.
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Fiscal year 2015 (FY2015) was the fourth year in which discretionary appropriations for the Department of Defense (DOD) were subject to a legally binding cap on national defense-related spending, initially codified by P.L. 112-25 , the Budget Control Act of 2011 (or BCA) and subsequently amended, most recently by P.L. 113-67 , the Bipartisan Budget Act (BBA) of 2013. President Obama's FY2015 Military Construction, Veterans Affairs, and Related Agencies (MilCon/VA) budget request complied with the applicable cap, as did the versions of the FY2015 National Defense Authorization Act (NDAA) that were passed by the House ( H.R. 4435 ), reported by the Senate Armed Services Committee ( S. 2410 ), and enacted into law ( H.R. 3979 , P.L. 113-291 ). Similarly, the versions of the FY2015 MilCon/VA Appropriations Act passed by the House and reported by the Senate Appropriations Committee ( H.R. 4486 ) and the version enacted as part of the Consolidated and Further Continuing Appropriations Act of 2015 ( H.R. 83 , Division I; P.L. 113-235 ) were consistent with spending caps then in force. Table 1 and Table 2 track the status of both acts. Congress annually authorizes the appropriation of funds for military construction projects through the drafting and passage of a Military Construction Authorization Act. This is typically incorporated as a division within the broader National Defense Authorization Act (NDAA). The Military Construction Authorization Act for Fiscal Year 2015 constituted Division B of the Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 ( P.L. 113-291 ). The NDAA is the principal legislative vehicle by which Congress organizes and sets policy for DOD. The Military Construction Authorization Act within the NDAA not only authorizes military construction projects and their necessary appropriations, but is also used to modify and extend the authorizations of existing projects, approve the acquisition and transfer of defense land title, set policy for real property disposition, require specific notifications to Congress of relevant defense actions, authorize appropriations for the NATO Security Investment Program (NSIP), and direct the management of DOD real property and facilities, among other actions. Provisions within, or amendments to, the NDAA authorized each of the five military base realignment and closure (BRAC) rounds carried out over the course of the past quarter-century. Title XXX of the FY 2015 NDAA, titled Natural Resources Related General Provisions , was unusual in the sense that it directed a number of real property actions for the Department of Interior, not DOD. This report will address only DOD-related provisions of the act. The amount of military construction new budget authority requested for FY2015 ($6.6 billion) was 40% less than the request for FY2014 ($11.0 billion). According to Administration statements, this reflected a deferral of construction forced by appropriations caps imposed by the BCA. The final act authorized the appropriation of $6.6 billion for military construction and family housing, $220 million for additional overseas contingency operations construction, and authorized several "unfunded" construction projects for which DOD had planned but had not requested funding. Table 3 tabulates the military construction appropriations requested and authorized for FY2015. In all, the President had requested $539.4 million for Army construction, while the act authorized $543.4 million. The President also requested $78.6 million for Army family housing construction and $351.0 million for operation and maintenance. The act authorized those amounts. Authorizations for military construction appropriations typically remain current for three years, as specified within the act. Nevertheless, specific authorizations can be modified in subsequent acts with respect to time for completion and to scope. The FY2015 act extended the authorization for a number of Army projects that originated in FY2011 and FY2012. It also expanded the scope or increased the amount of appropriations authorized for several others. The act also collapsed the last four of six planned phases of construction of a Command and Control Facility at Fort Shafter, HI, into a single authorization, with the conference committee stating that the move would be expected to save construction cost and speed completion by up to four years. The act also adjusted the Army's construction priorities by authorizing three projects for which funding had not been requested in FY2015: $15.0 million for a Consolidated Shipping Center at Blue Grass Army Depot in KY, $46.0 million for a Simulations Center at Fort Hood, TX, and $86.0 million for the third phase of construction of the Individual Training Barracks Complex at Fort Lee, VA. With respect to overseas military construction, the act prohibited the obligation or expenditure of funds for the construction of family housing at Camp Walker in the Republic of Korea (ROK) until DOD validated on-post family housing requirements in the country and proposed a plan to meet those requirements. The consolidation of U.S. Army personnel in the ROK from long-established garrisons along the Demilitarized Zone (DMZ) bordering North Korea to Camp Walker, near Daegu, and Camp Humphreys, near Seoul, has been a point of congressional concern noted in several NDAAs. The President requested $16.4 million for Navy and Marine Corps family housing construction and $354.0 million for operation and maintenance. The act authorized those amounts. The President had requested $1.0 billion ($1,018.7 million) for Navy and Marine Corps construction, while the act authorized $993.2 million. In its Joint Explanatory Statement (JES) accompanying the act, the conference committee explained that it had reduced the requested authorization for a Cyber Studies Building at Annapolis, MD, by $90.1 million from $120.1 million to $30.0 million, noting that the Navy would not be able to spend the full amount of the request. The act added unrequested authorizations of $13.8 million for a Regional Ship Maintenance Support Facility at Bangor, WA, and $50.7 million for a Radio Battalion Complex at Camp Lejeune, NC, the top unfunded construction priorities for the Navy and Marine Corps, respectively. As with the Army, the act modified some previously enacted authorizations for various construction projects. The President had requested $811.7 million for Air Force construction, while the act authorized $846.2 million. The difference can be attributed to an unrequested authorization of $34.4 million for a Corrosion Control and Composite Repair Shop at Andersen Air Force Base (AFB), Guam, a forward rotational deployment site for Global Strike Command B-52 Stratofortress and B-2 Spirit bombers. As it did for the other departments, the act modified several previously enacted construction authorizations. The President did not request family housing construction funding for the Air Force, and the act did not authorize any. He did request $327.7 million for Air Force family housing operation and maintenance, and the act authorized that amount. The President had requested $2.1 billion ($2,061.9 million) for Defense-Wide construction, while the act authorized $2.0 billion ($1,962.9 million). The difference is explained by a $70.0 million reduction to the $259.7 million requested for hospital construction at the Rhine Ordnance Barracks in Germany, a $9.0 million reduction in the request for Contingency Construction, and a $20.0 million reduction in requested Planning and Design funding. The act also modified several previously enacted authorizations for ongoing construction projects and barred the obligation or expenditure of any funds for the construction of either a human performance center at Joint Expeditionary Base Little Creek-Story, VA, or a squadron operations facility at Cannon AFB, NM, until the Committees on Armed Services of both House and Senate receive a report on DOD efforts on the prevention of suicide among members of U.S. Special Operations Command (USSOCOM). The President did not request family housing construction funding for the Defense account, and the act did not authorize any. He did request $61.0 million for the operation and maintenance of defense family housing, which the act authorized. The international Chemical Weapons Convention, formally known as the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction, ratified in 1997, banned the production, stockpiling, or use of chemical weapons. Since ratification, the U.S. has systematically reduced its supply of chemical munitions. The U.S. Army Chemical Munitions Activity is the agency entrusted with the destruction (demilitarization) of the nation's chemical munitions stockpile. At one time, installations in eight states stored these munitions. Currently, only Pueblo Chemical Depot, CO, and Blue Grass Army Depot, KY, have remaining munitions. The President had requested $38.7 million for chemical demilitarization construction and the act authorized the full amount. The President had requested $199.7 million as the U.S. contribution to NSIP (see footnote 3, p.2 of this report), while the act authorized $174.7 million. The difference is attributed in the act's Joint Explanatory Statement (JES) to slower than expected expenditure of funds already in the program. The presidential requests and subsequent authorizations for the various reserve components are set out in Table 4 . The projects authorized included several for which the President had not requested funding. The Family Housing Improvement Fund is the principal source of appropriations used to support the privatization of military family housing. The President requested $1.7 million for the fund, and the act authorized that amount. During the course of military Base Realignment and Closure (BRAC) rounds, Congress has created appropriations accounts to fund all of the activities (construction, relocation, etc.) necessary to carry them out and appropriated funds to them through the military construction appropriation. With no BRAC round currently authorized or underway, the primary purpose of continuing BRAC appropriations is to fund the environmental remediation necessary to permit the transfer of title to BRAC-surplused real property from the federal government to other parties. The President had requested $270.1 million for the BRAC account, and the act authorized that amount. The act also contained a provision (Section 2711) that affirmed congressional intent to reject the President's request to authorize a 2017 base closure round. Under previous BRAC procedures, DOD and so-called Local Redevelopment Authorities (LRAs) worked closely together to redevelop and transfer title of BRAC-surplused defense real property. In some instances, the creation of an LRA has proved problematic. Section 2721 of the act allowed a local government within whose jurisdiction the affected installation is wholly located to be recognized as an LRA. Advance congressional notification requirement. Section 2801 of the act amended statute 10 U.S.C. §2801 to require the Secretary concerned to notify the congressional defense committees in advance of any construction on a military installation that is not authorized under a Military Construction Authorization Act. Modification of construction authority. Section 2802 amended 10 U.S.C. §2805, which allows the Secretary concerned to initiate minor construction without previous authorization. The amendment raised the cost ceiling from $2.0 million to $3.0 million for such routine construction and from $3.0 million to $4.0 million if initiated to correct a deficiency that is life-threatening, health-threatening, or safety-threatening. The statute also permitted the use of operation and maintenance (O&M) funds, part of the defense appropriation, for construction projects costing less than $750 thousand. The amendment raised that limit to $1.0 million. Authorized payments-in-kind and in-kind contributions. Section 2803 amended 10 U.S.C. §2687a, which deals with U.S. military installations on foreign soil. The amendment clarifies that a military construction project may be accepted as a payment-in-kind form of host nation support only if it has been authorized by law. The amendment will become operative on September 30, 2016, or the date of enactment of a military construction authorization act for FY2017. One-step turn-key contractor selection. Section 2804 expanded the authority of the Secretaries under 10 U.S.C. §2862 to use a single fixed-price contract to both design and build a military construction project. Under standard military construction practice, design and construction are separate competitive-bid processes. Using "one-step turn-key selection procedures," the two are combined into a single contract. The amendment expanded its applicability to include certain repair projects and facility construction associated with authorized security assistance programs. Limits on construction in European Command. Section 2805 extended an existing restriction on military construction within the European Command Area of Responsibility (EUCOM AOR) until its requirement has been certified as part of the European Infrastructure Consolidation Assessment, has been determined to be of an enduring nature, and is the most effective means of meeting the need at the authorized location. For those projects created under the European Reassurance Initiative, the section requires the Secretary concerned to provide a military construction project data sheet (known as a Form DD-1391) to the congressional defense committees, to certify that a project pre-financing statement has been submitted through the NSIP, and to wait a specified number of days before initiating action. Temporary use of O&M funds for domestic construction. Section 2806 extended for one year a temporary authority to use a limited amount of O&M funding for contingency construction in the Central Command (CENTCOM) AOR. This provision has been reauthorized and amended annually since its original enactment as Section 2808 of the Military Construction Authorization Act for Fiscal Year 2004 (Division B of P.L. 108-136 ). The current extension limits the authority to $100 million. Residential building construction standards. Section 2807 expanded the number of voluntary consensus green building standards or rating systems that may be applied to any newly authorized residential building project. Limits on construction at NS Guantanamo Bay, Cuba. Section 2808 forbade the expenditure of any FY2015 funds for the construction of new facilities on Naval Station Guantanamo Bay, Cuba, unless the Secretary of Defense certifies that they would have enduring value independent of a high value detention mission. Section 2821 modified certain restrictions on the expenditure of funds that had limited the movement of Marine Corps forces from Okinawa, Japan, to the U.S. Territory of Guam. These restrictions had been in existence for several years pending the satisfaction of a number of conditions established in previous NDAAs. One of those conditions was the creation by DOD of a Master Plan for Guam, which the department supplied in July 2014. The section removed the previous prohibition and replaced it with a cap on the overall cost of construction on Guam to carry out the movement of Marines from Okinawa. The provision continued certain restrictions on the use of military construction funds for the development of other public infrastructure on Guam. Section 2822 permits the Secretary of the Navy and the Secretary of the Interior to provide for the establishment and operation of a surface danger zone in the Ritidian Unit of Guam that would provide safe boundaries for a proposed live-fire range on Andersen AFB – Northwest Field and management of adjacent Guam National Wildlife Refuge property. Subtitle D of the act provided for the conveyance to various entities of title to all or part of a number of land parcels administered by DOD. Many of these conveyance authorities stipulated reversionary clauses that would permit the United States to reassume title to the property under certain conditions. The conveyances authorized by the act are listed in Table 5 . Section 2851 amended 10 U.S.C. §4772 to permit the Secretary of the Army to accept funds and in-kind gifts, including services, construction materials, and equipment used in construction, for the Heritage Center for the National Museum of the United States Army from the Army Historical Foundation and from industry donors. Section 2852 directed the Secretary of Defense to convey title to the Mt. Soledad Veterans Memorial in San Diego, California, to the Mount Soledad Memorial Association, Inc., subject to certain conditions. Section 2853 authorized the Secretary of the Navy to permit a third party to establish and maintain a memorial on the Washington Navy Yard in the District of Columbia to the victims of the shooting attack of September 16, 2013, that occurred there. Section 2861 redesignated the Asia-Pacific Center for Security Studies at Honolulu, Hawaii, as the "Daniel K. Inouye Asia-Pacific Center for Security Studies." Senator Daniel K. Inouye, a World War II Army veteran and Medal of Honor recipient, represented Hawaii in the House of Representatives and the Senate continuously since the state entered the Union. Senator Inouye died on December 17, 2012. Section 2871 required the Secretary of Defense to submit not later than April 30, 2015, to the congressional defense committees a report on actions taken by DOD on recommendations resulting from reviews of physical security standards following the shooting incidents of November 2009 at Fort Hood, TX, and September 2013 at the Washington Navy Yard, DC. Section 2901 and Section 2902 authorized a number of Army and Air Force construction projects that would support the ERI. These projects were to be located in Romania, Bulgaria, Estonia, Italy, Latvia, Lithuania, and Poland. Section 2903 authorized $46.0 million for an overseas contingency construction project on behalf of the National Security Agency at a classified location. Section 2904 authorized $4.4 million for unspecified minor construction associated with the ERI. In total, the act authorized $220.4 million under its Title XXIX, Overseas Contingency Operations Military Construction. The Military Construction, Veterans Affairs, and Related Agencies appropriations bill provides funding for the planning, design, construction, alteration, and improvement of facilities used by active and reserve military components worldwide. It capitalizes military family housing and the U.S. share of the NATO Security Investment Program and finances the implementation of installation closures and realignments. It underwrites veterans benefit and health care programs administered by the Department of Veterans Affairs (VA), provides for the creation and maintenance of U.S. cemeteries and battlefield monuments within the United States and abroad, and supports the U.S. Court of Appeals for Veterans Claims, Armed Forces Retirement Homes, and Arlington National Cemetery. The bill also funds advance appropriations for veterans' medical services. The Military Construction, Veterans Affairs, and Related Agencies Subcommittee of the House Committee on Appropriations reported out its version of the appropriations bill ( H.R. 4486 , H.Rept. 113-416 ) by voice vote on April 3, 2014. It was formally introduced to the House on April 17 by Representative John Abney Culberson (TX/07) and passed on the Yeas and Nays (416-1, Roll no. 187). The bill was received in the Senate on May 1, 2014, and referred to the Committee on Appropriations. On May 20, the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies approved the bill with an amendment in the nature of a substitute for consideration by the full committee. Senator Tim Johnson (SD) reported the bill to the Senate with an amendment in the nature of a substitute on May 22 ( S.Rept. 113-174 ). The bill was placed on the Senate Legislative Calendar under General Orders (Calendar No. 400). No further action was taken on the bill until December 11, 2014, when it was incorporated as Division I of the House's amendment to the Senate's amendment to a separate bill, H.R. 83 . The House agreed to the newly amended bill by the Yeas and Nays (219-206, Roll No. 563). The Senate took up the amended bill on December 12 and agreed to the House amendment by Yea-Nay vote (56-40, Record Vote No. 354) on December 13. The bill was presented to the President on December 16, 2014, and signed into law as P.L. 113-235 . The appropriations included within this act closely follow the authorizations discussed in the previous section of this report. The major appropriations categories include military construction and family housing construction and operation for the various active and reserve components of the armed forces and defense agencies, U.S. contributions the NATO Security Investment Program, construction associated with the demilitarization of the U.S. chemical munitions stockpile, the DOD homeowners assistance program, the DOD family housing improvement program, and activities associated with the five formal military base closure and realignment (BRAC) rounds that Congress has authorized. Military construction is the creation of real property (that which cannot be moved), by the Department of Defense (on behalf of the defense agencies and Special Operations Command) or the Departments of the Army, Navy, or Air Force,. 10 U.S.C. §2802 defines military construction projects as "surveys and site preparation; acquisition, conversion, rehabilitation, and installation of facilities; acquisition and installation of equipment and appurtenances integral to the project; acquisition and installation of supporting facilities (including utilities) and appurtenances incident to the project; and planning, supervision, administration, and overhead incident to the project." Since 1948, the median (half above and half below) annual combined military construction and family housing appropriation is calculated at $11.9 billion, as measured in constant FY2015 dollars. For FY2015, Congress passed, and the President enacted, a military construction and family housing appropriation of $6.6 billion. The flow of appropriations is illustrated in Figure 1 . Funding for military construction over the decades has tended to organize itself into several distinct time periods. The end of World War II in 1945 left the Department of War and the Department of the Navy (predecessors of DOD) with massive, relatively new, infrastructure inventories supporting a rapidly demobilizing military force. A total of more than 16 million U.S. men and women served in uniform during the war, and more than 12 million were on active duty in September of 1945. By mid-1947, when DOD was created out of the two military departments, that number had shrunk to less than 2 million. Construction requirements, therefore, were minimal between the end of World War II and the outbreak of hostilities on the Korean Peninsula in 1950. The Cold War's onset required a significant reorientation of U.S. national strategy. Long-range Soviet bomber fleets and a large ground army concentrated in central Europe posed significant threats. During the 1950s and early 1960s, the U.S. constructed early warning radar facilities, missile defense sites, and strategic bomber bases along its northern tier and established large garrisons near the border between West and East Germany. Construction continued apace as U.S. combat troops became engaged in Vietnam during the late 1960s. The need for new construction slowed somewhat as the United States disengaged from Vietnam in the late 1960s, but picked up again during the military buildup during the Reagan Administration in the 1980s. Tensions of the Cold War eased during the last years of the 1980s, presaging the collapse of the Soviet Union in 1991. By then, budgetary pressures, the lack of a clearly defined adversary, and underutilized infrastructure offered an opportunity to significantly reduce DOD's "footprint." This led the Secretary of Defense in 1988 to negotiate an agreement with Congress that created a special Base Realignment and Closure (BRAC) process. Under BRAC, DOD and an independent commission have drawn up lists of recommendations in 1988, 1991, 1993, 1995, and 2005 that closed or adjusted the missions and garrisons of installations around the nation. The recommendations for each round have been implemented over the course of the six subsequent years, and the sole source of funding for that implementation has been the military construction appropriation. Authority to conduct BRAC expired in 2006. The Cost of BRAC. BRAC implementation is one reason that military construction appropriations between FY1989 and FY2011, the last year of BRAC implementation, may not have dropped to levels expected at the end of the Cold War. That the 2005 BRAC round, implemented between FY2006 and FY2011, required an extraordinary commitment of funding was largely due to three reasons unique to that round: its primary goal was not cost savings, but rather support for the "transformation" of U.S. military forces into a lighter "expeditionary" post-Cold War organization; operations in Iraq and Afghanistan prompted an increase in ground forces ("Grow the Force") requiring the construction of new troop facilities; and the redeployment of overseas units to U.S. garrisons required construction of additional domestic facilities funded through the BRAC account. Trends in Appropriations. Since 2011, appropriations for military construction and family housing appear to have shrunk to levels not seen since the mid-1970s. Military construction for FY2012, the first post-BRAC year, amounted to $13.8 billion, a 28% reduction from the year before. The $10.0 billion appropriated for FY2014 represented a further 27% reduction below those for FY2012. The President requested $6.6 billion in military construction and family housing appropriations for FY2015, which represented a level 53% below the appropriation of three years earlier. The military construction appropriations levels for FY 2016 through FY 2019 presented by DOD in its Future Years Defense Plan (FYDP) are projected to rise to $9.3 billion, then decline to $8.5 billion, $8.0 billion, and $7.7 billion, respectively. Post-BRAC actual, requested, and projected military construction and family housing new budget authority is illustrated in Figure 2 . The conference committee on H.R. 83 , Division I, raised several key issues in drafting the FY2015 appropriation. Capital asset projects, such as the construction of military facilities, can be either fully funded or incrementally funded. As a general rule, the Office of Management and Budget (OMB) has directed federal agencies, including DOD, to fully fund construction in order to accurately reflect the real cost of each project. Nevertheless, major projects that would require the dedication of substantial amounts of budget authority could limit the amount of annual budget authority available for other construction. For such large, budget-intensive projects, DOD has broken the funding stream into phases spread over a number of years. Each phase, though, is considered to be an independent, stand-alone project in the sense that its completion must yield a usable facility. This has led some in the construction industry to suggest that the approach is inefficient in both cost and time to completion. While generally supporting full funding, Congress has occasionally modified such projects by converting a series of construction phases into a single project and funding them in a series of increments, thereby preserving new budget authority and offering the potential for more efficient construction. Such was the case with several major construction projects for which funds were appropriated in the FY2015 act, as shown in Table 6 . Sometimes, military installations will continue to provide minimal upkeep and maintenance to buildings that are not occupied or otherwise being productively used. On one hand, this can reduce the assets available to support other facilities. On the other hand, keeping the heat and air conditioning on, patching leaks, and generally keeping these "zero-utilization" buildings habitable could prove a long-term cost-saving measure in case the facilities must again be pressed into service or title to the property is transferred to another agency or to a non-federal entity, such as in the case that the military installation is closed. In their Explanatory Statement accompanying the appropriations act, the conference committee stated, "It is important for DOD to eliminate wasteful spending on unused facilities and properties that have been rated at zero percent utilization. The DOD is urged to manage its facilities and properties in a responsible manner that does not waste taxpayer resources." The conference committee also noted that budget constraints on military construction appear to have negatively affected the quality of surface transportation infrastructure in and around a number of military installations. While road construction and maintenance can be funded through the military construction and defense appropriations, the only vehicle by which DOD can assist with the construction of roads "outside the fence" is the Defense Access Road (DAR) Program. The committee noted that DOD had submitted a list of certified unfunded DAR requirements totaling $92,900,000. The committee then directed DOD to submit with its FY2016 military construction appropriations request an updated list of unfunded DAR requirements; a list of unfunded internal road improvements at installations which have experienced a growth rate of 10 percent or more in tenant populations within the past five years or where tenant organizations comprise more than 50 % of the workforce; recommendations of ways in which DOD could facilitate the contribution and coordination of multiple service and Defense agency components of an installation's population to address unfunded base access and internal transportation requirements; and additional related data. In its Explanatory Statement, the conference committee noted that funding for the construction of what are referred to as "Quality of Life" (QOL) facilities (e.g., child development centers, physical fitness facilities and troop housing) had declined under strengthened budget constraints, stating that Both the Department and the services have acknowledged that they are taking risk in their military construction programs, especially QOL requirements, to provide additional funds for operational readiness. ... The fiscal year 2015 Senate Military Construction, Veterans Affairs and Related Agencies Appropriations Bill provided additional funding for unfunded QOL military construction requirements identified by the services, subject to authorization. However, no additional funding for QOL projects was authorized in either the fiscal year 2015 Senate or House of Representatives Defense authorization bills. The committee then directed DOD to provide along with its FY2016 military construction appropriations request a prioritized list of unfunded QOL requirements to include, but not limited to, troop housing, child development and youth centers, and physical fitness centers, for each of the services, and a plan across the FYDP to address these requirements. The Department of Veterans Affairs (VA) administers directly, or in conjunction with other federal agencies, programs that provide benefits and other services to veterans and their spouses, dependents, and beneficiaries. The VA has three primary organizations to administer these benefits: the Veterans Benefits Administration (VBA), the Veterans Health Administration (VHA), and the National Cemetery Administration (NCA). Benefits available to veterans include service-connected disability compensation; a pension for low-income veterans who are elderly or have a nonservice-connected disability; vocational rehabilitation for disabled veterans; medical care; life insurance; home loan guarantees; burial benefits; and educational and training benefits to help in the transition of active servicemembers to civilian life. As shown in Table 7 , VA appropriations for benefits and services have increased by almost 81% from FY2008 ($88.11 billion) to FY2015 ($159.14 billion). The FY2015 budget submitted by the Administration called for funding the VA at a level of $158.64 billion (see Table 8 ). This is an increase of $10.71 billion, or 7.2%, compared to the 2014 Consolidated Appropriations Act ( P.L. 113-76 ). However, the final $159.14 billion enacted FY2015 appropriation for the VA was $11.21 billion (7.6%) over the FY2014 enacted amount, and approximately $505 million (.34%) above the Administration's FY2015 request. Under current budget scoring guidelines, advance appropriations of budget authority are scored as new budget authority in the fiscal year in which the funds become newly available for obligation, and not in the fiscal year the appropriations are enacted. Therefore, in Table 8 and Table 9 of this report, FY2016 advance appropriation figures are shown in the corresponding fiscal year column at the end of each table. For example, the 2015 Consolidated and Further Continuing Appropriations Act ( H.R. 83 ; P.L. 113-235 ) provides advance appropriations for the medical services, medical support and compliance, and medical facilities accounts for FY2016. Funding shown for FY2015 does not include advance appropriations provided in FY2015 by P.L. 113-235 for use in FY2016. Instead, the advance appropriation provided in FY2015 for use in FY2016 is shown in the FY2016 column. At the same time, advance appropriations included in the 2014 Consolidated Appropriations Act ( P.L. 113-76 ) for use in FY2015 are shown in the FY2015 column. Since FY2010, the annual appropriations process for VHA includes advance appropriations for use during the following fiscal year. Beginning with the FY2016 MILCON/VA budget, the Administration will also be required to request FY2017 advance appropriations for several VBA accounts as described below. Advance Appropriations for VA Medical Care. In 2009, Congress enacted the Veterans Health Care Budget Reform and Transparency Act of 2009 ( P.L. 111-81 ) authorizing advance appropriations for three of the four accounts that comprise VHA: medical services, medical support and compliance, and medical facilities . The fourth account, the medical and prosthetic research account, is not funded with an advance appropriation. P.L. 111-81 also required the Department of Veterans Affairs to submit a request for advance appropriations for VHA with its budget request each year. Congress first provided advance appropriations for the three VHA accounts in the FY2010 appropriations cycle; the 2010 Consolidated Appropriations Act ( P.L. 111-117 ) provided advance appropriations for FY2011. Subsequently, each successive appropriation measure has provided advance appropriations for the three VHA accounts. In addition to the request for FY2015, as required by law, the Administration requested $58.66 billion in advance FY2016 funding for VA health care. Congress Extends Advance Appropriations to Mandatory VA Benefits. Additionally, the 2015 Consolidated and Further Continuing Appropriations Act ( H.R. 83 ; P.L. 113-235 ) amended 38 U.S.C §117 and authorized advance appropriations for three mandatory programs within the VBA: compensation and pensions, readjustment benefits, and veterans insurance and indemnities . Beginning with the FY2016 MILCON-VA Appropriations bill, these three VBA accounts will be provided advance appropriations for FY2017 in addition to the three VHA accounts that are already authorized to receive advance appropriations as explained above. The major differences between the FY2015 Administration request and P.L. 113-235 are that P.L. 113-235 includes slightly less overall funding for medical services than requested. P.L. 113-235 also rescinds and reallocates funding that affects several accounts. A general administrative rescission of $41 million applied across discretionary accounts, and a $15 million rescission was applied to the DOD-VA Health Care Sharing Incentive Fund for a total of $56 million in rescissions. Of that amount, $40 million was reprogrammed to temporarily extend a pilot program allowing the VA to contract outside physicians to conduct disability examinations in accordance with the Veterans' Benefits Improvement Act of 1996 ( P.L. 104-275 ). Taking into account the $40 million reallocation, new budget authority for the VA under P.L. 113-235 contained a final total of $16 million in rescissions. Slightly more funding than requested was provided for several VA departmental administration functions, including the Board of Veterans Appeals, general operating expenses for the VBA, the Office of the Inspector General, and grants for the construction of state extended care facilities and veterans' cemeteries. The 2015 MILCON-VA Appropriations Act ( H.R. 83 ; P.L. 113-235 ) provides a total of $56.4 billion for VHA (excluding rescissions), which comprises four accounts: medical services, medical support and compliance, medical facilities, and medical and prosthetic research accounts (see Table 8 ). For FY2015, P.L. 113-235 provides a $209 million supplement for the VHA medical services account in addition to the advance appropriation of approximately $45 billion provided in the 2014 Consolidated Appropriations Act ( P.L. 113-76 ), for the combined $45.225 billion in new budget authority included in Table 8 . This additional amount funds the higher than expected costs associated with the acquisition of two new Hepatitis-C drug therapies; to support the higher than expected demand for the Program of Comprehensive Assistance for Family Caregivers — established by Title I of the Caregivers and Veterans Omnibus Health Services Act of 2010 ( P.L. 111-163 ); and to fund several unfunded provisions in the Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-146 as amended by P.L. 113-175 and P.L. 113-235 ). The 2015 MILCON-VA Appropriations Act provides advance appropriations of approximately $58.7 billion for FY2016 for three VHA accounts (medical services, medical support and compliance, and medical facilities). For a more detailed discussion of VA health care appropriations, see CRS Report R43547, Veterans' Medical Care: FY2015 Appropriations , by [author name scrubbed]. As shown in Table 9 , mandatory funding is higher than discretionary funding for the VA. In the FY2015 appropriation ( P.L. 113-235 ), discretionary funding is 40.9%, while mandatory funding is 59.1% of total funding. Advance funding for VA medical care is considered discretionary; however, mandatory funding is composed of appropriated entitlements including disability compensation, pension, and readjustment benefits. The growth of mandatory funding has been driven primarily by disability claims of (1) former servicemembers, (2) current beneficiaries who are experiencing worsening or multiple service-connected disabilities, and (3) individuals who may be eligible for benefits under a presumptive service-connection. The American Battle Monuments Commission (ABMC) is responsible for the maintenance and construction of U.S. monuments and memorials commemorating the achievements in battle of U.S. Armed Forces since the nation's entry into World War I; the erection of monuments and markers by U.S. citizens and organizations in foreign countries; and the design, construction, and maintenance of permanent cemeteries and memorials in foreign countries. The commission maintains 24 cemeteries and 25 memorials in foreign countries and on U.S. soil. The U.S. Court of Appeals for Veterans Claims (CAVC) was established by the Veterans' Administration Adjudication Procedure and Judicial Review Act of 1988 ( P.L. 100-687 ). The court is an independent judicial tribunal with exclusive jurisdiction to review decisions of the Board of Veterans' Appeals. It has the authority to decide all relevant questions of law; interpret constitutional, statutory, and regulatory provisions; and determine the meaning or applicability of the terms of an action by the VA. It is authorized to compel action by the VA. It is authorized to hold unconstitutional, or otherwise unlawful, and set aside decisions, findings, conclusions, rules, and regulations issued or adopted by the VA or the Board of Veterans' Appeals. The Secretary of the Army is responsible for the administration, operation, and maintenance of Arlington National Cemetery and the Soldiers' and Airmen's Home National Cemetery. In addition to its principal function as a national cemetery, Arlington is the site of approximately 3,100 non-funeral ceremonies each year and has approximately 4 million visitors annually. P.L. 113-235 provides funding that is $20 million above the Administration request. The Armed Forces Retirement Home (AFRH) Trust Fund provides funds to operate and maintain the Armed Forces Retirement Home in Washington, DC (also known as the United States Soldiers' and Airmen's Home), and the Armed Forces Retirement Home in Gulfport, MS (originally located in Philadelphia, PA, and known as the United States Naval Home). The appropriation for the AFRH facilities is normally all from the Armed Forces Retirement Home Trust Fund. The trust fund is maintained through gifts, bequests, and a $0.50 per month assessment on the pay of active duty enlisted military personnel and warrant officers. Table 10 shows the Administration's FY2015 budget request, the House-passed and Senate proposed FY2015 appropriations, and the final enacted appropriation for each of the related agencies. The conference agreement on Division I of H.R. 83 created a new title devoted to military construction pursuant to the Global War on Terrorism and the European Reassurance Initiative (ERI). The request for funds for these projects was submitted to Congress after congressional consideration of the FY2015 Military Construction, Veterans Affairs, and Related Agencies bills was completed. The act appropriated the requested $46 million for a Defense-Wide OCO construction project at a classified location. An additional $175 million was appropriated for construction associated with the ERI. The Administration had requested that this sum be drawn from defense Operation and Maintenance (O&M) funds for unspecified ERI construction. Nevertheless, DOD subsequently identified to Congress individual construction requirements for which the appropriations committees provided funding as a new title within the appropriations act.
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The Military Construction, Veterans Affairs, and Related Agencies appropriations bill provides funding for the planning, design, construction, alteration, and improvement of facilities used by active and reserve military components worldwide. It capitalizes military family housing and the U.S. share of the NATO Security Investment Program and finances the implementation of installation closures and realignments. It underwrites veterans benefit and health care programs administered by the Department of Veterans Affairs (VA), provides for the creation and maintenance of U.S. cemeteries and battlefield monuments within the United States and abroad, and supports the U.S. Court of Appeals for Veterans Claims, Armed Forces Retirement Homes, and Arlington National Cemetery. The bill also funds advance appropriations for veterans' medical services. Military construction appropriations must be both authorized (usually in the annual National Defense Authorization Act) and appropriated. For FY2015, the President requested $6.6 billion in new budget authority for regular (base budget) military construction and an additional $46 million for Overseas Contingency Operations (OCO) construction associated with ongoing active military operations. Congress appropriated what the President requested, included a small amount of additional new budget authority, and added to that unexpired appropriations rescinded from prior fiscal years, bringing the base plus OCO military construction appropriation to $6.8 billion. In the spring of 2014, the President initiated a European Reassurance Initiative intended to strengthen confidence in U.S. support of its allies' security and territorial integrity. Congress thereupon added $221 million in military construction funding to the appropriation, bringing the total budget authority available for military construction in FY2015 to $7.0 billion. For Veterans Affairs, the President requested $154.6 billion, an increase of $10.7 billion above the amount enacted for FY2014. The final appropriation of $159.1 billion augmented the President's request by approximately $505 million. The Administration requested $212.6 million to support the other agencies (the American Battle Monuments Commission, the U.S. Court of Appeals for Veterans Claims, Arlington National Cemetery, and the Armed Forces Retirement Home) funded by the act. The final combined appropriation for these agencies for FY2015 was $236.6 million. The Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 (H.R. 3979/P.L. 113-291), which authorizes military construction appropriations and other related activities, was enacted on December 19, 2014. The final version of the FY2015 Military Construction, Veterans Affairs, and Related Agencies Appropriations Act (the Consolidated and Further Continuing Appropriations Act, 2015; H.R. 83, Division I/P.L. 113-265) was enacted on December 16, 2014.
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The 114 th Congress is considering legislation to provide "regulatory relief" for banks. The need for such relief, some argue, results from the increased regulation that was applied in response to vulnerabilities that became evident during the financial crisis that began in 2007. In the aftermath of the crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), a wide-ranging package of regulatory reform legislation, was enacted. Bank failures spiked during the crisis, and changes to banking regulation were a key part of financial reform. As financial regulators have implemented the Dodd-Frank Act and other reforms, some in Congress claim that the pendulum has swung too far toward excessive regulation. They argue that the additional regulation has resulted in significant costs that have stymied economic growth and restricted consumers' access to credit. Others, however, contend the current regulatory structure has strengthened financial stability and increased protections for consumers. They are concerned that regulatory relief for banks could negatively affect consumers and market stability. This report assesses banking regulatory relief proposals contained in bills that have been marked up by committee or have seen floor action in the 114 th Congress. In the House, proposals had generally been considered individually in separate bills until September 2016, when many of these bills were combined with new provisions in the Financial CHOICE Act ( H.R. 5983 , FCA). In the Senate, proposals have been combined into one legislative package, the Financial Regulatory Improvement Act ( S. 1484 / S. 1910 ). For more information on these two comprehensive regulatory relief packages, see the text box below. Several proposals were also included in the version of H.R. 22 , the Fixing America's Surface Transportation Act, which was signed into law as P.L. 114-94 on December 4, 2015. Because banks are involved in many different activities, this report does not address all regulatory relief proposals that would affect each aspect of a bank's business (e.g., it does not cover proposals affecting banks' involvement in areas such as derivatives) but focuses on those proposals that address the traditional areas of banking, such as taking deposits and offering loans. Although many of the proposals would modify regulations issued after the crisis, some would adjust policies that predated the financial crisis and some proposals are characterized as technical fixes. Further, the report covers only the regulatory relief banking legislation that has seen legislative action. The proposals discussed in this report vary with regard to the type of relief, including to whom relief would be provided and the manner in which it would be provided. For organizational purposes, this report classifies regulatory relief proposals into the categories of safety and soundness, mortgage and consumer protection, supervision and enforcement, or capital issuance. For each proposal, the report explains what the bill would do and the main arguments offered by its supporters and opponents. In assessing whether regulatory relief is called for or whether a regulation has not gone far enough, a central question is whether an appropriate trade-off has been struck between the benefits and costs of regulation. The different objectives and potential benefits of financial regulation include enhancing the safety and soundness of certain institutions; protecting consumers and investors from fraud, manipulation, and discrimination; and promoting financial stability while reducing systemic risk. The costs associated with government regulation are referred to as regulatory burden . The presence of regulatory burden does not necessarily mean that a regulation is undesirable or should be repealed. A regulation can have benefits that could outweigh its costs, but the presence of costs means, tautologically, that there is regulatory burden. Regulatory requirements often are imposed on the providers of financial services, so banks frequently are the focus of discussions about regulatory burden. But some costs of regulation are passed on to consumers, so consumers also may benefit from relief. Any benefits to banks or consumers of regulatory relief, however, would need to be balanced against a potential reduction to consumer protection and to the other benefits of regulation. The concept of regulatory burden can be contrasted with the phrase unduly burdensome . Whereas regulatory burden is about the costs associated with a regulation, unduly burdensome refers to the balance between benefits and costs. For example, some would consider a regulation to be unduly burdensome if costs were in excess of benefits or the same benefits could be achieved at a lower cost. But the mere presence of regulatory burden does not mean that a regulation is unduly burdensome. Policymakers advocating for regulatory relief argue that the regulatory burden associated with certain regulations rises to the level of being unduly burdensome for banks, whereas critics of those relief proposals typically believe the benefits of regulation outweigh the regulatory burden. As relief proposals for banks are debated, a useful framework to categorize proposals includes assessing to whom relief would be provided and how relief would be provided. Relief could be provided either to all banks to which a regulation applies or to only a subset of banks based on size, type, or the activities the banks perform. The perceived need for relief for small banks has been emphasized in the 114 th Congress, and Table 1 summarizes legislative proposals in this report that have a size threshold. Often in the regulatory relief debate, small banks are characterized as "community banks," although there is no consensus on what size threshold divides small banks from large or what are the defining characteristics of a community bank. Regulatory relief can be provided in different forms, including by repealing entire provisions, by providing exemptions from specific requirements, or by tailoring a requirement so that it still applies to certain entities but does so in a less burdensome way. Examples of different forms of tailoring are streamlining a regulation, grandfathering existing firms or types of instruments from a regulation, and phasing in a new regulation over time. Modifications can be made to regulations stemming from statutory requirements, regulatory or judicial interpretations of statute, or requirements originating from regulators' broad discretionary powers. Typically, in the area of financial regulation, Congress sets the broad goals of regulation in statute and leaves it to regulators to fill in the details. Many of the legislative proposals analyzed in this report, however, would make changes to specific details of the regulation that regulators have issued. Thus, some may oppose such proposals on the grounds that Congress is overriding regulator discretion and lacks the expertise to properly make detailed, technical regulatory judgments. In some cases, Congress might nevertheless determine that narrow intervention is justified because regulators have misinterpreted its will or are not considering other relevant policy objectives. The goal of safety and soundness (or prudential) regulation is to ensure that a bank maintains profitability and avoids failure. The rationale for safety and soundness regulation is to protect taxpayers (who backstop federal deposit insurance) and to maintain financial stability. Regulators monitor the bank's risk profile and set various metrics that banks must maintain in areas such as capital and liquidity. After the spike in bank failures surrounding the crisis, many of the reforms implemented in the wake of the financial crisis were intended to make banks less likely to fail. Whereas some view these efforts as essential to ensuring the banking system is safe, others view the reforms as having gone too far and imposing excessive costs on banks. Under Title I of H.R. 5983 , a banking organization that has received high ratings on recent examinations could choose to be subject to a higher, 10% leverage ratio. In exchange for choosing to be subject to the 10% leverage ratio, banks would be exempt from risk-weighted capital ratios; liquidity requirements; certain merger, acquisition, and consolidation restrictions; limitations on dividends; and other regulations. A bank would have the option to follow current regulatory requirements or this new regulatory approach. Some of the regulations from which a bank could receive relief are regulations that apply to all banks, such as the risk-weighted capital ratios. Other regulations from which a bank could receive relief under the FCA would only apply to larger banks (with an asset threshold of $50 billion to $700 billion, depending on the provision). For example, banks opting in to the new leverage ratio approach would be exempt from the Dodd-Frank Act's Section 165 enhanced prudential regulations except for stress tests and other regulations based on financial stability considerations. The enhanced regulatory regime can include capital standards, liquidity standards, counterparty limits, risk-management standards, and "living will" requirements. Regulators would still have authority to conduct stress tests on banks with over $50 billion in assets (but would no longer have the authority to require company-run stress tests for banks with between $10 billion and $50 billion in assets) that opted for the new regulatory approach but would be limited in their ability to require them to alter their capital levels. Background. With more than 500 banks failing between 2007 and 2014, strengthening prudential regulation has been a major goal of post-crisis financial reforms. Prudential regulation covers a broad set of a bank's activities, including assessing whether a bank will be able to meet its obligations during a market downturn, evaluating the quality of its assets and management team, and other factors. One of the main areas of focus is bank capital adequacy. Capital is the difference between the value of a bank's assets and its liabilities and is an indicator of a bank's ability to absorb losses. If a bank has $100 worth of assets and $90 of liabilities, then the bank has capital of $10. If the value of the assets decreases by $5 to $95 and the bank still has $90 in liabilities, then the $5 decline in asset value would be absorbed by the capital, which would decrease from $10 to $5. Capital is often measured as the ratio of capital to the bank's assets. A 10% capital ratio, for example, would imply $10 of capital for every $100 of assets. Banks are required to satisfy several different capital ratios, but the ratios fall into two main categories: (1) a leverage ratio and (2) a risk-weighted asset ratio. Failure to satisfy the required ratios could lead to regulators taking corrective action against a bank, including ultimately shutting the bank down. Under a leverage ratio, all assets regardless of riskiness are treated the same and, as in the previous example, the ratio is calculated by dividing capital by assets. Under a risk-weighted asset ratio, each asset is assigned a risk weight to account for the fact that some assets are more likely to lose value than others. Riskier assets receive a higher risk weight, which requires banks to hold more capital—and so be better able to absorb losses—to meet the ratio requirement. The specifics of the capital ratios—what the minimum levels are, what qualifies as capital, what the asset risk weights are, what is included in total assets—were proposed by the Basel Committee on Bank Supervision and then implemented by the U.S. financial regulators. The Basel Committee "is the primary global standard-setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters." The most recent proposed comprehensive reform proposal is referred to as Basel III. The capital ratios that a bank must satisfy and how those levels are computed varies based on a bank's size and complexity. The largest banks are required to hold more capital than smaller, less complex banks. In regards to the simple leverage ratio, most banks are required to meet a 4% leverage ratio. Large banks are subject to a supplementary leverage ratio ranging from 3% to 6% depending on their size and the organizational unit within the bank. The supplementary leverage ratio is more expansive than the leverage ratio because it takes into account certain off-balance-sheet assets and exposures. The required risk-weighted ratios depend on bank size and capital quality (some types of capital are considered to be less effective at absorbing losses than other types, and so considered lower quality). Most banks must meet a risk-weighted ratio of 4.5% for the highest quality capital and of 6% and 8% for lower quality capital. Banks are then required to have an additional 2.5% of high quality capital on top of those levels as part of the "capital conservation buffer." The eight U.S. banks that have been designated as global systemically important banks (G-SIBs) face a capital surcharge that can range from 1% to 4.5%. Although currently set at zero and not yet fully phased in, a large bank also could be subject to a countercyclical buffer of up to 2.5% of risk-weighted assets if regulators deem it necessary. Policy Discussion. Some economists argue that it is important to have both a risk-weighted ratio and a leverage ratio because the two complement each other. A basic tenet of finance is that riskier assets have a higher expected rate of return to compensate the investor for bearing more risk. Without risk weighting, banks would have an incentive to hold riskier assets because capital is costly and the same amount of capital must be held against riskier and safer assets. For example, banks might decide to shift out of certain lines of business that involve holding large amounts of safe assets, such as cash, if risk-weighted ratios were replaced by a higher leverage ratio. But risk weights may prove inaccurate. For example, banks held highly rated mortgage-backed securities (MBSs) before the crisis, in part because those assets had a higher expected rate of return than other assets with the same risk weight. MBSs then suffered unexpectedly large losses during the crisis. Thus, the leverage ratio can be thought of as a backstop to ensure that incentives posed by risk-weighted capital ratios to minimize capital and maximize risk within a risk weight do not result in a bank holding insufficient capital. Others argue that the risk-weighted system provides "needless complexity" and is an example of "central planning." The complexity benefits those largest banks that have the resources to absorb the added regulatory cost. They believe that the risk weights in place prior to the financial crisis were poorly calibrated and "encouraged financial firms to crowd into these" unexpectedly risky assets, exacerbating the downturn. Risk weighting may encourage regulators to set the weights so as "to provide a cheaper source of funding for governments and projects favored by politicians," which can lead to a distortion in credit allocation. Better, they argue, to eliminate the risk-weighted system for those banks that agree to hold more capital and satisfy a higher, simpler leverage ratio. While a 10% leverage ratio is significantly more capital than what banks are currently required to hold, it is not necessarily more capital than they are currently holding. For example, under the current definition of the leverage ratio, banks except those with more than $250 billion in assets had an average leverage ratio above 10% in the first half of 2016. For traditional banks, as defined in H.R. 5983 , the bill uses a slightly different definition of leverage ratio than found in regulatory filings, however, making a direct comparison to the bill's requirement difficult. For traditional banks that are already above a 10% ratio, H.R. 5983 would provide them with regulatory relief without requiring them to hold more capital. In addition to the issue of whether it is better to have either both a risk-weighted ratio and a leverage ratio or only a leverage ratio is the broader issue of the role of capital in bank regulation. Those who argue in favor of having only a higher leverage ratio also generally support eliminating other forms of prudential regulation, such as liquidity requirements, asset concentration guidelines, and counterparty limits. They argue that capital is essential to absorbing losses and, so long as sufficient capital is in place, banks should not be subject to excessive regulatory micromanagement. Others, however, believe that the different components of prudential regulation each play an important role in ensuring the safety and soundness of financial institutions and are essential complements to bank capital. In other words, capital can absorb losses, but unlike other forms of prudential regulation, it cannot make losses less likely. 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, including acquiring or retaining "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. The final rule implementing the Volcker Rule was adopted on January 31, 2014. Section 901 of H.R. 5983 would repeal the Volcker Rule in its entirety. Policy Discussion. The Volcker Rule is named after Paul Volcker, former Chair of the Federal Reserve (Fed) and former Chair of President Obama's Economic Recovery Advisory Board. Volcker proposed this rule on the grounds 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…. Apart from the risks inherent in these activities, they also present virtually insolvable conflicts of interest with customer relationships, conflicts that simply cannot be escaped by an elaboration of so-called Chinese walls between different divisions of an institution. The further point is that the three activities at issue—which in themselves are legitimate and useful parts of our capital markets—are in no way dependent on commercial banks' ownership. Volcker also pointed out that in the presence of deposit insurance, banks are implicitly backed by taxpayers, which presents moral hazard problems. Thus, support for the Volcker Rule has often been posed as preventing banks from "gambling" in securities markets with taxpayer-backed deposits. In Volcker's view, moving these activities out of the banking system reduces moral hazard and systemic risk concerns. 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. Further, the Volcker Rule bans these activities from any subsidiary within a bank holding company, including non-bank subsidiaries. Proprietary trading in non-bank subsidiaries would be less likely to pose concerns about moral hazard and taxpayer risk unless the firm poses too big to fail problems. A House Financial Services Committee majority report argues that the Volcker Rule 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." A practical challenge posed by the Volcker Rule is differentiating between proprietary trading and permissible activities, such as hedging and market making. For example, how can regulators determine whether a broker-dealer is holding a security as inventory for market making, as a hedge against another risk, or as a speculative investment? Differentiating between these motives creates regulatory complexity, and if the benefits are not sufficient, the Volcker Rule might be unduly burdensome. The House Financial Services Committee report argues that banks will alter their behavior to avoid this regulatory burden, and this will reduce financial market efficiency: The Volcker Rule will increase borrowing costs for businesses, lower investment returns for households, and reduce economic activity overall because it constrains market-making activity that has already reduced liquidity in key fixed-income markets, including the corporate bond market. Section 115 of S. 1484 (Section 916 of S. 1910 ) would exempt banks with total consolidated assets of $10 billion or less (indexed in future years to the growth in GDP) from the Volcker Rule. Despite the exemption, regulators would be given discretion to apply the Volcker Rule to individual small banks if they determine that the bank's activities are "inconsistent with traditional banking activities or due to their nature or volume pose a risk to the safety and soundness of the insured depository institution." Background . Banks of all sizes must comply with the Volcker Rule, but regulators have adopted streamlined compliance requirements for banks with less than $10 billion in assets. Small banks with activities covered by the Volcker Rule can meet the requirements of the rule within existing compliance policies and procedures. However, according to the FDIC's guidance for community banks accompanying the Volcker Rule, The vast majority of these community banks have little or no involvement in prohibited proprietary trading or investment activities in covered funds. Accordingly, community banks do not have any compliance obligations under the Final Rule if they do not engage in any covered activities other than trading in certain government, agency, State or municipal obligations. Policy Discussion. Regulators contend that "the vast majority of community banks" who do not face compliance obligations do not face excessive burden. Banks argue that the act of evaluating the Volcker Rule to ensure that they are in compliance is burdensome in and of itself. The fact that the vast majority of community banks do not engage in activities subject to the Volcker Rule has been used by different bank regulatory officials as a rationale to support and oppose an exemption from the Volcker Rule for small banks. On the one hand, Federal Reserve Governor Daniel Tarullo argued in favor of an exemption on the grounds that "both community banks and supervisors would benefit from not having to focus on formal compliance with regulation of matters that are unlikely to pose problems at smaller banks." On the other hand, Federal Deposit Insurance Corporation (FDIC) Vice Chairman Thomas Hoenig says that among community banks subject to compliance requirements, those with traditional hedging activities can comply simply by having clear policies and procedures in place that can be reviewed during the normal examination process. Of the remainder, he estimates that the number of community banks facing significant compliance costs represent "less than 400 of a total of approximately 6,400 smaller banks in the U.S. And of these 400, most will find that their trading-like activities are already exempt from the Volcker Rule. If the remainder of these banks have the expertise to engage in complex trading, they should also have the expertise to comply with Volcker Rule." He concludes that On balance, therefore, a blanket exemption for smaller institutions to engage in proprietary trading and yet be exempt from the Volcker Rule is unwise. A blanket exemption would provide no meaningful regulatory burden relief for the vast majority of community banks that do not engage at all in the activities that the Volcker Rule restricts. However, a blanket exemption for this subset of banks would invite the group to use taxpayer subsidized funds to engage in proprietary trading and investment activities that should be conducted in the marketplace, outside of the [federal] safety net. The Promoting Job Creation and Reducing Small Business Burdens Act ( H.R. 37 ) passed the House on January 14, 2015. Title VIII of H.R. 37 would modify a provision of the final rule implementing the Volcker Rule. It would modify the Volcker Rule's treatment of certain collateralized loan obligations (CLOs) as impermissible covered fund investments. It would allow banks with investments in certain CLOs issued before January 31, 2014, an additional two years, until July 21, 2019, to be in compliance with the Volcker Rule. Background. H.R. 37 involves the part of the Volcker Rule prohibiting "certain relationships" with "risky" investment funds. A CLO is a form of securitization in which a pool of loans (typically, commercial loans) is funded by issuing securities. CLOs provide nearly $300 billion in financing to U.S. companies. In the final rule implementing the Volcker Rule, many of the trusts used to facilitate CLOs were included in the definition of risky investment funds. As a result, banks would have to divest themselves of certain CLO-related securities if the securities conveyed an impermissible interest in the trust. The Volcker Rule does not ban CLOs or banking organizations from holding CLOs; rather, it prohibits banking organizations from owning securities conferring ownership-like rights in CLOs. Regulators already have exercised their discretion to extend the conformance period for banks to divest themselves of these CLO-related assets to July 2017. They announced that they were not authorized to grant further temporary extensions. H.R. 37 would extend the conformance period to 2019 for CLOs. H.R. 37 applies only to banks that hold securities issued by existing CLOs funded by commercial loans. It would limit the extension period for conformance to those CLO securities issued prior to January 31, 2014. Going forward, bank participation in newly issued CLOs would have to be structured to comply with the Volcker Rule's prohibition of bank interests in risky investment firms. Policy Discussion. The potential economic impact of H.R. 37 depends on the characteristics of CLO-related obligations already held in the banking system. If banks did not expect their CLO holdings to be prohibited by the Volcker Rule, they may not have made any preparations to comply with it. Thus, proponents of extending the conformance period argue that rapid divestiture of CLO-related securities could force banks to sell these securities at a loss, perhaps in fire sales, if an extension is not granted and point out that the bill merely changes the grandfathering date of existing commercial loan-related CLO securities from 2017 to 2019. They argue that stress in the banking system without the extension may curtail credit available to small- and medium-sized commercial businesses. Opponents of Title VIII of H.R. 37 , including the White House, argue that extending the conformance period would undermine the intent of the Volcker Rule and allow risky securities to remain in the banking system. They contend that it could result in future destabilizing losses for banks that hold risky securities. The Investor Clarity and Bank Parity Act ( H.R. 4096 ), passed by the House on April 26, 2016, would allow an investment advisor that is affiliated with a bank or bank holding company to share the advisor's name with the hedge fund or private equity fund it manages if certain criteria were met. Those criteria include the investment advisor not being a bank or bank holding company, sharing the same name as a bank or bank holding company, or having bank in the name. Background . As mentioned above, the Volcker Rule prohibits banking entities from "certain relationships" with risky investment funds, including acquiring or retaining "any equity, partnership, or other ownership interest in or sponsor a hedge fund or a private equity fund." Banking entities include all FDIC-insured bank and thrift institutions; all bank, thrift, or financial holding companies; all foreign banking operations with certain types of presence in the United States; and all affiliates and subsidiaries of any of these entities. A banking entity is allowed, however, to organize and offer a private equity or hedge fund if certain conditions are met, including that "the banking entity does not share with the hedge fund or private equity fund, for corporate, marketing, promotional, or other purposes, the same name or a variation of the same name." An investment manager that is affiliated with a bank or bank holding company is considered a banking entity and, therefore, cannot name a fund that it manages after itself. The naming prohibition in the Volcker Rule is intended to make it less likely that "that a banking entity would otherwise come under pressure for reputational reasons to directly or indirectly assist a covered fund under distress that bears the banking entity's name." As explained in an example from the markup for H.R. 4096 , currently, "if XYZ Investment Advisers is an affiliate of XYZ Bank and sponsors a real estate fund, the real estate fund could not be named XYZ Real Estate Fund." H.R. 4096 would modify the naming prohibition by allowing an investment advisor that is not a bank or bank holding company to share its name with the fund it manages if the investment advisor's name is sufficiently different from its parent company's name and does not have bank in the name. So under H.R. 4096 , if ABC Investment Advisers is an affiliate of XYZ Bank and sponsors a real estate fund, the real estate fund could be named ABC Real Estate Fund (assuming the necessary criteria are met), but could still not be named XYZ Real Estate Fund. Policy Discussion. Supporters of H.R. 4096 argue that an investment manager naming its fund after itself is industry practice and serves "the goal of providing clarity to investors about who is managing a covered fund." If the investment manager has a completely different name than the bank with which it is affiliated, they argue that it is difficult to see how naming the fund after the investment manager "could lead to an expectation that the taxpayer-backed bank which didn't even organize the fund would bail the fund out." Critics of H.R. 4096 argue that it could "in some case permit funds to be named after significant bank affiliates that the markets strongly associate with the overall holding company, creating a reputational risk to the bank if the fund failed, and an inference of implicit sponsorship." Critics cite Merrill Lynch's relationship to Bank of America as one possible example. Some of the opponents of H.R. 4096 note that they would withdraw their objection if, instead of a broad change to the naming prohibition, H.R. 4096 "were modified to grant regulators discretion over the decision of whether or not to grant the specific exemption from naming restrictions laid out in the bill." CBO estimates that H.R. 4096 as ordered to be reported would have an insignificant effect on spending and revenues." Section 171 of the Dodd-Frank Act, known generally as the Collins Amendment , requires bank holding companies, thrift holding companies, and non-bank "systemically important financial institutions" (SIFIs) to have capital and leverage requirements at the holding company level that are no lower than those applied at the depository subsidiary. As a result, certain capital instruments, such as trust preferred securities, that had previously counted toward certain capital requirements at the holding company level would no longer be eligible. The Collins Amendment allowed capital instruments that were otherwise no longer eligible to receive grandfathered treatment if they were issued before May 19, 2010. For institutions with more than $15 billion in assets as of December 31, 2009, the instruments would be grandfathered until January 1, 2016. For institutions with less than $15 billion in assets, instruments issued before May 19, 2010, would be permanently grandfathered. For institutions with less than $1 billion (those subject to the Small Bank Holding Company policy), capital instruments issued on any (past or future) date would be eligible for capital requirements. Section 123 of S. 1484 (Section 924 of S. 1910 ) would change the date for determining whether banks were above the $15 billion threshold from December 31, 2009, to "December 31, 2009 or March 31, 2010." A similar provision was included in the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ). According to testimony from Emigrant Bank, this statutory change will make its capital instruments eligible to be grandfathered from the Collins Amendment. The Taking Account of Institutions with Low Operation Risk Act ( H.R. 2896 ) was ordered to be reported by the House Financial Services Committee on March 2, 2016. It was also included in Section 1146 of H.R. 5983 . When promulgating a rule, it would require the federal banking regulators, CFPB, and NCUA to "take into consideration the risk and business models" of the affected firms, "determine the necessity, appropriateness, and impact" of the regulation, and tailor the regulation "in a manner that limits the regulatory compliance impact, cost, liability risk, and other burden as is appropriate…." The legislation would leave it to the regulators to determine who should benefit from tailoring, as opposed to basing it on size, for example. The legislation would require the agencies to apply its requirements to regulations adopted in the past five years and new regulations adopted in the future. It would also require the regulators to annually testify and report to Congress on tailoring. Section 928 of S. 1910 would give the banking regulators discretion to exempt any bank or thrift, at the subsidiary or holding company level, with less than $10 billion in assets from any rule issued by the regulators or any provision of banking law. Regulators could exempt banks on the grounds that the provision or rule is unduly burdensome, is unnecessary to promote safety and soundness, and is in the public interest. Policy Discussion. Currently, regulators consider whether tailoring and exemptions are permissible, required, or appropriate on a case-by-case basis; there is no blanket authority to offer tailoring or exemptions when the authority underlying a regulation does not allow it. Granting regulators more discretion to provide tailoring or exemptions could be useful if it is believed that more specialized, technical expertise is required than Congress possesses to identify when policies are unduly burdensome or when exemptions would undermine the broad goals of regulation. Requiring regulators to consider whether regulations should be tailored or include exemptions could be desirable if Congress believes that regulators are insufficiently doing so at present. For example, proponents of H.R. 2896 and H.R. 5983 claim it is necessary because regulators are designing regulations for large banks and then applying them to small banks. An alternative view is that regulatory relief involves policy trade-offs that Congress is better placed to make on a case-by-case basis than regulators. Granting regulators more discretion to provide tailoring or exemptions could result in more or less regulatory relief than Congress intended—indeed, it does not guarantee that any regulatory relief will occur. Critics view legislation as unnecessary because regulators have already provided tailoring or exemptions in many recent rules (although, as noted above, in some cases, statute does not allow it). In some cases, by granting tailoring or exemptions, regulators would be overriding the will of Congress, who expressly declined to include tailoring or exemptions when provisions were originally enacted. A "look back" at existing regulations might also be time-consuming for regulators, and divert their attention from completing current initiatives. CBO estimated that H.R. 2896 would increase direct spending by $20 million in 2017, reduce revenues by $24 million between 2017 to 2026, and would require additional appropriations of $10 million over 2017 to 2021. The Mortgage Servicing Asset Capital Requirements Act of 2015 ( H.R. 1408 ) was agreed to by voice vote in the House on July 14, 2015. It was then included as Section 634 of Division E of the Consolidated Appropriations Act, 2016 ( H.R. 2029 ), which was signed into law as P.L. 114-113 on December 18, 2015. Section 116 of S. 1484 (Section 917 of S. 1910 ) is also similar in content to H.R. 1408 . The bills would require the federal banking regulators—the Fed, OCC, FDIC, and National Credit Union Administration (NCUA)—to "conduct a study of the appropriate capital requirements for mortgage servicing assets for banking institutions." H.R. 1408 as introduced would have delayed the implementation of Basel III for all but the largest institutions until the study was completed, but that provision was removed prior to House passage. Mortgage Servicing Assets. Mortgage servicers collect payments from borrowers that are current and forward them to mortgage holders, work with borrowers that are delinquent to try to get them current, and extinguish mortgages (such as through foreclosures) if a borrower is in default. A mortgage servicer is compensated for its work. A mortgage holder can service the mortgage itself or hire an agent to act on its behalf. Just as the mortgage holder can sell the mortgage and the right to receive the stream of payments associated with a mortgage to a different investor, a servicer can sell to a different servicer the right to service a mortgage and to receive the compensation for doing so, which can make mortgage servicing a valuable asset. A mortgage servicing asset (MSA), therefore, is an asset that results "from contracts to service loans secured by real estate, where such loans are owned by third parties." Some banks will originate a mortgage and sell the mortgage to a different investor but retain the servicing of the mortgage (so they keep the MSA) to maintain their relationship with the customer. Banks are required to fund their assets with a certain amount of capital to protect against the possibility that their assets may drop in value. The riskier an asset, the more capital a bank is required to hold to guard against losses. The Basel III framework is an international agreement with U.S. participation that includes guidelines on how banks should be regulated, such as how much capital they are required to hold against certain assets. The federal bank regulators have issued rules generally implementing the Basel III framework and setting capital requirements that banks must follow. Banks have identified the capital treatment for MSAs as one of the more costly aspects of the new capital requirements. Policy Discussion. The new capital requirements mandate more capital for MSAs, making it more costly for banks to hold MSAs. As a result, some banks have started selling their MSAs and nonbanks (financial institutions that do not accept deposits and are not subject to the Basel III capital requirements) have purchased MSAs. Although the CFPB regulates nonbank mortgage servicers to ensure that they comply with consumer protections, some are worried that the growth of nonbank servicers and the sale of MSAs may "trigger a race to the bottom that puts homeowners at risk" as nonbank servicers cut costs to compete for business. Given the concerns about the effect the Basel III capital requirements are having on the mortgage servicing market, some argue that "there needs to be additional review of whether or not additional capital is required simply for mortgage servicing." Supporters of additional review note that Basel III is an international agreement but that MSAs are a product of the U.S. housing finance system, which is different than the housing finance system in other countries. As a result, they contend that additional study needs to be given to this unique topic. Some Members of Congress acknowledge that servicing has migrated to nonbanks and have expressed concerns about the implications of that migration. They have stated that they are generally supportive of having a study, but do not want the study to result in the delayed implementation of the Basel III requirements. Critics of H.R. 1408 supported the removal of the provision in H.R. 1408 that would have delayed the implementation of Basel III for all but the largest institutions until the study was completed. They contend Basel III is important to the safety and soundness of the banking system. CBO estimates that H.R. 1408 as ordered to be reported would affect direct spending and revenues but that "the net effect on the federal budget over the next 10 years would not be significant." To address the "too big to fail" problem, Title I of the Dodd-Frank Act created an enhanced prudential regulatory regime for all large bank holding companies (BHCs) and non-bank SIFIs. Under Subtitle C of Title I, the Fed is the prudential regulator for any BHC with total consolidated assets of more than $50 billion and any firm that the Financial Stability Oversight Council (FSOC) has designated as a SIFI. The Fed, with the FSOC's advice, is required to set safety and soundness standards that are more stringent than those applicable to other non-bank financial firms and BHCs that do not pose a systemic risk. There are currently about 30 U.S. BHCs with more than $50 billion in consolidated assets. Section 201 of S. 1484 (Section 931 of S. 1910 ) would raise the asset threshold from $50 billion to $500 billion under which BHCs are automatically subject to Title I's enhanced prudential regulation by the Fed. For BHCs with assets between $50 billion and $500 billion, FSOC would have the authority to designate them as systemically important and thus subject to enhanced prudential regulation. Under current law, the asset threshold is fixed at $50 billion, but FSOC and Fed have the discretion to raise it, whereas under S. 1484 / S. 1910 , these thresholds would be indexed annually based on the growth rate of GDP. For a BHC to be designated, at least two-thirds of FSOC voting members, including the chairman (the Treasury Secretary), would have to find that the BHC is systemically important based initially on five factors specified by the bill and a multi-step designation process laid out in the bill. As discussed below, a FSOC designation process is already used for non-bank financial firms; compared with statute governing the current non-bank designation process, S. 1484 / S. 1910 would require FSOC to provide more information to (bank or non-bank) institutions and would give institutions more opportunities to take actions to avoid or reverse a SIFI designation. It would increase public disclosure requirements surrounding the designation process, including the identity of firms under consideration for designation. S. 1484 / S. 1910 would also amend provisions of the Dodd-Frank Act that apply to BHCs with more than $50 billion in assets to apply instead to BHCs subject to the revised enhanced supervision (e.g., changing who is subject to emergency divestiture powers and to fees that finance enhanced regulation and the Office of Financial Research) Section 202 of S. 1484 (Section 932 of S. 1910 ) would increase the thresholds from $10 billion to $50 billion for requiring a BHC to form a risk committee (if the BHC is publicly traded) and conduct company-run stress tests. All of these thresholds would be indexed in future years based on GDP growth. These changes would become effective 180 days after enactment. Section 506 of S. 1484 (Section 966 of S. 1910 ) would require GAO to conduct a study of the Fed's enhanced regulatory regime for banks and non-banks. H.R. 1309 was ordered to be reported by the House Financial Services Committee on November 4, 2015. A similar bill, H.R. 6392 , was referred to the House Financial Services Committee on November 22, 2016. The two bills would remove the $50 billion asset threshold under which BHCs are automatically subject to Title I's enhanced prudential regulation by the Fed. If a bank has been designated as a "globally systemically important bank" (G-SIB) by the Financial Stability Board, it would automatically be subject to enhanced prudential regulation. As of November 2015, there are 30 G-SIBs, of which 8 are headquartered in the United States. For BHCs that are not G-SIBs, FSOC would have the authority to designate them as systemically important, and thus subject to enhanced prudential regulation, under the designation process currently used for non-bank SIFIs. For a BHC to be designated, at least two-thirds of FSOC's voting members, including the Treasury Secretary, would have to find that it is systemically important using "the indicator-based measurement approach established by the Basel Committee…." The bill would provide a one-year phase-in period so that firms currently subject to enhanced regulation remain subject while the designation process is proceeding. H.R. 1309 and H.R. 6392 would also modify other parts of the Dodd-Frank Act (e.g., banks subject to emergency divestiture powers and fees to finance enhanced regulation and the Office of Financial Research) that apply to BHCs with more than $50 billion in assets to apply instead to banks subject to the revised enhanced supervision. Unlike H.R. 1309 , H.R. 6392 would allow assessments to be levied on BHCs in the process of being considered for designation. Section 211 of H.R. 5983 would repeal certain provisions of the Dodd-Frank Act that apply to banks with $50 billion or more in assets, including early remediation requirements and emergency divestiture powers. In addition, banks over $50 billion that qualify to be subject to the 10% leverage ratio (discussed in the section entitled " Leverage Ratio as an Alternative to Current Bank Regulation (H.R. 5983) ") would no longer be subject to enhanced prudential regulation (except stress tests) and other regulations based on financial stability considerations. Background. The final rule implementing parts of Subtitle C for banks was adopted in February 2014, and banks were required to be in compliance by January 1, 2015. The final rule includes requirements for stress tests run by the Fed, capital planning, liquidity standards, living wills, early remediation, and risk management. In the event that the FSOC has determined that it poses a "grave threat" to financial stability, the final rule also requires any bank with more than $50 billion in assets to comply with a 15 to 1 debt to equity limit. Exposure limits of 25% of a company's capital per single counterparty were issued as a separate proposed rule that has not yet been finalized. Enhanced capital requirements have not been required of all BHCs with $50 billion or more in assets; instead enhanced capital requirements for only the largest banks have been proposed or implemented through rules implementing Basel III. This is an example of how there is already some "tiering" of regulation for large banks. A large number of foreign banks operating in the United States are also subject to the enhanced prudential regime. Foreign banks operating with more than $50 billion in assets in the United States are required to set up intermediate BHCs that will be subject to heightened standards comparable to those applied to U.S. banks. Less stringent requirements apply to large foreign banks with less than $50 billion in assets in the United States. Policy Discussion. Critics of the $50 billion asset threshold argue that many banks above that range are not systemically important. In particular, critics distinguish between "regional banks," which tend to be at the lower end of the asset range and, it is claimed, have a traditional banking business model comparable to community banks, and "Wall Street banks," a term applied to the largest, most complex organizations that tend to have significant non-bank financial activities. If critics are correct that some banks that are currently subject to enhanced prudential regulation are not systemically important, then there may be little societal benefit from subjecting them to enhanced regulation, making that regulation unduly burdensome to them. Alternatively, proponents view practices such as living wills, stress tests, and risk committees as "best practices" that any well-managed bank should follow to prudentially manage risk. Many economists believe that the economic problem of "too big to fail" is really a problem of too complex or interdependent to fail. In other words, they believe policymakers are reluctant to allow a firm to fail if it is too complex to be wound down swiftly and orderly or if its failure would cause other firms to fail or would disrupt critical functions in financial markets. If firms and their creditors perceive policymakers as reluctant to allow the firms to fail, it creates incentives for those firms to take on excessive risk (known as "moral hazard"). These firms are referred to as systemically important. Size correlates with complexity and interdependence, but not perfectly. It follows that a size threshold is unlikely to successfully capture all those—and only those—banks that are systemically important. A size threshold will capture some banks that are not systemically important if set too low or leave out some banks that are systemically important if set too high. (Alternatively, if policymakers believe that size is the paramount policy problem, then a numerical threshold is the best approach, although policymakers may debate the most appropriate number.) Size is a much simpler and more transparent metric than complexity or interdependence, however. Thus, policymakers face a trade-off between using a simple, transparent but imperfect proxy for systemic importance, or trying to better target enhanced regulation by evaluating banks on a case-by-case basis. A case-by-case designation process would be more time-consuming and resource-intensive, however. For example, only four non-banks were designated as SIFIs in three years under the existing process, and S. 1484 / S. 1910 would add several additional formal steps to the process. Furthermore, there is no guarantee that FSOC will correctly identify systemically important BHCs since there is no definitive proof that a BHC is systemically important until it becomes distressed. Some fear that FSOC could make an incorrect judgment about a bank's systemic importance because most members of FSOC do not have banking expertise or because the Treasury Secretary has effective veto power. Some Members of Congress have expressed concern about international agreements generally—and the Financial Stability Board's designations in particular—overriding domestic law in the areas of financial regulation. The G-SIB designation has not been referenced in an act of Congress, but some U.S. regulations have defined eligibility so that certain regulations apply only to banks with the G-SIB designation. H.R. 1309 and H.R. 6392 would enshrine G-SIB designation in U.S. statute. CBO estimates that H.R. 1309 would increase the budget deficit by $85 million over the 2017 to 2026 period. Section 125 of S. 1484 (Section 926 of S. 1910 ) would require the Dodd-Frank Act to be included in the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) review and would require the NCUA and the CFPB to also participate. Currently, the NCUA is not required to review its regulations under EGRPRA, but has elected to do so "in keeping with the spirit of the law." The CFPB is also not required to review its regulations through EGRPRA, but the "CFPB is required" by the Dodd-Frank Act "to review its significant rules and publish a report of its review no later than five years after they take effect." Background. Under EGRPRA, the OCC, Federal Reserve, and FDIC are required to conduct a review at least every 10 years "to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions." The agencies began the latest review process by seeking public comment in June 2014. In this review, the agencies are placing an emphasis on reducing the regulatory burden on community banks. Policy Discussion. Initially, the banking regulators decided that "new regulations that have only recently gone into effect, or rules that we have yet to fully implement" would not be included in the current EGRPRA review. The agencies argued that they were already "required to take burden into account in adopting these regulations," so including them in the EGRPRA process was unnecessary. The regulators, however, later "decided to expand the scope of the EGRPRA review to cover more recent regulations." The legislation would codify this decision. Some argue that the Dodd-Frank Act should not be included in the EGRPRA review because such "a review would be premature and unwise, as many Dodd-Frank Act reforms have not even been implemented, and those that are in place have had a very limited time to make the intended impact." If the Dodd-Frank regulations are to be included, critics contend that the "review should not be limited to the impact of regulation on regulated entities but must include a thorough analysis of the benefits of those rules collectively, including specifically the benefits of those rules in avoiding a future financial crisis and the costs, burdens, bailouts, and suffering that would accompany such a crisis." Supporters of the legislation argue that it is necessary to include the Dodd-Frank Act as well as the NCUA and the CFPB in the review in order to provide a more meaningful assessment of the regulatory burden facing financial institutions. In particular, they contend that the EGRPRA "review is only meaningful if we identify the biggest challenges for community banks and credit unions and provide real solutions." H.R. 2209 passed the House on February 1, 2016. The bill would require any municipal bond "that is both liquid and readily marketable ... and investment grade" to be treated as a Level 2A high quality liquid asset for purposes of complying with the Liquidity Coverage Ratio (LCR) within three months of enactment. Municipal bonds are debt securities issued by state and local governments or public entities. Members of Congress supporting H.R. 2209 have mainly voiced concern about the LCR's impact on the ability of states and local governments to borrow, but because the LCR is applied to banks, H.R. 2209 would also have an effect on bank profitability and riskiness. CBO estimated that the bill would have a negligible effect on the federal budget. Background. The banking regulators issued a final rule in 2014 that implements the LCR, which is part of bank liquidity standards required for large banks by Basel III and the Dodd-Frank Act. In 2010, 27 countries agreed to modify the Basel Accords, which are internationally negotiated bank regulatory standards. In response to acute liquidity shortages and asset "fire sales" during the financial crisis, Basel III introduced international liquidity standards for the first time. The Dodd-Frank Act requires heightened prudential standards, including liquidity standards, for banks with more than $50 billion in assets and non-banks that have been designated as SIFIs. The rule came into effect at the beginning of 2015 and will be fully phased in by the beginning of 2017. The LCR applies to two sets of banks. A more stringent version (implementing Basel III) applies to the largest, internationally active banks, with at least $250 billion in assets and $10 billion in on-balance-sheet foreign exposure. A less stringent version (implementing the Dodd-Frank Act) applies to depositories with $50 billion to $250 billion in assets, except for those with significant insurance or commercial operations. Around 40 institutions must comply with the LCR, as of the end of 2015. The rule does not apply to credit unions, community banks, foreign banks operating in the United States, or non-bank SIFIs. Regulators plan to issue liquidity regulations at a later date for large foreign banks operating in the United States and non-bank SIFIs. The LCR aims to require banks to hold enough "high-quality liquid assets" (HQLA) to match net cash outflows over 30 days in a hypothetical market stress scenario in which an unusual number of creditors are withdrawing substantial amounts of funds. An asset can qualify as a HQLA if it is less risky, has a high likelihood of remaining liquid during a crisis, is actively traded in secondary markets, is not subject to excessive price volatility, can be easily valued, and is accepted by the Fed as collateral for loans. HQLA must be "unencumbered"—for example, they cannot already be pledged as collateral in a loan. The assets that regulators have approved as HQLA include bank reserves, U.S. Treasury securities, certain securities issued by foreign governments and companies, securities issued by U.S. government-sponsored enterprises (GSEs), certain investment-grade corporate debt securities, and equities that are included in the Russell 1000 Index. Different types of assets are relatively more or less liquid, and there is disagreement on how liquid assets need to be to qualify as HQLAs under the LCR. In the LCR, assets eligible as HQLA are assigned to one of three categories (Levels 1, 2A, and 2B). Assets assigned to the most liquid category (Level 1) receive more credit toward meeting the requirements, and assets in the least liquid category (Level 2B) receive less credit. For purposes of the LCR, Level 2A assets are subject to a 15% haircut (i.e., only 85% of their value counts toward meeting the LCR), whereas Level 2B assets are subject to a 50% haircut and may not exceed 15% of total HQLA. In the 2014 final rule, municipal bonds did not qualify as HQLA to meet the LCR, but a subsequent rule issued by the Fed and finalized on April 1, 2016, allows banks regulated by the Fed to count a limited amount of municipal debt as Level 2B HQLA for purposes of the LCR. According to the Fed, The final rule allows investment-grade, U.S. general obligation state and municipal securities to be counted as HQLA up to certain levels if they meet the same liquidity criteria that currently apply to corporate debt securities. The limits on the amount of a state's or municipality's securities that could qualify are based on the liquidity characteristics of the securities. In the Fed's rule, the amount of municipal debt eligible to be included as HQLA is subject to various limitations, including an overall cap of 5% of a bank's total HQLA. Dedicated revenue bonds do not qualify as HQLA. The Fed requires banks to demonstrate that a security has "a proven record as a reliable source of liquidity in repurchase or sales markets during a period of significant stress" in order for it to qualify as HQLA. The Fed's rule applies to institutions and holding companies regulated by the Fed. To date, the Office of the Comptroller of the Currency (OCC) and the FDIC have not issued similar proposed rules allowing municipal bonds to count as HQLA for banks for whom they are the primary regulators. Thus, proponents of H.R. 2209 argue that the Fed's proposed rule alone would not significantly mitigate the perceived impact of the LCR on municipal bonds. Analysis. To the extent that the LCR reduces the demand for bank holding companies to hold municipal securities, it would be expected to increase the borrowing costs of states and municipalities. The impact of the LCR on the municipal bond market is limited by the fact that banks' holdings of municipal bonds are limited and relatively few banks are subject to the LCR. The Congressional Research Service (CRS) could not locate any data on the value of municipal securities held by banks subject to the LCR, but according to Federal Reserve data, all U.S. banks held about $490 billion of municipal securities in the third quarter of 2015, equal to 13% of the total outstanding. Finally, even banks subject to the LCR are still allowed to hold municipal bonds, as long as they have a stable funding source to back their holdings. Arguments that municipal bonds should qualify as HQLA because most pose little default risk confuses default risk, which is addressed by Basel's capital requirements, with liquidity risk, which is addressed by the LCR. The purpose of the LCR is to ensure that banks have ample assets that can be easily liquidated in a stress scenario; a municipal bond may pose very little default risk, but nevertheless be highly illiquid (i.e., hard to sell quickly). On the one hand, if the inclusion of assets that prove not to be liquid in the HQLA undermines the effectiveness of the LCR, it could increase the systemic risk posed by a large institution experiencing a run. On the other hand, further diversifying the types of assets that qualify as HQLA could reduce the risk stemming from any single asset class becoming illiquid. If municipal bonds are included as HQLA, a challenge for regulators is how to differentiate between which municipal securities should or should not qualify. Some municipal securities are liquid in the sense that they are frequently traded, whereas others are not. According to data from the Municipal Securities Rulemaking Board, the 50 most actively traded municipal bond CUSIP (Committee on Uniform Securities Identification Procedures) numbers traded at least 1,970 times per year each, but even some of the largest CUSIPs traded less than 100 times a year in 2014. Proponents of including municipal debt as HQLA claim that some municipal securities are more liquid than some assets that currently qualify as HQLA, such as corporate debt. For purposes of the LCR, frequent trading may not be the only relevant characteristic of HQLA. For example, in the final rule, regulators argued that one reason why municipal bonds should not qualify as LCR is because banks cannot easily use them as collateral to access liquidity from repo (repurchase agreement) markets. In its final rule, the Fed did not provide an estimate of how many municipal securities would qualify as HQLA under the Fed's criteria. According to an estimate by the Securities Industry and Financial Markets Association of the impact of the proposed rule, By one calculation, only $186 billion of the nearly $3.7 trillion of outstanding bonds would be eligible to be included as HQLA. While we recognize that the Fed seeks to ensure that only the most secure and liquid segment of the market is eligible for banks' LCR compliance, we do not believe that excluding 95 percent of the market strikes the right balance. The share of municipal securities that would qualify as HQLA under H.R. 2209 would depend on subsequent rulemaking . The Fed's rule differs from H.R. 2209 by classifying qualifying municipal bonds as Level 2B and Level 2A HQLA, respectively. The difference in treatment makes municipal bonds less attractive for purposes of the LCR in the Fed's rule relative to H.R. 2209 . In comparing the Fed's rule to H.R. 2209 , a key policy question is whether municipal bonds have more in common with the other Level 2A HQLA, which include securities issued by government sponsored enterprises and foreign governments, or the other Level 2B HQLA, which include corporate bonds and equities. H.R. 3791 passed the House on April 14, 2016. It was also included in Section 1126 of H.R. 5983 . I t would increase the threshold for BHCs and thrift holding companies (THCs) subject to the Federal Reserve's Small Bank Holding Company Policy Statement from those below $1 billion to those below $5 billion in assets. It would make a corresponding increase in the threshold for an institution to be exempted from the "Collins Amendment" to the Dodd-Frank Act. CBO estimated that the effects of the bill on direct spending and revenues would be "insignificant." Background . In general, the Fed limits the debt levels of BHCs and THCs to ensure that they are able to serve as a source of strength for their depository subsidiary. The Federal Reserve's Small Bank Holding Company Policy Statement is a regulation that allows BHCs and THCs that have less than $1 billion in assets to hold more debt at the holding company level than would otherwise be permitted by capital requirements if the debt is used to finance up to 75% of an acquisition of another bank. To qualify, the holding company may not be engaged in significant nonbank activities, may not conduct significant off- balance - sheet activities, and may not have a substantial amount of outstanding debt or equity securities registered with the Securities and Exchange Commission (with the exception of trust preferred securities). After the acquisition, t he holding company is required to gradually reduce its debt levels over several years , and it faces restrictions on paying dividends until the debt level is reduced. This policy is motivated by recognition of differences between how small and large banks typically finance acquisitions. Although the policy statement is limited to making it easier to fund acquisitions through debt, it has also been referenced in other parts of banking regulation. Banks subject to the policy enjoy streamlined compliance with certain requirements. More recently, all BHCs and THCs subject to the Small Bank Holding Company Policy Statement are exempted from the Collins Amendment (Section 171) to the Dodd-Frank Act, which subjects holding companies to the same capital and leverage requirements as their depository subsidiaries. Holding companies subject to the policy statement are also exempted from the rule applying Basel III capital requirements at the holding company level (although their depository subsidiaries are still subject to this rule). Since 1980, when the policy statement was issued, the threshold has been occasionally raised. Most recently, it was raised in the 113 th Congress from $500 million to $1 billion and extended to cover savings and loan (thrift) holding companies by P.L. 113-250 , which was signed into law on December 18, 2014. The Fed issued a final rule on April 9, 2015, implementing this statutory change. The rule also extended the policy statement to apply to thrift holding companies. Policy Discussion. Proponents view the legislation as providing well-targeted regulatory relief to banks with between $1 billion and $5 billion in assets. (As discussed previously, there is no consensus about whether banks of this size should be considered community banks.) Alternatively, the bill could be opposed on the grounds that providing relief based on size creates inefficient distortions in the allocation of credit or on the grounds that it weakens the ability of holding companies to act as a source of strength for affected banks. The Federal Savings Association Charter Flexibility Act of 2015 ( H.R. 1660 ) was ordered to be reported by the House Committee on Financial Services on November 3, 2015. It was also included in Section 1151 of H.R. 5983 . It would allow a federal savings association (also known as federal thrifts) to operate with the same rights and duties as a national bank without having to change its charter. A federal thrift and a national bank are types of financial institutions that typically accept deposits and make loans but have different charters that allow for different permitted activities. Historically, federal thrifts—which were established during the Great Depression when mortgage credit was tight—have focused on residential mortgage lending and have faced restrictions in the other types of lending that they can perform. For example, federal thrifts are limited by statute in the amount of commercial and non-residential real estate loans they can hold, whereas national banks do not face the same statutory restrictions. Over time, the federal thrift charter has been expanded to allow federal thrifts to offer products similar to those offered by national banks, eroding some of the difference between the two. If a federal thrift wants to alter its business model and engage in activities that it is prohibited from performing but are allowed for a national bank, the federal thrift would have to convert its charter to a national bank charter, which can be a costly process. For federal thrifts that have mutual ownership structures, there would be a "need to convert to a stock form of ownership prior to converting to a national bank." Supporters of H.R. 1660 argue that the proposal would provide federal thrifts "additional flexibility to adapt to changing economic conditions and business environments" by allowing a less costly process for expanding federal thrifts' permitted activities without having to convert charters. In addition, they argue that the change would not pose a safety and soundness risk because federal thrifts are regulated by the same regulator as national banks—the OCC regulates federal thrifts and national banks —and the bill would provide the OCC with authority to issue regulations as necessary to safeguard safety and soundness, ensuring that the switch would not pose undue risk. While there would be no change in regulator, the regulations and restrictions that apply to national banks would apply to federal thrifts that elected to make the change. The federal thrifts that elected to change, however, would maintain their corporate form and continue to be treated as federal thrifts for purposes of "consolidation, merger, dissolution, conversion (including conversion to a stock bank or to another charter), conservatorship, and receivership." Others have raised issues with the bill being too narrowly focused and argue that it should also provide assistance to credit unions, which are another type of financial institution with a charter of permitted activities. Credit unions, for example, are limited in the amount of member business loans that they can hold. Just as H.R. 1660 would expand the lending opportunities for thrifts, credit union supporters argue that credit unions' lending opportunities should be expanded as well. A broader issue underlying H.R. 1660 is whether the government should offer different charters, with different benefits and responsibilities, for businesses that engage in similar activities. Bills that narrow the differences between charter type arguably weaken the benefits of having different charters. Banks are also regulated for consumer protection. These regulations are intended to ensure the safety of the products, such as loans, that banks offer to consumers. Several bills would modify regulations issued by the Consumer Financial Protection Bureau, a regulator created by the Dodd-Frank Act to provide an increased regulatory emphasis on consumer protection. Prior to the Dodd-Frank Act, bank regulators were responsible for consumer protection. The Dodd-Frank Act gave the CFPB new authority and transferred existing authorities to it from the banking regulators. The Dodd-Frank Act also directed the CFPB to implement several new mortgage-related policy changes through rulemakings. The bills included in this section could be viewed in light of a broader policy debate about whether the CFPB has struck the appropriate balance between consumer protection and regulatory burden, and whether congressional action is needed to achieve a more desirable balance. The Preserving Access to Manufactured Housing Act of 2015 ( H.R. 650 ) was passed by the House on April 14, 2015. H.R. 650 as passed would affect the market for manufactured housing by amending the definitions of mortgage originator and high-cost mortgage in the Truth-in-Lending Act (TILA). Sections 1101 and 1102 of H.R. 5983 and Section 108 of S. 1484 (Section 909 of S. 1910 ) contain provisions similar to H.R. 650 . Manufactured homes, which often are located in more rural areas, are a type of single-family housing that is factory built and transported to a placement site rather than constructed on-site. When purchasing a manufactured home, a consumer does not necessarily have to own the land on which the manufactured home is placed. Instead, the consumer could lease the land, a practice that is different from what is often done with a site-built home. Manufactured housing also differs from site-built properties in other ways, such as which consumer protection laws apply to the transaction and how state laws title manufactured housing. The Dodd-Frank Act changed the definitions for mortgage originator and high-cost mortgage to provide additional consumer protections to borrowers for most types of housing transactions, including manufactured housing. Some argue that these protections restrict credit for manufactured housing. The proposals would modify the definitions of mortgage originator and high-cost mortgage with the goal of increasing credit. Critics of the proposal are concerned about the effect on consumers of reducing the consumer protections. The first part of the proposals would not affect banks but would affect manufactured-home retailers. It is discussed briefly to provide context for the second part of the proposals, which would affect banks more directly. Definition of Mortgage Originator. In response to problems in the mortgage market when the housing bubble burst, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) and the Dodd-Frank Act established new requirements for mortgage originators' licensing, registration, compensation, training, and other practices. A mortgage originator is someone who, among other things, "(i) takes a residential mortgage loan application; (ii) assists a consumer in obtaining or applying to obtain a residential mortgage loan; or (iii) offers or negotiates terms of a residential mortgage loan." The current definition in implementing the regulation excludes employees of manufactured-home retailers under certain circumstances, such as "if they do not take a consumer credit application, offer or negotiate credit terms, or advise a consumer on credit terms." The legislation would expand the exception such that retailers of manufactured homes or their employees would not be considered mortgage originators unless they received more compensation for a sale that included a loan than for a sale that did not include a loan. Policy Discussion. Supporters of the proposals argue that the current definition of mortgage originator is too broad and negatively affects the manufactured-housing market. Manufactured-home retailers "have been forced to stop providing technical assistance to consumers during the process of home buying" because of concerns that providing this assistance will result in the retailers being deemed loan originators, which in turn will lead to costs that the manufactured-home retailers do not want to bear, according to supporters. Supporters of the bills argue that this situation has unnecessarily complicated the purchase process for consumers. The proposals would allow manufactured-home retailers to provide minimal assistance to consumers for which they would not be compensated. Opponents of the proposals, however, note that the existing protections are intended to prevent retailers from pressuring consumers into making their purchase through a particular creditor. Expanding the exemption, they argue, "would perpetuate the conflicts of interest and steering that plague this industry and allow lenders to pass additional costs on to consumers." High-Cost Mortgage. The proposals also would narrow the definition of high-cost mortgage for manufactured housing. A high-cost mortgage often is referred to as a "HOEPA loan" because the Home Ownership and Equity Protection Act (HOEPA) provides additional consumer protections to borrowers for certain high-cost transactions involving a borrower's home. The Dodd-Frank Act expanded the protections available to high-cost mortgages by having more types of mortgage transactions be covered and by lowering the thresholds at which a mortgage would be deemed high cost. The CFPB issued a rule implementing those changes in 2013. Consumers receive additional protections on high-cost transactions, such as "special disclosure requirements and restrictions on loan terms, and borrowers in high-cost mortgages have enhanced remedies for violations of the law." Prior to originating the mortgage, lenders are required to receive "written certification that the consumer has obtained counseling on the advisability of the mortgage from a counselor that is approved to provide such counseling." Because of these protections and the added legal liability associated with originating a high-cost mortgage, originating a HOEPA loan is generally considered more costly for a lender (which could be either a bank or a nonbank) than originating a non-HOEPA loan. This is an example of the trade-off between consumer protection and credit availability—if a loan is deemed high-cost, the consumer has added protections, but the lender may be less willing to originate it. A mortgage is high cost if certain thresholds are breached related to the mortgage's (1) annual percentage rate (APR) or (2) points and fees. The APR is a measure of how much a loan costs expressed as an annualized rate. Computation of the APR includes the interest rate as well as certain fees, such as compensation to the lender and other expenses. Under the APR test , a loan is considered to be a high-cost mortgage if the APR exceeds the average prime offer rate (APOR, an estimate of the market mortgage rate based on a survey of rates) by more than 6.5 percentage points for most mortgages or by 8.5 percentage points for certain loans under $50,000. The bills would increase the threshold for the latter category to 10 percentage points above the APOR for certain transactions involving manufactured housing below $75,000. Points and fees, the second factor, refers to certain costs associated with originating the mortgage. The term point refers to compensation paid up front to the lender by the borrower. A point is expressed as a percentage of the loan amount, with one point equal to 1% of the loan amount. The fees included in the definition of points and fees include prepayment penalties, certain types of insurance premiums, and other real estate-related fees. Under the points and fees test , the mortgage is high cost if the points and fees exceed (1) 5% of the total amount borrowed for most loans in excess of $20,000 or (2) the lesser of 8% of the total amount or $1,000 for loans of less than $20,000. The proposals would create a third category for the points and fees test for manufactured-housing loans. Under the third category, certain types of manufactured-housing transactions would be deemed high cost if the points and fees on loans less than $75,000 were greater than 5% of the total loan amount or greater than $3,000. This higher threshold would make it less likely that a manufactured-housing loan would be high-cost under the points and fees test, all else equal. Policy Discussion. Data from the Consumer Financial Protection Bureau's September 2014 report on the manufactured-housing market indicate that manufactured-housing loans are more likely to be HOEPA loans than loans for traditional, site-built homes. The CFPB analyzed data for originations from 2012, which was before the more expansive Dodd-Frank definition of high-cost mortgage took effect. The CFPB estimated the share of the 2012 market that would have violated the APR test (which is just one of the high-cost triggers) had the current thresholds been in effect and found that "0.2 percent of all home-purchase loans in the U.S. have an interest rate that exceeds the HOEPA APR threshold. This fraction is only 0.01 percent for site-built homes but nearly 17 percent for manufactured homes." As the CFPB notes, this estimate of the share of HOEPA loans may understate the true share because it does not include the points and fees test, but it also may overstate the true share because lenders may have adjusted the points, fees, interest rate, profitability of the loan, and other factors so that fewer loans would have been high-cost had the new thresholds been in effect. Either way, the CFPB's data are illustrative of the fact that a larger share of manufactured-housing loans than site-built loans is likely to be affected by the high-cost mortgage requirements. The CFPB stated that the changes to HOEPA made by Dodd-Frank likely would lead to a larger share of all loans being high-cost, but "the resulting increase in the share of high-cost mortgages was much larger for manufactured-housing loans than for loans on site-built homes." Manufactured-housing loans are more likely to be high-cost for several reasons. Manufactured-housing loans usually are smaller than loans for site-built properties. The CFPB's report found that the "median loan amount for site-built home purchase was $176,000, more than three times the manufactured home purchase loan median of $55,000." Because manufactured-housing loans often are for a smaller amount, they are likely to have higher APR and points and fees ratios; the APR and points and fees computations include some fixed costs that do not vary proportionately to the size of the loan. All else equal, smaller loans would be more likely to breach the thresholds. To account for this, the APR test and the points and fees test have thresholds that vary based on the size of the loan, as explained above. Additionally, because of how some states title manufactured homes and other unique aspects of the manufactured-housing market, a manufactured-housing loan is likely to have a higher interest rate than a loan involving a site-built home (all else equal), which makes it more likely that the loan will violate the APR threshold. Supporters of the bills argue that the high-cost thresholds are poorly targeted for manufactured-housing loans because the fixed costs and higher rates associated with smaller manufactured-housing loans make it more likely that the thresholds will be exceeded. The existing adjustments for small-dollar loans are insufficient and allow too many manufactured-housing loans to be high-cost. As a result, critics of the current threshold argue, credit will be restricted as some lenders will be less inclined to bear the expense and liability associated with originating high-cost manufactured-housing loans. H.R. 650 , they claim, is important for ensuring that credit is available for borrowers who want to purchase a manufactured home. Opponents of the legislation argue that the APR and points and fees thresholds already are adjusted for the size of the loan and do not need to be further modified. Doing so would weaken consumer protections, they argue, for borrowers who are likely to have lower incomes and be more "economically vulnerable consumers." The Obama Administration has said that "if the President were presented with H.R. 650 , his senior advisors would recommend that he veto the bill." CBO estimates that H.R. 650 as ordered reported "would increase direct spending by less than $500,000." The bill would not affect revenues or discretionary spending. The Mortgage Choice Act of 2015 ( H.R. 685 ) was passed by the House on April 14, 2015. H.R. 685 as passed would modify the definition of points and fees to exclude from the definition (1) insurance held in escrow and (2) certain fees paid to affiliates of the lender. Section 1106 of H.R. 5983 includes a similar provision. S. 1484 and S. 1910 would also exclude insurance held in escrow from the definition of points and fees, but would not exclude fees paid to affiliates. Instead, Section 107 of S. 1484 (Section 908 of S. 1910 ) would require a study and report that would examine the effect of the Dodd-Frank Act on the ability of affiliated lenders to provide mortgage credit, on the mortgage market for mortgages that are not qualified mortgages, on the ability of prospective homeowners to obtain financing, and several other issues. As is elaborated upon below, points and fees refers to certain costs that are paid by the borrower related to lender compensation and other expenses that are associated with originating the mortgage. How points and fees are defined can have an effect on credit availability (mortgage lenders argue that the current definition of points and fees makes it harder for them to extend credit) and an effect on consumer protection (consumer groups argue that expanding the definition could lead to borrowers being steered into more expensive mortgages that they could be less able to repay). The Ability-to-Repay Rule and Points and Fees. The definition of points and fees is a component of multiple rules, but it is often discussed in the context of the Ability-to-Repay (ATR) rule. Title XIV of the Dodd-Frank Act established the ATR requirement and instructed the CFPB to establish the definition of a qualified mortgage (QM) as part of its implementation. The ATR rule requires a lender to determine, based on documented and verified information, that at the time a mortgage loan is made the borrower has the ability to repay the loan. Failure to make such a determination could result in a lender having to pay damages to a borrower who brings a lawsuit claiming that the lender did not follow the ATR rule. This legal risk gives lenders added incentive to comply with the ATR rule. One of the ways a lender can comply with the ATR rule is by originating a QM. A QM is a mortgage that satisfies certain underwriting and product-feature requirements, such as having payments below specified debt-to-income ratios and having a term no longer than 30 years. By making a QM, a lender is presumed to have complied with the ATR rule and receives legal protections that could reduce its potential legal liability. A lender can comply with the ATR rule by making a mortgage that is not a QM, but the lender will not receive the additional legal protections. The definition of a QM, therefore, is important to a lender seeking to minimize its legal risk. Because of this legal risk, some are concerned that, at least in the short term, the vast majority of mortgages that are originated will be mortgages meeting the QM standards due to the legal protections that QMs afford lenders, even though there are other means of complying with the ATR rule. As an additional requirement for a mortgage to be a QM, certain points and fees associated with the mortgage must be below specified thresholds. Some argue that the more types of fees that are included in the QM rule's definition of points and fees, the more likely a mortgage is to breach the points and fees threshold and no longer qualify as a QM. The definition of points and fees, therefore, may be important for determining whether a mortgage receives QM status, which can influence whether the lender will extend the loan. The points and fees threshold varies based on the size of the loan. The threshold is higher for smaller loans because some fees are fixed costs that do not depend on the size of the loan. All else equal, smaller loans would be more likely to breach the thresholds unless their thresholds were higher. The thresholds, which are indexed for inflation, are currently as follows: 3% of the total loan amount for a loan greater than or equal to $100,000; $3,000 for a loan less than $100,000 but greater than or equal to $60,000; 5% of the total amount for a loan less than $60,000 but greater than or equal to $20,000; $1,000 for a loan less than $20,000 but greater than or equal to $12,500; and 8% of the total loan amount for a loan less than $12,500. A loan that is above the respective points and fees cap cannot be a QM. The definition of points and fees includes certain costs associated with originating the mortgage. The term point refers to compensation paid up front to the lender by the borrower. A point is expressed as a percentage of the loan amount, with one point equal to 1% of the loan amount. The definition of fees has several different categories of fees, but what is most pertinent with respect to H.R. 685 is that certain fees are excluded from the definition of points and fees if "the charge is paid to a third party unaffiliated with the creditor." Certain fees paid to third parties affiliated with the lender are included in the definition. H.R. 685 and H.R. 5983 would change the treatment of fees for third parties affiliated with the lender by allowing (in some cases) those fees to also be excluded from the definition of points and fees. S. 1484 and S. 1910 would not exclude fees for third parties affiliated with the lender from the definition of points and fees, but would require a study that would examine the issue. Policy Discussion. As mentioned above, the legislative proposals address the treatment of several types of fees. However, most of the policy debate surrounding fees for affiliated entities has focused on title insurance because title insurance is one of the larger fees associated with a mortgage that would be affected by the changes H.R. 685 and H.R. 5983 propose to the points and fees definition. Title insurance involves "searching the property's records to ensure that [a particular individual is] the rightful owner and to check for liens." Title insurance provides protection to the lender or borrower (depending on the type of policy) if there turns out to be a defect in the title. Under the current definition for points and fees, fees for title insurance provided by a title insurer that is independent of or unaffiliated with the lender may be excluded from the points and fees definition, but the fees for an affiliated title insurer must be included in the definition of points and fees. H.R. 685 and H.R. 5983 would allow fees for affiliated title insurance to be treated the same as independent title insurance, and both would be excluded from the points and fees definition. The cap on points and fees is intended to protect consumers from predatory loans by limiting fees that can be placed on a QM and by aligning the incentives of the lender and the borrower. Lenders can be compensated through points that are paid up front or through interest payments over the life of the loan. The method by which the lender receives compensation may influence the lender's incentive to evaluate the borrower's ability to repay the mortgage. As the CFPB notes in its preamble to the ATR rule, the cap on points and fees may make lenders "take more care in originating a loan when more of the return derives from performance over time (interest payments) rather [than] from upfront payments (points and fees). As such, this provision [the cap on points and fees] may offer lenders more incentive to underwrite these loans carefully." Supporters of H.R. 685 and H.R. 5983 argue that expanding the definition of points and fees is important to ensuring that credit is available. The Mortgage Bankers Association, for example, stated that as a result of the current definition of points and fees, "many affiliated loans, particularly those made to low-and moderate-income borrowers, would not qualify as QMs and would be unlikely to be made or would only be available at higher rates due to heightened liability risks. Consumers would lose the ability to choose to take advantage of the convenience and market efficiencies offered by one-stop shopping." Putting the fees of affiliated and independent title insurers on equal footing in the points and fees definition, supporters argue, would enhance competition in the title insurance industry. Supporters also contend that because title insurance is regulated predominantly by the states and many states have policies in place to determine how title insurance is priced, there is less need to be concerned that title insurance fees are excessive. They note that the Real Estate Settlement Procedures Act (RESPA) allows affiliated business arrangements and already has protections in place for consumers, such as "a requirement to disclose affiliation to consumers." Opponents of H.R. 685 and H.R. 5983 argue that, by narrowing the definition of points and fees to exclude affiliated providers, the bill "would allow lenders to increase the cost of loans and still be eligible for 'Qualified Mortgage' treatment. This revision risks eroding consumer protections and returning the mortgage market to the days of careless lending focused on short-term profits." For this reason, the Obama Administration has said that "if the President were presented with H.R. 685 , his senior advisors would recommend that he veto the bill." Critics also contend that removing affiliated title insurers from the points and fees definition would reduce the title insurance industry's incentive to make the price of title insurance, which some believe is already too high, "more reasonable." They note that affiliated service providers are likely to be able to receive business through references from their affiliate and, therefore, "affiliates of a creditor may not have to compete in the market with other providers of a service and thus may charge higher prices that get passed on to the consumer." Escrow. H.R. 685 , H.R. 5983 , S. 1484 , and S. 1910 would modify the definition of points and fees to exclude from the definition insurance held in escrow. Supporters of the proposals state that the bill would clarify that insurance held in escrow should not be included in the definition of points and fees. They argue that the drafting of the Dodd-Frank Act left unclear how insurance payments held in escrow should be treated in the definition. Opponents of the proposals have not cited this provision as a rationale for their opposition. CBO estimates that H.R. 685 as ordered reported "would affect direct spending" but that "those effects would be insignificant." The bill would not affect revenues or discretionary spending, according to CBO. The Helping Expand Lending Practices in Rural Communities Act ( H.R. 1259 ) was passed by the House on April 13, 2015. H.R. 1259 as passed would establish a temporary, two-year program in which individuals could petition the CFPB for counties that were not designated as rural by the CFPB to receive the rural designation. It also would establish evaluation criteria and an evaluation process for the CFPB to follow in assessing these petitions. A similar provision was included in the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ). Section 103 of S. 1484 (Section 904 of S. 1910 ) would establish a petition process similar to the one proposed by H.R. 1259 , but the process under S. 1484 and S. 1910 would not sunset after two years. The legislative proposals could increase the credit available to borrowers in rural areas but would reduce some of the protections put in place for rural consumers. Definition of Rural. Statute allows for exemptions from certain consumer protection requirements for companies operating in rural areas. In implementing the requirements, the CFPB designates certain counties as rural. The exemptions and additional compliance options for lenders in rural areas stem from concerns that borrowers in these areas may have a harder time accessing credit than those in non-rural areas. For example, the ATR rule has an additional compliance option that allows small lenders operating in rural or underserved areas to originate balloon mortgages, subject to some restrictions. The Dodd-Frank Act specifies the additional compliance option for rural lenders, but it leaves the definition of rural to the discretion of the CFPB. Balloon mortgages originated by lenders in areas that are not designated as rural may be ineligible for the compliance option (although the CFPB has established a two-year transition period to allow "small " lenders to originate balloon mortgages until January 2016, subject to some restrictions). Lenders that benefit from exemptions may offer products to their consumers that lenders in non-rural areas may be less likely to offer, but consumers in rural areas may not receive the same protections as those in non-rural areas. When publishing the ATR rule, the CFPB stated that it considers its method of designating counties as rural, which is based on the U.S. Department of Agriculture's Urban Influence Codes, to be consistent with the intent of the exemptions contained in statute. The CFPB estimated that its definition of rural results in 9.7% of the total U.S. population being in rural areas. However, in light of various questions about its definition of rural raised during the comment period, the CFPB said in 2013 that it intended "to study whether the [definition] of 'rural' ... should be adjusted." As a result, the CFPB issued a rule in September 2015 to expand the definition of rural as a means of facilitating access to credit in rural areas. The new definition would have two prongs: an area could be deemed rural under the existing methodology involving the Urban Influence Codes or, if it is not designated as rural by that test, it could qualify under an alternative method that involves the Census Bureau's census block data. To qualify for some of the exemptions, a lender not only must operate in a rural area but also must meet the CFPB's definition of small, which the CFPB also expanded in its September 2015 rule. Based on 2013 data, the CFPB estimates "that the number of rural small creditors would increase from about 2,400 to about 4,100." Policy Discussion. Although the rule is intended to expand credit availability, the CFPB notes that its analysis "did not find specific evidence that the final provisions would increase access to credit." The CFPB explains that its inability to estimate the change in credit availability from the rule may be due to data limitations that prevent it from testing certain hypotheses. Alternatively, the CFPB notes that the change in credit availability may be difficult to estimate because borrowers in rural areas already may be adequately served by lenders and therefore may not benefit from the CFPB's expanded definition. The CFPB maintains that the use of census blocks, as suggested in its rule, allows for a more granular approach, but critics have argued that the new approach "is still inadequate because census tracts are only updated once every 10 years." Supporters of the proposals contend the CFPB's method of designating counties as rural is inflexible and may not account for "atypical population distributions or geographic boundaries." The proposals are intended, supporters argue, to provide a way to challenge a CFPB designation and invite individuals "to participate in their government and provide input on matters of local knowledge. It is about making the Federal Government more accessible, more accountable, and more responsive to the people who know their local communities best." CBO estimates that H.R. 1259 as ordered reported would increase direct spending by $1 million over the next 10 years but would not affect revenues or discretionary spending. The Community Institution Mortgage Relief Act of 2015 ( H.R. 1529 ) was reported by the House Committee on Financial Services on April 6, 2015. H.R. 1529 as reported would make two modifications to CFPB mortgage rules. It would (1) exempt from certain escrow requirements any mortgage held by a lender with assets of $10 billion or less if the mortgage is held in the lender's portfolio for three years and (2) exempt from certain servicing requirements any servicer that annually services 20,000 mortgages or fewer. Section 1131 of H.R. 5983 contains nearly identical language as H.R. 1529 . Supporters of H.R. 1529 and H.R. 5983 argue that the provisions would reduce the burden on small lenders and servicers of complying with these regulations while giving added flexibility to consumers. Opponents argue that the bills would roll back consumer protections that were put in place in response to the housing and foreclosure crisis. Escrow Accounts. An escrow account is an account that a "mortgage lender may set up to pay certain recurring property-related expenses ... such as property taxes and homeowner's insurance." Property taxes and homeowner's insurance often are lump-sum payments owed annually or semiannually. To ensure a borrower has enough money to make these payments, a lender may divide up the amount owed and add it to a borrower's monthly payment. The additional amount paid each month is placed in the escrow account and then drawn on by the mortgage servicer that administers the account to make the required annual or semiannual payments. Maintaining escrow accounts for borrowers is an additional cost to banks and may be especially costly for smaller firms. An escrow account is not required for all types of mortgages but had been required for at least one year for higher-priced mortgage loans even before the Dodd-Frank Act. A higher-priced mortgage loan is a loan with an APR "that exceeds an 'average prime offer rate' for a comparable transaction by 1.5 or more percentage points for transactions secured by a first lien, or by 3.5 or more percentage points for transactions secured by a subordinate lien." If the first lien is a jumbo mortgage (above the conforming loan limit for Fannie Mae and Freddie Mac), then it is considered a higher-priced mortgage loan if its APR is 2.5 percentage points or more above the average prime offer rate. The Dodd-Frank Act, among other things, extended the amount of time an escrow account for a higher-priced mortgage loan must be maintained from one year to five years, although the escrow account can be terminated after five years only if certain conditions are met. It also provided additional disclosure requirements. The Dodd-Frank Act gave the CFPB the discretion to exempt from certain escrow requirements lenders operating predominantly in rural areas if the lenders satisfied certain conditions. The CFPB's escrow rule included exemptions from escrow requirements for lenders that (1) operate predominantly in rural or underserved areas; (2) extend 2,000 mortgages or fewer; (3) have less than $2 billion in total assets; and (4) do not escrow for any mortgage they service (with some exceptions). Additionally, a lender that satisfies the above criteria must intend to hold the loan in its portfolio to be exempt from the escrow requirement for that loan. H.R. 1529 would expand the exemption such that a lender also would be exempt from maintaining an escrow account for a mortgage as long as it satisfied two criteria: (1) the mortgage is held by the lender in its portfolio for three or more years and (2) the lender has $10 billion or less in assets. Policy Discussion. When the CFPB issued its escrow rule in January 2013, it estimated that "there are 2,612 exempt creditors who originated ... first-lien higher-priced mortgage loans in 2011." It also estimated that there would be 5,087 lenders with $10 billion or less in total assets who, collectively, originated 91,142 first-lien higher-priced mortgage loans in 2011 that would not be exempt from the escrow requirements. If H.R. 1529 had been in place in 2011, those additional 5,087 lenders would have been exempt from the escrow requirements for the loans held in portfolio for three or more years. Supporters of H.R. 1529 and H.R. 5983 argue that expanding the escrow exemption is important for reducing the regulatory burden on small banks. Small banks already would have the incentive, the argument goes, to make sure the borrower will pay taxes and insurance even without the escrow account because the lender is exposed to some of the risk by keeping the mortgage in its portfolio. Because of this "skin in the game," supporters argue the escrow requirement is unduly burdensome for small banks. They also believe the requirement can be an unnecessary burden to consumers who would rather manage their taxes and insurance payments on their own, especially if those consumers have a history of making their required payments on previous loans. Opponents of H.R. 1529 and H.R. 5983 argue that the escrow requirement is an important consumer protection. The escrow account is required for higher-priced mortgage loans, and critics contend that the higher interest rate on those loans reflects the fact that borrowers with these loans often are riskier subprime borrowers. Because these borrowers already face a higher risk of default, opponents of H.R. 1529 argue the escrow requirement is important for ensuring these borrowers are not, in the words of Ranking Member Maxine Waters, "being blindsided by additional costs at the end of each year." They argue that the exemption the CFPB gave for certain smaller entities already strikes the appropriate balance between reducing the regulatory burden for some banks and protecting consumers. Mortgage Servicers. The second part of H.R. 1529 and H.R. 5983 addresses mortgage servicers . Servicers received added attention from Congress after the surge in foreclosures following the bursting of the housing bubble. The Dodd-Frank Act imposed additional requirements on servicers to protect borrowers through amendments to TILA and RESPA. The new servicing protections include, among other things, additional disclosure requirements about the timing of rate changes, requirements for how payments would be credited, obligations to address errors in a timely fashion, and guidance on when foreclosure could be initiated and how servicers must have continuity of contact with borrowers. The CFPB issued rules implementing those changes. Servicers that service 5,000 mortgages or fewer and only service mortgages that they or an affiliate owns or originated are considered small servicers and are exempted from some but not all TILA and RESPA servicing requirements. H.R. 1529 and H.R. 5983 would modify the exemption for the rules implemented under RESPA by directing the CFPB to provide exemptions to or adjustments from the RESPA servicing provisions for servicers that service 20,000 mortgages or fewer "in order to reduce regulatory burdens while appropriately balancing consumer protections." The RESPA servicing provisions that could be affected by H.R. 1529 include, among other things, how escrow accounts (if they are required) would be administered, disclosure to an applicant about whether his or her servicing can be sold or transferred, notice to the borrower if the loan is transferred, prohibitions on the servicer relating to fees and imposing certain types of insurance, and other consumer protections. Policy Discussion. In its discussion of its servicing rule, the CFPB notes that "servicers that service relatively few loans, all of which they either originated or hold on portfolio, generally have incentives to service well." The incentive to service the loans well comes from the fact that "foregoing the returns to scale of a large servicing portfolio indicates that the servicer chooses not to profit from volume, and owning or having originated all of the loans serviced indicates a stake in either the performance of the loan or in an ongoing relationship with the borrower." The CFPB, therefore, found that an "exemption may be appropriate only for servicers that service a relatively small number of loans and either own or originated the loans they service." The CFPB set the loan threshold at 5,000 loans because it concluded that this category "identifies the group of servicers that make loans only or largely in their local communities or more generally have incentives to provide high levels of customer contact and information." The CFPB's data analysis of the threshold concluded that With the threshold set at 5,000 loans, the Bureau estimates that over 98% of insured depositories and credit unions with under $2 billion in assets fall beneath the threshold. In contrast, only 29% of such institutions with over $2 billion in assets fall beneath the threshold and only 11% of such institutions with over $10 billion in assets do so. Further, over 99.5% of insured depositories and credit unions that meet the traditional threshold for a community bank—$1 billion in assets—fall beneath the threshold. The Bureau estimates there are about 60 million closed-end mortgage loans overall, with about 5.7 million serviced by insured depositories and credit unions that qualify for the exemption. The CFPB's 2013 rulemaking did not discuss the effect of setting the threshold at 20,000 loans, as H.R. 1529 would, but it noted that if "the loan count threshold were set at 10,000 mortgage loans, for example, over 99.5% of insured depositories and credit unions with under $2 billion in assets would fall beneath the threshold. However, 50% of insured depositories with over $2 billion in assets and 20% of those with over $10 billion in assets would fall beneath the threshold." Those entities that service more than 5,000 loans, the CFPB contends, may be more likely to use a different servicing model that would not have the same "incentives to provide high levels of customer contact and information." The CFPB, therefore, set the threshold at 5,000 loans. Supporters of H.R. 1529 and H.R. 5983 argue that the proposals would give the CFPB the discretion to either provide "exemptions or adjustments to the requirements of the existing codes section and should do so appropriately balancing consumer protections. So the near-small institutions will either get the relief currently granted to the small institutions or a bit less relief, and that will be determined by the CFPB." Raising the threshold from 5,000 loans to 20,000 loans, supporters argue, "will better delineate small servicers from the large servicers, and give credit union and community banks greater flexibility to ensure that more of their customers can stay in their homes." Opponents of H.R. 1529 and H.R. 5983 have contended that the exemptions in the CFPB's regulations are sufficient to protect small lenders and that expanding the exemptions would weaken the protections available to consumers. They note that by not only raising the threshold but also removing the requirement that servicers own the mortgage, the servicers would have "less skin in that game if bad servicing practices were to result in default and foreclosure." Critics point to mortgage servicers in particular as actors that performed poorly during the foreclosure crisis and should not receive additional exemptions from CFPB regulations. CBO estimates that H.R. 1529 as ordered reported would "increase direct spending by less than $500,000 for expenses of the CFPB to prepare and enforce new rules" but would not affect revenues or discretionary spending. The Portfolio Lending and Mortgage Access Act ( H.R. 1210 ) was passed by the House on November 18, 2015. H.R. 1210 would establish a new qualified mortgage category for a mortgage held in a lender's portfolio. Section 1116 of H.R. 5983 has nearly identical language to H.R. 1210 . Section 106 of S. 1484 (Section 907 of S. 1910 ) would also establish a portfolio QM category but utilizes a different approach. S. 1484 / S. 1910 would require a loan to meet stricter criteria than under H.R. 1210 and H.R. 5983 but would have more relaxed portfolio requirements than H.R. 1210 and H.R. 5983 . The legislative proposals are intended to increase credit availability and to reduce the regulatory burden on lenders. Critics argue that the proposals would go too far in reducing consumer protections and would allow lenders to receive legal protections for offering risky, non-standard mortgage products. The Ability-to-Repay Rule and Portfolio Loans. Title XIV of the Dodd-Frank Act established the ability-to-repay (ATR) requirement. Under the ATR requirement, a lender must determine based on documented and verified information that, at the time a mortgage loan is made, the borrower has the ability to repay the loan. The rule enumerates the type of information that a lender must consider and verify prior to originating a loan, including the applicant's income or assets, credit history, outstanding debts, and other criteria. Lenders that fail to comply with the ATR rule could be subject to legal liability could be subject to legal liability, such as the payment of certain statutory damages. A lender can comply with the ATR rule in one of two ways. A lender can either originate a mortgage that meets the less concrete underwriting and product feature standards of the General ATR Option or a mortgage that satisfies the more stringent, specific standards of the Qualified Mortgage. A QM is a mortgage that satisfies certain underwriting and product feature requirements. There are several different types of QM, with the different categories applying to different lenders and having different underwriting and product feature requirements. For example, the Standard QM that is available to all lenders requires the mortgage to not have balloon payments or a loan term over 30 years, has restrictions on the fees that can be charged, and has other requirements that must be met in order for the mortgage to receive QM status. These underwriting and product feature requirements are intended to ensure that a mortgage receiving QM status satisfies certain minimum standards, with the standards intended to offer protections to borrowers. A loan that satisfies the less concrete standards of the General ATR Option, in contrast, is allowed to have a balloon payment and a term in excess of 30 years so long as the lender verifies that the borrower would have the ability to repay the loan. If a lender originates a mortgage that receives QM status, then it is presumed to have complied with the ATR rule and receives legal protections that could reduce its potential legal liability. As mentioned above, a lender can comply with the ATR rule by making a mortgage that is not a QM and instead satisfies the General ATR Option, but the lender will not receive the additional legal protections. The definition of a QM, therefore, is important to a lender seeking to minimize its legal risk . Because of this legal risk, some are concerned that, at least in the short term, few mortgages will be originated that do not meet the QM standards due to the legal protections that QMs afford lenders, even though there are other means of complying with the ATR rule. If a mortgage does not receive QM status under the Standard QM—the general approach that most focus on when discussing the QM compliance options—the mortgage may still receive QM status if it complies with the Small Creditor Portfolio QM option. To do so, three broad sets of criteria must be satisfied. First, the loan must be held in portfolio for at least three years (subject to several exceptions). Second, the loan must be held by a small lender, which is defined as a lender who originated 2,000 or fewer mortgages in the previous year and has less than $2 billion in assets. Third, the loan must meet certain underwriting and product feature requirements. Compared to the Standard QM, the Small Creditor Portfolio QM has less prescriptive underwriting requirements. For example, to receive QM status under the Standard QM, a borrower must have a debt-to-income (DTI) ratio below 43% after accounting for the payments associated with the mortgage and other debt obligations, but under the Small Creditor Portfolio QM, the lender is required to consider and verify the borrower's DTI but does not have a specific threshold that the borrower must be below. The CFPB was willing to relax the underwriting standards for some portfolio loans because it believed "that portfolio loans made by small creditors are particularly likely to be made responsibly and to be affordable for the consumer." By keeping the loan in portfolio, the CFPB argues, small creditors have added incentive to consider whether the borrower will be able to repay the loan because the lender retains the default risk and could be exposed to losses if the borrower does not repay. This exposure, the argument goes, would encourage small creditors to provide additional scrutiny during the underwriting process, even in the absence of a legal requirement to do so. Keeping the mortgage in portfolio is intended to align "consumers' and creditors' interests regarding ability to repay." Policy Discussion. The Small Creditor Portfolio QM is intended to increase the amount of credit that is available to consumers by making it easier for small lenders to extend portfolio loans. Some in Congress argue that the Small Creditor Portfolio QM, while useful to expand credit and reduce regulatory burden, is too narrow. They propose establishing an additional portfolio QM option that would have more relaxed eligibility criteria. The proposals would allow larger lenders to participate and would not require all of the Small Creditor Portfolio QM's underwriting and product feature requirements (such as the DTI ratio) to be met in order to receive QM status. Supporters of an expanded portfolio lending option argue that when a larger lender holds the mortgage in portfolio, it too has the incentive to ensure that the borrower will repay the loan because it is also exposed to the risk of default. They argue that this incentive is present whether the lender is large or small. The incentive to ensure the loan is properly underwritten, supporters argue, is sufficient to merit the loan receiving QM status and the commensurate legal protections. Extending the legal protections to portfolio loans, the argument goes, will encourage lenders to expand credit and allow more individuals to purchase homes. Critics of the proposals contend that the incentive alignment associated with holding a mortgage in portfolio is not sufficient to justify extending QM status to portfolio loans held by large lenders. Certain traits that are more likely to be found in small lenders, they argue, are also important for ensuring that a lender thoroughly evaluates a borrower's ability to repay. The CFPB limited the Small Creditor Portfolio QM to small lenders because the CFPB believes the "relationship-based" business model often employed by small lenders may make small lenders better able to assess a borrower's ability to repay than larger lenders. Additionally, the CFPB argues that small lenders often have close ties to their communities, which provides added incentive to thoroughly underwrite their mortgages for the borrower's ability to repay. The level at which a lender should not be considered small because it no longer is influenced by its ties to its communities, however, is subject to much debate. CBO estimates that H.R. 1210 as ordered reported could affect direct spending but that the effect would be insignificant. The bill would not affect revenues. CBO notes that the more relaxed definition of QM could result in higher losses to financial institutions which could increase their likelihood of failure and potential cost to the government, but CBO states that this is a small probability that "CBO's baseline estimates would result in additional costs to the federal government of less than $500,000 over the 2016-2025 period." The Homebuyers Assistance Act ( H.R. 3192 ) was passed by the House on October 7, 2015. H.R. 3192 as passed would have prevented the TILA and RESPA integrated disclosure requirements from being enforced until February 1, 2016. It would also have prohibited anyone from filing a suit against a lender related to the TILA-RESPA integrated disclosure forms during that time period so long as the lender has made a good faith effort to comply with the requirements. Section 117 of S. 1484 (Section 918 of S. 1910 ) would provide a safe harbor for lenders related to the integrated disclosure forms. It would make a lender that provides the required disclosures not "subject to any civil, criminal, or administrative action or penalty for failure to fully comply." The safe harbor would be in effect until one month after the CFPB director certifies that the new disclosures "are accurate and in compliance with all State laws." In addition, S. 1484 / S. 1910 would eliminate the requirement that a mortgage closing be delayed three days if the lender offered the borrower a mortgage with a lower annual percentage rate than the rate that was originally offered. Integrated Disclosures. On November 20, 2013, the CFPB issued the TILA-RESPA Final Rule that would require mortgage lenders to use more easily understood and streamlined mortgage disclosure forms. TILA and RESPA have long required lenders to provide consumers disclosures about the estimated and actual real estate settlement costs and financial terms of the mortgages they offer. These disclosures are intended to help consumers compare the terms and make informed decisions regarding the suitability of various mortgage products and services they are offered. However, TILA and RESPA required disclosures of duplicative information while using inconsistent language, which might have led to increased regulatory costs and consumer confusion. In light of these concerns, Sections 1098 and 1100A of the Dodd-Frank Act required the CFPB to develop "a single, integrated disclosure for mortgage loan transactions ... to aid the borrower ... in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures" that remains compliant with both TILA and RESPA. The TILA-RESPA Final Rule is the culmination of more than two years of study through, among other things, consumer testing and a Small Business Review Panel. The Board of Governors of the Federal Reserve System and the Department of Housing and Urban Development, which prior to the Dodd-Frank Act implemented TILA and RESPA, had attempted but failed to make similar changes to these disclosure forms. In short, combining these mortgage disclosures into a single form was a massive undertaking, and, upon taking effect, the TILA-RESPA Final Rule will have a significant impact on consumers, lenders, and other participants in the mortgage market. Policy Discu s sion. The CFPB chose to give the industry until August 1, 2015—nearly two years from the date on which the Final Rule was first publicly released—to comply. In spite of this lead time, mortgage bankers and lenders have expressed concern about their inability to update software and make other necessary changes to meet the compliance deadline. This led some to ask CFPB Director Richard Cordray for additional time to comply before the CFPB starts enforcing the law. Those requests went unheeded until it was discovered that, because of an "administrative error," the August 1 st effective date would violate a provision of the Congressional Review Act that prevents a major rule from going into effect until at least 60 days from the date on which the rule was published in the Federal Register or was formally reported to Congress, whichever is later. The CFPB announced that, "[t]o comply with the CRA and to help ensure the smooth implementation of the TILA-RESPA Final Rule, the Bureau is extending the effective date ... [from August 1 to] October 3, 2015...." The CFPB has also announced what some have characterized as a restrained enforcement period related to the integrated disclosures. In a letter to Members of Congress, the CFPB stated that its "oversight of the implementation of the Rule will be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the Rule on time." The CFPB also announced that it sent a letter to industry trade groups in which it stated that During initial examinations for compliance with the rule, the Bureau's examiners will evaluate an institution's compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance. Examiners will expect supervised entities to make good faith efforts to comply with the rule's requirements in a timely manner. Specifically, examiners will consider: the institution's implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and, its handling of early technical problems or other implementation challenges. Supporters of H.R. 3192 and S. 1484 / S. 1910 argued that an additional two months is insufficient for lenders to make the upgrades needed to satisfy the deadline and that the restrained enforcement period does not address several underlying concerns. Supporters of a safe harbor contend that lenders should have to use the new disclosure forms and procedures but should have a grace period to test out the new systems. The grace period that supporters sought would not just apply to actions taken by the regulators but would also protect lenders from being sued by borrowers claiming that the correct disclosure forms and procedures were not followed. The threat of this private litigation risk, supporters argue, is not addressed by the CFPB's extension and could cause some lenders to delay or cancel mortgage closings if there is uncertainty about how the new process should be implemented. In addition, supporters of a delay argue that there is uncertainty as to whether the rule conflicts with state law, and the potential conflicts should be clarified prior to implementation. Critics of delaying the implementation argued that the actions already taken by the CFPB are sufficient to protect lenders from the risks that they face and that the extended implementation timeframe allows lenders enough time to adopt the necessary systems and processes. They also argued "that private liability works to ensure that regulated entities are diligent in complying promptly with the new TRID disclosures" and that the private liability should not be delayed. Critics also note that the litigation risk "that [is] part of the new TRID rule has been overstated, as private litigants rarely bring actions that prevail under the provisions of TILA that are implicated by the new TRID disclosures." The delay that some were hoping for, according to critics, "is unnecessary in light of the limited liability for disclosure-related violations under TILA and the steps already taken by the CFPB." If a further delay were put in place, some argue that homeowners "who would receive false or misleading mortgage cost disclosures during such a period would have no remedy." CBO estimated that H.R. 3192 as ordered reported would have resulted in a negligible increase in direct spending and would not have affected revenues or discretionary spending. The Eliminate Privacy Notice Confusion Act ( H.R. 601 ) was passed by the House on April 13, 2015. It was then included in the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ). Section 101 of S. 1484 (Section 902 of S. 1910 ) includes similar language. These proposals would reduce the number of scenarios under which financial firms were required to send customers privacy notices. Under H.R. 601 , financial firms would no longer be required to send annual privacy notices if their privacy policy had not changed. Under S. 1484 / S. 1910 , financial firms would no longer be required to send annual privacy notices if their privacy policy had not changed and if the firm made the most recent privacy notice available to customers electronically. Cases in which third-party information sharing triggers notification and the opportunity to opt out under current law would remain unchanged. It is an example of a regulatory relief bill amending a law that predates the financial crisis. Background. Under a provision of the Gramm-Leach-Bliley Act (15 U.S.C. §6803), financial firms, including banks, are required to send customers privacy notices when they establish a relationship with the customer and annually thereafter. Firms also are required to send customers notices explaining how customers may opt out of allowing the firm to share their personal information with third parties, under certain circumstances. Policy Discussion. Financial firms argue that the privacy notice requirement is unduly burdensome to them and of little value to customers because the notices are lengthy, confusing, and thus likely to be ignored. Defenders of current law argue that it provides consumer protection and safeguards privacy. The CFPB contends that a rule it issued in 2014 modifying Regulation P (which implements 15 U.S.C. §6803) will reduce the regulatory burden of compliance without undermining the policy's benefits. The 2014 CFPB rule allows firms under certain conditions to post privacy notices on the Internet rather than mail hard copies to customers. The rule requires firms to continue sending printed notices when privacy policies are changed or information is shared with third parties. Firms are required to provide annual notification that privacy notices are available on the Internet and to provide printed notices upon request. Some believe additional relief is needed beyond what was provided in the 2014 CFPB rule. CBO estimates that H.R. 601 as ordered reported would result in an increase in direct spending that would not be significant. The bill would not affect revenues or discretionary spending. Section 335 of the FCA would repeal Section 1075 of the Dodd-Frank Act, commonly referred to as the "Durbin Amendment," which caps interchange fees for debit card transactions involving institutions with more than $10 billion in assets. Background. When a consumer uses a debit card in a transaction, the merchant pays a "swipe" fee, which is also known as the interchange fee. The interchange fee is paid to the card-issuing bank (the consumer's bank that issued the debit card), and the fee compensates the bank for facilitating the transaction. Under the Durbin Amendment, the Federal Reserve prescribed regulations to ensure that the amount of any interchange transaction fee received by a debit card issuer is reasonable and proportional to the cost incurred by the issuer. The Federal Reserve may consider the authorization, clearance, and settlement costs of each transaction when it sets the interchange fee. The Durbin Amendment allows the interchange fee to be adjusted for costs incurred by debit card issuers to prevent fraud. Debit card issuers with less than $10 billion in assets are exempt by statute from the regulation, which means that smaller financial institutions may receive a larger interchange fee than larger issuers. The Durbin Amendment also prohibits network providers (e.g., Visa and MasterCard) and debit card issuers from imposing restrictions that would override a merchant's choice of the network provider through which to route transactions. On June 29, 2011, the Federal Reserve issued a final rule implementing the Durbin Amendment by Regulation II, which includes a cap of 21 cents plus 0.05% of the value of the transaction (and an additional 1 cent to account for fraud protection costs) on the interchange fee for large issuers. The rule went into effect on October 1, 2011. Policy Discussion. The supporters of the Durbin Amendment argued that the network providers were using their market power to keep interchange fees elevated above the price that would prevail in perfectly competitive markets to the detriment of businesses and consumers. Capping the fees for the largest issuers, they argued, would result in cost savings for businesses and consumers while still allowing small banks to compete with larger banks. Critics of the Durbin Amendment and those who advocate for its repeal argue that it is a system of government price fixing that does not allow for private sector entities to negotiate a competitive price and reduces industry's incentives to improve quality and innovate. In addition, critics argue that in restricting banks' revenues, banks have an incentive to pass additional costs on to consumers or find other ways of reducing costs. Supervision refers to the power to examine banks, instruct banks to modify their behavior, and to impose reporting requirements on banks to ensure compliance with rules. In some cases, examiners confirm whether banks meet quantitative targets and thresholds set by regulation; in others, they have discretion to interpret whether a bank's actions satisfy the goals of a regulation. Enforcement is the authority to take certain legal actions, such as imposing fines, against an institution that fails to comply with rules and laws. While regulators generally view their supervisory and enforcement actions as striking the appropriate balance between ensuring that institutions are well managed and minimizing the burden facing banks, others believe the regulators are overreaching and preventing banks from serving their customers. On-site examinations, which stem from a regulator's visitorial powers, are part of the supervisory process. A regulator's visitorial powers include (i) Examination of a bank; (ii) Inspection of a bank's books and records; (iii) Regulation and supervision of activities authorized or permitted pursuant to federal banking law; and (iv) Enforcing compliance with any applicable Federal or state laws concerning those activities, including through investigations that seek to ascertain compliance through production of non-public information by the bank ... [with certain limitations]. Section 109 of S. 1484 (Section 910 of S. 1910 ) would raise the size thresholds for banks subject to an 18-month exam cycle from $500 million to $1 billion in assets if the bank received an outstanding exam rating. For banks that received a good exam rating, it gives the regulator discretion to raise the threshold from $100 million up to $1 billion (currently, the regulator may raise it to up to $500 million) in assets if it believes raising it would be consistent with safety and soundness. H.R. 1553 was passed by the House on October 6, 2015. It was then included in the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ). The provision raised the size thresholds for banks subject to an 18-month exam cycle from $500 million to $1 billion in assets if the bank received an outstanding exam rating and from $100 million to $200 million if the bank received a good exam rating. It gives the bank regulator discretion to raise the latter threshold from $200 million up to $1 billion (currently, the regulator may raise it to up to $500 million) in assets if it believes raising it would be consistent with safety and soundness. CBO estimates that the net budgetary effects of the bill would be insignificant. Background. Regulators examine banks at least once every 12 months, but banks with less than $500 million in total assets that have high supervisory ratings and meet certain conditions are examined once every 18 months. Regulators changed the frequency of examinations in 2007 from once every 12 months to once every 18 months pursuant to the Financial Services Regulatory Relief Act. In contrast, some large and complex banks have examiners conducting full-time monitoring on-site. The bank receives a report of the findings when an examination is completed. Policy Discussion . CBO estimates that 500 to 600 institutions would see the frequency of their exams reduced under H.R. 1553 . Regulators have taken steps to reduce the regulatory burden associated with on-site examinations. The Fed introduced a new examination program in January 2014 that, according to Governor Tarullo, "more explicitly links examination intensity to the individual community bank's risk profile.... The new program calls for examiners to spend less time on low-risk compliance issues at community banks." In testimony before the Senate Banking Committee, Governor Tarullo also stated, Recognizing the burden that the on-site presence of many examiners can place on the day-to-day business of a community bank, we are also working to increase our level of off-site supervisory activities…. To that end, last year we completed a pilot on conducting parts of the labor-intensive loan review off-site using electronic records from banks. Although regulators have already taken these steps to reduce regulatory burden related to exams, the OCC has proposed increasing the threshold for the 18-month exam cycle to banks with $750 million. In response to a congressional request, bank regulators' inspectors general conducted studies on the regulatory burden to small banks stemming from compliance with supervisory exams. From 2007 to 2011, OCC community bank exams typically took 120 days or less (as they are intended to), but sometimes took up to a year, and occasionally took over a year. The length of exams was slightly longer from 2008 to 2010, when the most banks were failing. In 2011, FDIC community bank risk-management exams varied in length from an average of 335 hours to 1,820 hours based on the size of the bank and its supervisory rating. From 2007 to 2011, exams of banks with poor supervisory ratings became shorter over time and banks with good supervisory ratings took longer over time. In addition, the FDIC conducts thousands of compliance and a few CRA exams annually. In 2011, the FDIC spent an average of 24 days to 57 days on-site for risk management exams, based on supervisory rating. Fed exams (not including state-led exams, which took longer), averaged 63 days to 79 days between 2007 and 2011, peaking in 2009. Although costs cannot be derived directly from hours spent on exams, these data may nevertheless give some indication of regulatory burden caused by meeting with examination staff and uncertainty created while waiting for exam results. One concern raised by small banks is that there are economies of scale in compliance—in other words, compliance costs rise less than proportionately with size. The FDIC inspector general's study provides some evidence of economies of scale in compliance in the area of exams. It found that exams of banks with less than $50 million in assets averaged 335 hours, whereas banks with $500 million-$1 billion in assets averaged 850 hours in 2011. In other words, exams for larger banks took longer, but the increase in hours was not linear with the increase in assets. H.R. 1941 was ordered to be reported by the House Financial Services Committee on July 29, 2015. It was also included in Section 1136 of H.R. 5983 . It would require regulators to provide a bank a final exam report within 60 days of the conclusion of the exam exit interview or when follow-up materials have been provided. It would require the exit interview to take place no more than nine months after the exam begins unless the agency provides written notice for an extension. It sets detailed exam standards for commercial loans to prevent an adverse action when the underlying collateral has deteriorated. It would require the banking regulators to harmonize their standards for non-accrual loans. It would establish an ombudsman (called the Office of Independent Examination Review) within the Federal Financial Institutions Examination Council (FFIEC) to investigate complaints from banks about supervisory exams. The head of the office would be appointed by FFIEC. It would prohibit specific actions by the supervisor in retaliation for appealing. It would give banks the right to appeal exam results to the ombudsman or an administrative law judge, and would not allow the ombudsman or judge to defer to the supervisor's opinions. It would not permit further appeal by the supervisor, but would allow the bank to appeal this decision to appellate court. It would add the CFPB to the statutory appeals process, including the new ombudsman. CBO estimates that H.R. 1941 would increase budget deficits by $232 million between 2016 and 2026. Section 104 of S. 1484 (Section 905 of S. 1910 ) similarly would establish an ombudsman (called the Office of Independent Examination Review) within FFIEC to investigate complaints from banks about supervisory exams. The head of the office would be appointed by FFIEC to a five-year term, but could be removed by the President without cause. It would prohibit specific actions by the supervisor in retaliation for appealing. It would add the CFPB to the statutory appeals process, including the new ombudsman. Background. Bank regulators have established multiple processes for a bank to appeal the results of its examination. Regulators typically encourage a bank to attempt to resolve any dispute informally through discussions with the bank examiner. The Riegle Community Development and Regulatory Improvement Act of 1994 required banking regulators to establish a formal independent appeals process for supervisory findings, appoint an independent ombudsman, and create safeguards to prevent retaliation (which is not defined in the act) against a bank that disputes their examination findings. While each ombudsman's exact role varies by agency, they generally fit the description of the Fed's—to "serve as a facilitator and mediator for the timely resolution of complaints." The independent appeals process currently involves bank examiners at the agency that were not involved in the examination, as well as agency leadership. Only the OCC allows banks to appeal an examination directly to the agency's ombudsman. Policy Discussion . By statute, banks may already appeal exam results to the regulator that conducted it, and each banking agency already has an ombudsman. Skeptics view the creation of an additional ombudsman for all banking agencies as redundant. Proponents of the legislation argue that the proposed ombudsman would be more independent from the banking agencies, although it would be funded by the agencies and would still be located within a forum (FFIEC) controlled by the banking agencies. The role of ombudsman in the appeals process in H.R. 1491 would be new for all of the regulators except the OCC, however. In exams, supervisors are balancing the profitability of the bank with the risk of bank failure to the taxpayer. Critics of H.R. 1941 argue that shifting the appeals process away from the regulator to the newly created ombudsman would put the taxpayer at risk by making it more likely that supervisory decisions would be overturned. Further, the new ombudsman would arguably not have "inside knowledge" of the supervisory process, which involves discretion. Proponents of H.R. 1491 argue that in the current appeals process, the supervisor plays the role of prosecutor, judge, and jury, and therefore the supervisor is unlikely to be willing to admit that a mistake had been made in the original exam. In the American Bankers Association's view, the current process is "time-consuming, expensive, and rarely result in a reversal of the matter being appealed. There also is a concern among ABA members that appealing will risk examiner retribution," though retaliation is already forbidden by statute. The knowledge that exams could be independently appealed could make examiners more careful to adhere to guidelines, or it could make them less willing to make adverse decisions so as to avoid the "hassle" of appeals. The urgency of changing the appeals process depends on how well it is currently working. Since all supervisory information is confidential, disputes about the fairness of exams and appeals are prone to a "he said/she said" dynamic between bank and regulator that is difficult for a third party to evaluate. The frequency of appeals might give some indication of bank displeasure with the examination process. In response to a congressional request, bank regulators' inspectors general conducted studies on the regulatory burden to small banks and found that banks only formally appealed 22 OCC exam results (informally appealed 24 more), 23 FDIC exams (informally appealed 18 more), and 12 Fed exams (no informal appeal data) out of the thousands of exams performed between 2007 and 2011. However, banks might not appeal an exam result they thought was unfair if they thought their appeal had no chance of succeeding. Further, many disputes are resolved informally through the supervisory process, before an exam is completed. The primary source of bank regulatory data is the quarterly Reports of Condition and Income, or call report , that a bank submits to its regulator. Section 119 of S. 1484 (Section 920 of S. 1910 ) requires the banking regulators to review the current call report and, "to the extent appropriate," develop a shorter call report. Section 1166 of H.R. 5983 requires banking regulators to develop a short form call report for highly rated and well capitalized depository institutions to use in two out of four quarters. Background. Bank supervision is not a one-time event that occurs when the examiner visits the bank, but rather is an ongoing process that includes monitoring data collected from banks. A primary source of data is the call report, in which banks report data on various aspects of their operations using a standard definition so that data can be compared across banks by the regulators and the public. The call report is made up of various schedules, each with multiple line items, and the number of schedules and items that a bank must report depends on its size and activities. Current statute requires the regulators to review call reports every five years in order to eliminate any information or schedule that "is no longer necessary or appropriate." This requirement does not reference the size of the institution. The next review is due by October 13, 2016. FFIEC has announced that they are accelerating this review and expect it to take effect for the December 2015 or March 2016 call reports. The bank regulators released a proposed rule in September 2015 that proposes to delete a number of items from current call reports, exempt banks with under $1 billion in assets from four items, surveys regulators to find out the usefulness of each item on the call report, and dialogues with banks to find out the regulatory burden associated with reporting each item, among other things. They are also "evaluating the feasibility and merits of creating a streamlined version of the quarterly Call Report for community institutions…." Statute also required the regulators to modernize the call report process in 1994 and 2000. Included was a requirement that the regulators eliminate call report items that were "not warranted for reasons of safety and soundness or other public purposes." Policy Discussion . The FDIC has argued that call reports "provide an early indication that an institution's risk profile may be changing" and are therefore important parts of the supervision process. Removing too many items from the call report could mute the early warning signal it provides. Proponents of the legislation argue that call reports are currently unduly complex and burdensome for community banks with traditional business operations. The call report is currently structured to lower the burden on small banks relative to larger and more complex banks, however. The FDIC states that The Call Report itself is tiered to size and complexity of the filing institution, in that more than one-third of the data items are linked to asset size or activity levels. Based on this tiering alone, community banks never, or rarely, need to fill out a number of pages in the Call Report, not counting the data items and pages that are not applicable to a particular bank based on its business model. For example, a typical $75 million community bank showed reportable amounts in only 14 percent of the data items in the Call Report and provided data on 40 pages. Even a relatively large community bank, at $1.3 billion, showed reportable amounts in only 21 percent of data items and provided data on 47 pages. There are no official data on the regulatory burden associated with call reports. As evidence that the regulatory burden has increased over time, the American Bankers Association claims that the number of items required in call reports has increased from 309 in 1980 to 1,955 in 2012. The Independent Community Bankers of America, a trade association representing community banks, conducted a survey which found that "[a]lmost three quarters of respondents stated that the number of hours required to complete the call report had increased over the last ten years. Over one third of respondents indicated a significant increase in hours over this period. Well over three quarters of respondents noted increased costs in call report preparation with almost one third noting that costs increased significantly." The survey showed mixed evidence of economies of scale in call report compliance. For banks with less than $500 million in assets, costs were similar regardless of the banks' size, but for banks with more than $500 million in assets, costs were significantly higher than for banks with less than $500 million in assets. Because the survey was of members and members are generally small, it did not contain evidence for call report compliance costs for the largest banks, however. As noted above, regulators argue that the call reports are already tailored to reduce the burden on small banks. Since S. 1484 leaves it to regulators to shorten the call report, and regulators are currently undergoing a statutorily required review to eliminate unnecessary items from the call report, it is unclear what additional effect S. 1484 would have beyond the current review. One could argue that it would signal to regulators that Congress desires the current review to result in a shorter call report. Section 328 of H.R. 5983 and Section 110 of S. 1484 (Section 911 of S. 1910 ) would increase the threshold at which insured depository institutions (including banks and savings associations) and insured credit unions would be subject to CFPB supervision from $10 billion in total assets to $50 billion in total assets. S. 1484 would also index the $50 billion level to the annual change in gross domestic product. Bank and Credit Union Regulation. Banks, savings associations, and credit unions are regulated for safety and soundness as well as for consumer compliance . Safety and soundness, or prudential , regulation is intended to ensure an institution is managed to maintain profitability and avoid failure. The focus of consumer compliance regulation, by contrast, is ensuring institutions conform with applicable consumer protection and fair-lending laws. Prior to the Dodd-Frank Act, the federal banking regulators (the Fed, OCC, FDIC, and NCUA) were charged with the two-pronged mandate of regulating for both safety and soundness and consumer compliance. Pursuant to the Dodd-Frank Act, the CFPB acquired certain consumer compliance powers over banks and credit unions that vary based on whether the institution holds more or less than $10 billion in assets. For institutions with more than $10 billion in assets, the CFPB is the primary regulator for consumer compliance, whereas safety and soundness regulation continues to be performed by the prudential regulator. As a regulator of larger entities, the CFPB has rulemaking, supervisory, and enforcement authorities. This means the CFPB can issue rules for a large bank to follow, examine the bank to ensure it is in compliance with these rules, and take enforcement actions (such as imposing fines) against banks that fail to comply. A large institution, therefore, has different regulators for consumer protection and safety and soundness. For institutions with $10 billion or less in assets, the rulemaking, supervisory, and enforcement authorities for consumer protection are divided between the CFPB and a prudential regulator. The CFPB may issue rules that would apply to smaller institutions from authorities granted under the federal consumer financial protection laws. The prudential regulator, however, would maintain primary supervisory and enforcement authority for consumer protection. The CFPB has limited supervisory authority over smaller institutions; it can participate in examinations of smaller entities performed by the prudential regulator "on a sampling basis." The CFPB does not have enforcement powers over small entities, but it may refer potential enforcement actions against small entities to the entities' prudential regulators (the prudential regulators must respond to such a referral but are not bound to take any other substantive steps). Policy Discussion. Approximately 120 banks and credit unions have over $10 billion in assets. If the threshold were increased to $50 billion, about 80 institutions that are currently subject to CFPB supervision would no longer be, with approximately 40 institutions remaining under CFPB supervision. Though small in number, the largest institutions hold the vast majority of the industry's total assets. Supporters of the legislative proposals to raise the CFPB threshold argue that financial institutions are subject to overly burdensome examinations that require bank managers to invest time and other resources that, the supporters believe, could be better spent elsewhere. By raising the threshold, the institutions "would still be examined by their primary regulators who are required by law to enforce the CFPB rules and regulations" but, supporters contend, the institutions "wouldn't have to go through yet another exam with the CFPB in addition to the ones they already have to go through with their primary regulators." A higher threshold could reduce the regulatory burden imposed on those banks but, in supporters' opinion, still ensure that the institutions would be examined for consumer compliance. Critics of the proposal noted that exam cycles could be better coordinated to reduce the burden institutions faced, but did not support raising the CFPB threshold. They argue that some of the banks in the asset range that would no longer be primarily supervised by the CFPB were, in critics' opinions, "some of the worst violators of consumer protections" in the housing bubble, with IndyMac at approximately $30 billion in assets a highlighted example. Raising the threshold could lead to those entities being subject to less-intensive consumer compliance supervision (though it would not affect the consumer protection rules with which an entity would be required to comply, just the supervision). Operation Choke Point (OCP) was a Department of Justice (DOJ) initiative aimed at curbing Internet fraudsters operating in conjunction with third-party payment processors. It is the subject of numerous bills. Section 126 of S. 1484 (Section 927 of S. 1910 ) would prohibit the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve, the Bureau of Consumer Financial Protection, and the National Credit Union Administration from implementing or participating in Operation Choke Point. The Financial Institution Consumer Protection Act of 2015 ( H.R. 766 ) passed the House on February 4, 2016. It was also included in Title 11 of H.R. 5983 . It would bar banking regulators from formally requesting or informally suggesting that a depository bank close customer accounts unless the regulators have a material reason for the request, which cannot be based solely on reputational risk. The bill also identifies several threats that could satisfy the material reason requirement; specifically, if the customer poses a threat to national security; is engaged in terrorism financing; is doing business with Iran, North Korea, Syria, or another State Sponsor of Terrorism; or is doing business with an entity in any of those countries. The bill would require depository institutions to inform their customers of the justification for account termination. The bill would also require the regulators to report annually to Congress the number of accounts terminated at the request of the regulator and the legal justification for the request. Other legislative proposals also address OCP. The Commerce, Justice, Science, and Related Agencies Appropriations Act, 2016 ( H.R. 2578 ), which passed the House on June 3, 2015, would prohibit funds provided by H.R. 2578 from being used for OCP. The budget resolution for FY2016 ( S.Con.Res. 11 ) includes a provision for a non-binding deficit-neutral reserve fund to end OCP. Operation Choke Point. According to DOJ, OCP's stated goal was "to attack Internet, telemarketing, mail, and other mass market fraud against consumers, by choking fraudsters' access to the banking system." While OCP remained a DOJ initiative, DOJ did communicate with other law enforcement agencies and financial regulators to ensure it had all the information needed to evaluate the enforcement options available to address the violations. The operation held banks and payments processors accountable for processing transactions that they knew were fraudulent. Fraud may be committed by scammers who take advantage of increased online commerce to systemically extract money from consumers' bank accounts. According to DOJ, once a fraudulent merchant enters the banking system, they can debit consumers' bank accounts and credit their own account repeatedly, without permission and in violation of federal law, unless someone stops them. The DOJ has sought legal action in certain circumstances that has resulted in civil monetary penalty fees levied against financial institutions who, despite indications of fraud, continued to process fraudulent merchant transactions in violation of federal law. Policy Discussion. One of the major issues related to OCP is whether it affected businesses that are lawful and legitimate. Allegedly, DOJ and bank regulators labeled certain firms as high-risk, including credit repair companies, debt consolidation and forgiveness programs, online gambling-related operations, government-grant or will-writing kits, pornography, online tobacco or firearm sales, pharmaceutical sales, sweepstakes, magazine subscriptions, and payday or subprime loans. Certain bank regulators also considered some of these merchants to pose a reputational risk to the financial institutions that provide services to these merchants. Federal banking regulators have also supported DOJ efforts either through guidance or policy statements. As an example, the Federal Deposit Insurance Cooperation's Guidance on Payment Processor Relationships recommended banks to conduct heightened scrutiny of certain types of accounts. Some have argued that, contrary to DOJ public statements, OCP was primarily focused on the payday lending industry. In addition, they contend that DOJ was pressuring banks to shut down accounts without proving the merchants using the banking services broke the laws. They further assert that, in instances when the banks did not shut down the accounts, DOJ has penalized the banks for wrongdoing that may or may not have happened. Based on the staff report by the Committee on Oversight and Government Reform and a letter from Members of Congress, DOJ's Office of Professional Responsibility performed a review of OCP. The review concluded that Department of Justice attorneys did not improperly target lawful participants involved in the Internet payday lending industry.... To the extent that Civil Division attorneys involved in Operation Choke Point investigated Internet payday lending, their focus appeared to be on only a small number of lenders they had reason to suspect were engaged in fraudulent practices. The review found some evidence indicating that "some of the congressional and industry concerns relating to Internet payday lending was understandable," including some DOJ memoranda disparaging payday lending and emails indicating that "some of the attorneys ... working on Operation Choke Point may have viewed Internet payday lending in a negative light." The review "did not find evidence of an effort to improperly pressure lawful businesses," although it did find that "attorneys at one point did enclose with ... subpoenas ... regulatory guidance from federal regulators, including one document that contained a footnote listing businesses that the FDIC had described as posing an 'elevated risk.'" The review concluded OCP did not compel banks to terminate their relationship with legitimate businesses. In addition, an audit by the FDIC's Inspector General found the "FDIC's involvement in Operation Choke Point to have been inconsequential to the overall direction and outcome of the initiative." To address concerns raised by Congress and the financial services industry about OCP, FDIC issued new guidance and removed the list of examples of merchants categories that were considered high risk. Further, FDIC has established dedicated email, and a toll-free number for the Office of the Ombudsman for institutions to address any concerns raised by FDIC-supervised institutions about OCP. CBO's cost estimates for H.R. 766 as ordered to be reported determined that the legislative proposals would have no effect on the federal budget. Banks face regulations surrounding how they can raise capital from investors, and what rights are conferred to investors. Capital can take various forms depending on the ownership structure of the institution. For example, publicly held banks issue stock that can be traded on exchanges. Disclosure requirements and investor protections may better inform investors about the risks that they are assuming, but can make it more costly for institutions to raise capital, and those costs might be passed on to customers in the form of higher fees or interest rates charged. While some view these existing regulatory requirements as important safeguards that ensure that investors are protected from fraud, others see them as unnecessary red tape that makes it too difficult for banks to raise the capital needed to expand or remain healthy. Five bills that have seen congressional action would raise the exemption threshold on the Securities and Exchange Commission's (SEC's) registration for thrift holding companies to match the current exemptions for bank holding companies (BHCs). The proposal is found in the Holding Company Registration Threshold Equalization Act ( H.R. 1334 ), which passed the House on July 15, 2015; Title III of the Promoting Job Creation and Reducing Small Business Burdens Act ( H.R. 37 ), which passed the House on January 14, 2015; and Section 601 of S. 1484 (which is also Section 971 of S. 1910 ). It was enacted in Title LXXXV of the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ). Background. Historically, under the Securities Act of 1933, banks and BHCs, similar to nonfinancial firms, generally were required to register securities with the SEC if they had total assets exceeding $10 million and the shares were held (as per shareholders of record) by 500 shareholders or more. Banks and BHCs also were allowed to stop registering securities with the SEC, a process known as deregistration , if the number of their shareholders of record fell to 300 shareholders or fewer. Title VI of the Jumpstart Our Business Startups Act (JOBS Act) raised the SEC shareholder registration threshold from 500 shareholders to 2,000 shareholders and increased the upper limit for deregistration from 300 shareholders to 1,200 shareholders for those banks and nonfinancial firms. In other words, the JOBS Act made it easier for banks and BHCs to increase the number of their shareholders while remaining unregistered private banks and, if already registered, to voluntarily deregister while also adding more shareholders. The provision went into effect immediately upon the enactment of the JOBS Act on April 5, 2012. These changes made by the JOBS Act did not apply to savings and loan holding companies (SLHCs). The Holding Company Registration Threshold Equalization provisions amended the Securities Exchange Act of 1934 by extending the higher registration and deregistration shareholder thresholds in the JOBS Act for banks and BHCs to SLHCs. Savings and loans (also known as thrifts and savings banks) are similar to banks in that they take deposits and make loans, but their regulation is somewhat different. Over time, the differences between banks and savings and loans have narrowed. Under the provision, an SLHC would be required to register with the SEC if its assets exceed $10 million and it has 2,000 shareholders of record, up from the current requirement of 500 shareholders of record. SLHCs that want to deregister from the SEC would have to have no more than 1,200 shareholders of record, an increase over the current 300 or fewer shareholders. Policy Discussion. Generally speaking, the central perceived benefit of SEC registration is to enhance investor protection by ensuring that investors have access to significant financial and nonfinancial data about firms and the securities they issue. The cost of SEC registration is the regulatory burden on the firm issuing securities associated with complying with SEC requirements, which potentially raises the cost of capital and reduces how much capital a firm can raise. For small firms, the regulatory burden of registration is thought to be greater than for larger firms. Policymakers attempt to reach the optimal trade-off between costs and benefits of SEC registration by exempting firms below a certain size from registration requirements. The JOBS Act raised this threshold for banks, modifying the balance between costs and benefits. Reports indicate that after passage of the JOBS Act, a number of privately held banks and BHCs took advantage of Title VI's reduction in shareholder ownership registration triggers by raising capital from additional shareholders without having to register with the SEC. Some banks also have taken the opportunity to deregister from the SEC. One of the few studies on changes to the financial health of banks that took advantage of the JOBS Act threshold changes to deregister found that the act was generally, but not entirely, financially beneficial to banks. For example, it found that, on average, the legislation resulted in $1.31 in higher net bank income and $3.28 lower pretax expenses for every $1.00 of bank assets and was responsible for $1.54 million in increased assets per bank employee. The study did not attempt to estimate the costs to investors of reduced disclosure under the changes made by the JOBS Act. In potentially expanding the exemption threshold on SEC registration for thrift holding companies, there are two main points to consider. First, should exemption levels from SEC registration requirements be different for thrifts and savings and loans than for banks? Current law makes it more difficult for small thrifts to raise capital than for small banks. Second, are the costs and benefits of registration requirements for small banks better balanced at the higher thresholds enacted for banks in the JOBS Act or the lower thresholds in current law for thrifts? Section 113 of S. 1484 (Section 914 of S. 1910 ) addresses the issue of how dividends are allocated among the shareholders of mutual holding companies or their subsidiaries. It would authorize all MHCs to waive the "receipt of dividends declared on the common stock of their bank or mid-size holding company" without having to comply the Federal Reserve's regulation regarding "Mutual Holding Company Dividend Waivers." Mutual Holding Companies (MHCs) . Section 107 of the Competitive Equality Banking Act of 1987 provided for the formation of Mutual Holding Companies (MHCs). MHCs are savings and loan holding companies in mutual form, some of which own mutually held federally insured savings and loan associations, and state-chartered mutual savings banks. Most banks in the United States are held either publicly or privately by shareholders. In contrast, a mutual company or mutual savings bank (association) is one that is owned by its members. In the instance of a mutual savings bank, the members are the financial institution's depositors. A mutual savings bank can reorganize itself into an MHC by transferring all of the assets and liabilities to a newly formed stock institution, the majority shares of which are owned by the MHC. The remaining minority shares are sold to equity investors, with depositors afforded the right to buy minority equity interest before it is made available to the public. The Dodd-Frank Act transferred authority over savings and loan holding companies regulated by the Office of Thrift Supervision (OTS) to the Federal Reserve and included a specific provision which requires a MHC to follow certain procedures in order to waive receipt of any dividend declared by a subsidiary. Dividends are distribution of earnings (profits) to shareholders, which are usually declared and paid quarterly. The board of directors determines the amount of dividends. If the MHC waives the right to receive dividends, depending upon the specifics of an institution's dividend arrangements, dividends may be distributed among the other equity holders or retained by the bank subsidiary. The Federal Reserve issued Regulation MM, implementing its authority over MHCs and included in it a subsection, 12 C.F.R. 239.8(d), implementing the statutory requirements permitting MHCs to waive the right to receive dividends declared by a subsidiary of the MHC. Under the Federal Reserve regulations, an MHC may waive the right to receive any dividend declared by a subsidiary ... if (i) no insider of the MHC, associate of an insider, or tax-qualified or non-tax-qualified employee stock benefit plan of the MHC holds any share of the stock in the class of stock to which the waiver would apply, or (ii) the MHC gives written notice to the ... [Federal Reserve] of the intent of the MHC to waive the right to receive dividends ... and the [Federal Reserve] Board does not object. The regulation specifies what must be included in the notice of waiver, including documentation of the MHC's conclusion that a waiver would be consistent with the fiduciary duties of the board of directors of the MHC. The Dodd-Frank Act and the Federal Reserve regulation include a streamlined approval process for dividend waivers by certain "grandfathered MHC's." Under the statute, the Federal Reserve may not object to a proposed waiver of dividends for an MHC that waived dividends prior to December 1, 2009, (grandfathered MHC's) provided "the waiver would not be detrimental to the safe and sound operation of the ... [mutual savings bank]"; and, the MHC's board "expressly determines the waiver to be consistent with its fiduciary duties to the mutual members of the MHC." For MHCs that do not meet the criteria for grandfathering, Regulation MM specifies conditions under which the Federal Reserve will not object to a waiver of dividends for non-grandfathered MHCs. Among them are a vote of the members of the MHC approving the waiver of dividends; a determination that the mutual savings bank is operating in a safe and sound manner, which will not be jeopardized by the waiver; and an affirmation that the MHC is able to meet any obligations in connection with any loan for which the MHC has pledged the stock of the subsidiary mutual savings bank. Policy Discussion. In prior circumstances, the Federal Reserve identified a number of issues related to dividend waivers by the holding company. One of the reasons for retaining dividends is so the MHC could serve as a source of strength to its subsidiary bank. If the MHC retains the dividend payments from the subsidiary, then an MHC can transfer its excess capital to the subsidiary when the subsidiary might need a capital infusion. If there is no requirement for a mandatory vote of MHC shareholders, the waiver would rest exclusively with the MHC's board, who may have a financial interest in the waiver as minority shareholders in the bank. In issuing the regulations implementing the Dodd-Frank dividend waiver provisions, the Federal Reserve also noted that dividend waiver by the MHC without corresponding waiver by the minority (i.e., non-member) shareholders poses an "inherent conflict of interest" because it might result in unequal distribution of equity between mutual owners of the MHC and minority shareholders. In essence, it could result in a transfer of equity from mutual owners to minority shareholders. Supporters of S. 1484 cite similar reasons as those that opposed the implementation of Regulation MM's dividend waiver requirements in 2011. They fear that the Fed will erroneously block waivers under Regulation MM, thereby harming MHCs and discouraging capital formation. They assert that if the MHC waives the dividends, greater capital is retained by the subsidiary, which would enhance the safe and sound operation of the subsidiary savings bank. Further, they state, waiving dividends for majority shareholders while retaining them for minority shareholders may be necessary in order to offer the latter a market rate of return. Lastly, the supporters state that when the MHC receives the dividends from the subsidiary it must pay taxes on the dividends received, thereby reducing the overall franchise value. The supporters of S. 1484 also state that distinguishing between grandfathered MHCs and the rest of the MHCs leads to different classes of MHCs. They also assert that the cost of obtaining the vote of the members could be cost prohibitive and lead to additional unnecessary administrative and financial costs. Previously, in similar circumstances, the banking regulators have allowed waiver of dividends by the MHC and those dividends to be retained by the bank. In such instances, the regulators required specific accounting procedures to allocate the value of those dividends to the members of the mutual institution. This process helped delineate the increase in value of the MHC to be properly apportioned between the members and minority shareholders. Appendix A. Indexing of Bank Regulatory Relief Provisions for GDP Growth Certain provisions of S. 1484 / S. 1910 with exemptions based on size are indexed by "such amount is adjusted annually ... to reflect the percentage change for the previous calendar year in the gross domestic product of the United States, as calculated by the Bureau of Economic Analysis of the Department of Commerce." Indexing reduces the number of firms that "graduate" from the exemption over time as they grow in size, in nominal or real terms. Nominal price increases are caused by inflation, whereas real price increases refer to those in excess of the inflation rate. Table A-1 summarizes those provisions that apply to banks. Section 110 of S. 1484 (Section 911 of S. 1910 ) indexes exemptions found in a few provisions of existing law (all added by the Dodd-Frank Act) while making no other changes to those provisions, except 110(b), which also raised the threshold and is discussed in the section above entitled " CFPB Supervisory Threshold ." The other exemptions are found within other sections of the bills that make broader changes to current law. In addition, Section 108 of S. 1484 (Section 909 of S. 1910 ) indexed thresholds for exemptions from points and fees for manufactured housing for inflation (as measured by the consumer price index) instead of GDP. GDP is revised repeatedly and is not available on the first of the year, so regulators would have to formulate a method for making this calculation. The bills do not specify whether regulators should use the nominal or real GDP growth rate—nominal GDP growth is equal to real GDP growth plus the inflation rate. If regulators used the real GDP growth rate, GDP in some years could be negative or lower than the inflation rate. In most years, GDP grows faster than inflation, so the thresholds would be increasing in real terms over the long run. Total assets of the financial system also generally increase more rapidly than inflation, so indexing by GDP growth instead of inflation would make it less likely that an increasing number of firms would not be subject to the exemption over time. Appendix B. Provisions in the Financial Regulatory Improvement Act Covered in this Report Table B-1 lists the provisions in S. 1484 , the Financial Regulatory Improvement Act, that are covered in this report and the corresponding section in S. 1910 , Financial Services and General Government Appropriations Act, 2016, and related House bills. Appendix C. Provisions in the Financial CHOICE Act Covered in this Report Table C-1 lists the provisions in H.R. 5983 , the Financial CHOICE Act, that are covered in this report and related House and Senate bills. Appendix D. Provisions in the Fixing America's Surface Transportation Act Covered in this Report H.R. 22 , the Fixing America's Surface Transportation Act, was signed into law as P.L. 114-94 on December 4, 2015. Division G of H.R. 22 contained 19 titles related to financial services. Table D-1 lists the provisions of Division G that are covered in this report and the corresponding section in S. 1484 and related House bills.
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The 114th Congress is considering legislation to provide "regulatory relief" for banks. The need for this relief, some argue, results from new regulations introduced in response to vulnerabilities that were identified during the financial crisis that began in 2007. Some have contended that the increased regulatory burden—the cost associated with government regulation and its implementation—is resulting in significant costs that restrain economic growth and consumers' access to credit. Others, however, believe the current regulatory structure strengthens financial stability and increases protections for consumers, and they are concerned that regulatory relief for banks could negatively affect consumers and market stability. Regulatory relief proposals, therefore, may involve a trade-off between reducing costs associated with regulatory burden and reducing benefits of regulation. This report discusses regulatory relief legislation for banks in the 114th Congress that, at the time this report was published, has seen legislative action. Many, but not all, of the bills would make changes to the Dodd-Frank Act (P.L. 111-203), wide-ranging financial reform enacted in response to the financial crisis. The bills analyzed in this report would provide targeted regulatory relief in a number of different areas: Safety and Soundness Regulations. Safety and soundness, or prudential, regulation is designed to ensure that a bank maintains profitability and avoids failure. After many banks failed during the financial crisis, the reforms implemented in the wake of the crisis were intended to make banks less likely to fail. While some view these efforts as essential to ensuring that the banking system is safe, others view the reforms as having gone too far and imposing excessive costs on banks. Examples of legislation include changes to the Volcker Rule, capital requirements, liquidity requirements applied to municipal bonds, and enhanced regulation for large banks. Mortgage and Consumer Protection Regulations. Several bills would modify regulations issued by the Consumer Financial Protection Bureau (CFPB), a regulator created by the Dodd-Frank Act to provide an increased regulatory emphasis on consumer protection. The Dodd-Frank Act gave the CFPB new authority and transferred existing authorities to it from the banking regulators. Many regulatory relief proposals could be viewed in light of a broader policy debate about whether the CFPB has struck the appropriate balance between consumer protection and regulatory burden. One legislative focus has been several mortgage-related CFPB rulemakings pursuant to the Dodd-Frank Act. Supervision and Enforcement. Supervision refers to regulators' power to examine banks, instruct banks to modify their behaviors, and to impose reporting requirements on banks to ensure compliance with rules. Enforcement is the authority to take certain legal actions, such as impose fines, against an institution that fails to comply with rules and laws. Although regulators generally view their supervisory and enforcement actions as striking the appropriate balance between ensuring that institutions are well managed and minimizing the burden facing banks, others believe the regulators are overreaching and preventing banks from serving their customers. Examples of legislation include changes to call reports and bank exams, as well as legislation addressing "Operation Chokepoint." Capital Issuance. Banks are partly funded by issuing capital to investors. Disclosure requirements and investor protections may better inform investors about the risks that they are assuming but can make it more costly for institutions to raise capital. Whereas some view these existing regulatory requirements as important safeguards that ensure investors are making educated decisions, others see them as unnecessary red tape that stymies capital formation. The capital issuance legislative proposals discussed in this report are generally geared toward making it easier for financial institutions to raise funds. Congress faces the question of how much discretion to give regulators in granting relief. Some bills leave it up to the regulators to determine how much relief should be granted, whereas others make relief mandatory. Some bills provide relief in areas regulators have already reduced regulatory burden. Some of the legislation is focused on providing relief for small banks, whereas other bills provide relief to the entire industry.
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Congress is composed of 541 individuals from the 50 states, the District of Columbia, Guam, the U.S. Virgin Islands, American Samoa, the Northern Mariana Islands, and Puerto Rico. This count assumes that no seat is temporarily vacant. Since 1789, 12,179 individuals have served in Congress: 10,886 in the House and 1,963 in the Senate. Of these Members, 669 have served in both chambers. These numbers do not include an additional 176 individuals who have served only as territorial Delegates or as Resident Commissioners from Puerto Rico or the Philippines in the House. The following is a profile of the 114 th Congress (2015-2016). In the 114 th Congress, the current party alignments as of December 5, 2016, are as follows: House of Representatives: 248 Republicans (including one Delegate), 192 Democrats (including 4 Delegates and the Resident Commissioner) and one vacancy. Senate: 54 Republicans, 44 Democrats, and 2 Independents who caucus with the Democrats. The average age of Members of the 114 th Congress is among the highest of any Congress in recent U.S. history. Table 1 shows the average ages at the beginning of the 114 th and three previous Congresses. The U.S. Constitution requires Representatives to be at least 25 years old when they take office. The youngest Representative at the beginning of the 114 th Congress was 30-year-old Elise Stefanik (R-NY), born July 2, 1984. The oldest Representative was John Conyers (D-MI), born May 16, 1929, who was 85 at the beginning of the 114 th Congress. Senators must be at least 30 years old when they take office. The oldest Senator in the 114 th Congress is Dianne Feinstein (D-CA), born June 22, 1933, who was 81 at the beginning of the Congress. The youngest Senator is Tom Cotton (R-AR), born May 13, 1977, who was 37. According to the CQ Roll Call Guide to the New Congress , in the 114 th Congress, public service/politics is the dominantly declared profession of Senators, followed by law, then business; for Representatives, public service/politics is first, followed by business, then law. Table 2 uses data from the CQ Roll Call Guide to the New Congress and the CQ Roll Call Member Profiles to show the following occupations most frequently listed for Members at the beginning of the 114 th Congress. A closer look at the prior occupations and previously held public offices of Members of the House and Senate at the beginning of the 114 th Congress, as listed in their CQ Roll Call Member Profiles , also shows the following: 53 Senators with previous House service; 100 Members who have worked in education, including teachers, professors, instructors, school fundraisers, counselors, administrators, or coaches (85 in the House, 15 in the Senate); 3 physicians in the Senate, 15 physicians in the House, plus 3 dentists and 3 veterinarians; three psychologists (all in the House), an optometrist (in the Senate), a pharmacist (in the House), and four nurses (all in the House); seven ordained ministers, all in the House; 41 former mayors (33 in the House, 8 in the Senate); 10 former state governors (9 in the Senate, 1 in the House) and 8 lieutenant governors (4 in the Senate, 4 in the House, including 1 Delegate); 15 former judges (all but 1 in the House) and 43 prosecutors (11 in the Senate, 32 in the House) who have served in city, county, state, federal, or military capacities; one former Cabinet Secretary (in the Senate), and three ambassadors (one in the Senate, two in the House); 267 state or territorial legislators (44 in the Senate, 223 in the House); at least 102 congressional staffers (21 in the Senate, 81 in the House), as well as 7 congressional pages (3 in the House and 4 in the Senate); two sheriffs and one deputy sheriff (all in the House), two police officers in the House and one in the Senate, one firefighter in the House, and one CIA agent in the House; four Peace Corps volunteers, all in the House; one physicist, one microbiologist, one chemist, and eight engineers (all in the House, with the exception of one Senator who is an engineer); 22 public relations or communications professionals (2 in the Senate, 20 in the House), and 10 accountants (2 in the Senate and 8 in the House); five software company executives in the House and two in the Senate; 14 management consultants (4 in the Senate, 10 in the House), 6 car dealership owners (all in the House), and 2 venture capitalists (1 in each chamber); 18 bankers or bank executives (4 in the Senate, 14 in the House), 36 veterans of the real estate industry (5 in the Senate, 31 in the House), and 16 Members who have worked in the construction industry (2 in the Senate, 14 in the House); two social workers in the Senate and six in the House and four union representatives (all in the House); six radio talk show hosts (one Senate, five House); eight radio or television broadcasters, managers, or owners (two Senate, six House); nine reporters or journalists (two Senate, seven House); and a public television producer in the House; 19 insurance agents or executives (4 Senate, 15 House) and 3 stockbrokers (2 in the Senate, 1 in the House); one screenwriter and comedian and one documentary filmmaker (both in the Senate), and an artist in the House; 29 farmers, ranchers, or cattle farm owners (4 in the Senate, 25 in the House); two almond orchard owners in the House, as well as two vintners; and 10 current members of the military reserves (8 House, 2 Senate) and 7 current members of the National Guard (6 House, 1 Senate). Other occupations listed in the CQ Roll Call Member Profiles include emergency dispatcher, letter carrier, urban planner, astronaut, flight attendant, electrician, auto worker, museum director, rodeo announcer, carpenter, computer systems analyst, Foreign Service officer, and software engineer. As has been true in recent Congresses, the vast majority of Members (94% of House Members and 100% of Senators) at the beginning of the 114 th Congress hold bachelor's degrees. Sixty-four percent of House Members and 74% of Senators hold educational degrees beyond a bachelor's. The CQ Roll Call Member Profiles at the beginning of the 114 th Congress indicate the following: 20 Members of the House have no educational degree beyond a high school diploma; eight Members of the House have associate's degrees as their highest degrees; 82 Members of the House and 16 Senators earned a master's degree as their highest attained degrees; 159 Members of the House (36% of the House) and 54 Senators (54% of the Senate) hold law degrees; 23 Representatives and 1 Senator have doctoral (Ph.D., D.Phil., Ed.D., or D.Min) degrees; and 22 Members of the House and 3 Senators have medical degrees. By comparison, approximately 35 years ago in the 97 th Congress (1981-1982), 84% of House Members and 88% of Senators held bachelor's degrees. Approximately 45 years ago, in the 92 nd Congress (1971-1972), 77% of House Members and 87% of Senators held bachelor's degrees. Fifty-four years ago, in the 87 th Congress (1961-1962), 71% of House Members and 76% of Senators held bachelor's degrees. Four Representatives and one Senator in the 114 th Congress are graduates of the U.S. Military Academy, one Senator and one Representative graduated from the U.S. Naval Academy, and one Representative graduated from the U.S. Air Force Academy. Two Senators and two Representatives were Rhodes Scholars, two Representatives were Fulbright Scholars, two Representatives were Marshall Scholars, and one Senator and one Representative were Truman Scholars. The average length of service for Members of the House at the beginning of the 114 th Congress was 8.8 years (4.4 terms) and for Senators 9.7 years (1.6 terms). At the beginning of the 114 th Congress, 61 of the Representatives, including 2 Delegates (13.8% of the total House Membership) had first been elected to the House in November 2014, and 13 of the Senators (13% of the total Senate membership) had first been elected to the Senate in November 2014. These numbers are lower than at the beginning of the 113 th Congress, when 17% of the House and 14% of the Senate were newly elected "freshmen." At the beginning of the 114 th Congress, 131 Representatives, including 2 Delegates (30.4% of House Members), had no more than 2 years of House experience, and 27 Senators (27% of Senators) had no more than 2 years of Senate experience. For more historical information on the tenure of Members of Congress, see CRS Report R41545, Congressional Careers: Service Tenure and Patterns of Member Service, 1789-2015 , by [author name scrubbed] and [author name scrubbed]. Ninety-eight percent of the Members of the 114 th Congress are reported to be affiliated with a specific religion. Of the 98%, the vast majority (92%) are Christian. Statistics gathered by the Pew Forum on Religion and Public Life, which studies the religious affiliation of Members, and CQ Roll Call at the beginning of the 114 th Congress showed the following: 57% of the Members (251 in the House, 55 in the Senate) are Protestant, with Baptist as the most represented denomination, followed by Methodist; 31% of the Members (138 in the House, 26 in the Senate) are Catholic; 5.2% of the Members (19 in the House, 9 in the Senate) are Jewish; 3% of the Members (9 in the House, 7 in the Senate) are Mormon (Church of Jesus Christ of Latter-day Saints); two Members (one in the House, one in the Senate) are Buddhist , two House Members are Muslim, and one House Member is Hindu; and other religious affiliations represented include Greek Orthodox, Unitarian Universalist, and Christian Science. A record 108 women (20% of the total membership) serve in the 114 th Congress as of November 2016, 7 more than at the beginning of the 113 th Congress. Eighty-eight women, including 4 Delegates, serve in the House and 20 in the Senate. Of the 88 women in the House, 65 are Democrats, including 3 of the Delegates, and 23 are Republicans, including 1 Delegate. Of the 20 women in the Senate, 14 are Democrats and 6 are Republicans. There are a record 48 African American Members (8.8% of the total membership) in the 114 th Congress, 3 more than at the beginning of the 113 th Congress. Forty-six serve in the House, including two Delegates, and two serve in the Senate. This number includes one Member of the House who is of African American and Asian ancestry and is counted in both ethnic categories in this report. Forty-four of the African American House Members, including two Delegates, are Democrats, and two are Republicans. There is a Senator of each party. Twenty African American women, including two Delegates, serve in the House. There are 38 Hispanic or Latino Members in the 114 th Congress, 7.0% of the total membership and a record number. Thirty-four serve in the House and four in the Senate. Of the Members of the House, 25 are Democrats (including 1 Delegate and the Resident Commissioner from Puerto Rico), 9 are Republicans, and 9 are women. There are four male Hispanic Senators (three Republicans, one Democrat). Two Hispanic Members, Representatives Linda Sánchez and Loretta Sanchez, are sisters. Fourteen Members of the 114 th Congress (2.5% of the total membership) are of Asian, South Asian, or Pacific Islander ancestry. Thirteen of them (11 Democrats, 1 Republican) serve in the House, and 1 (a Democrat) serves in the Senate. These numbers include one House Member who is also of African American ancestry and another of Hispanic ancestry; these Members are counted in both ethnic categories. Of those serving in the House, two are Delegates. Eight of the Asian Pacific American Members are female: seven in the House and one in the Senate. There are two American Indian (Native American) Members of the 114 th Congress, both of whom are Republican Members of the House. Thirteen Representatives and three Senators (2.9% of the entire 114 th Congress) were born outside the United States. Their places of birth include Canada, Cuba, Guatemala, Japan, Peru, and Thailand. Many of these Members were born to American citizens working or serving abroad. The U.S. Constitution requires that Representatives be citizens for seven years and Senators be citizens for nine years before they take office. At the beginning of the 114 th Congress, there were 101 Members (18.7% of the total membership) who had served or were serving in the military, 7 fewer than at the beginning of the 113 th Congress (108 Members) and 17 fewer than in the 112 th Congress (118 members). According to lists compiled by CQ Roll Call , the House currently has 82 veterans (including 3 female Members, as well as 1 Delegate); the Senate has 20 veterans, including 1 woman. These Members served in the Korean War, the Vietnam War, the Persian Gulf War, Afghanistan, Iraq, and Kosovo, as well as during times of peace. Many have served in the reserves and the National Guard. Eight House Members and one Senator are still serving in the reserves, and six House Members are still serving in the National Guard. All of the female veterans are combat veterans. The number of veterans in the 114 th Congress reflects the trend of steady decline in recent decades in the number of Members who have served in the military. For example, 64% of the Members of the 97 th Congress (1981-1982) were veterans, and in the 92 nd Congress (1971-1972), 73% of the Members were veterans. For summary information on the demographics of Members in selected past Congresses, including age trends, occupational backgrounds, military veteran status, and educational attainment, see CRS Report R42365, Representatives and Senators: Trends in Member Characteristics Since 1945 , coordinated by [author name scrubbed].
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This report presents a profile of the membership of the 114th Congress (2015-2016). Statistical information is included on selected characteristics of Members, including data on party affiliation, average age, occupation, education, length of congressional service, religious affiliation, gender, ethnicity, foreign births, and military service. As of December 5, 2016, in the House of Representatives, there are 248 Republicans (including 1 Delegate), 192 Democrats (including 4 Delegates and the Resident Commissioner of Puerto Rico), and one vacancy. The Senate has 54 Republicans, 44 Democrats, and 2 Independents, who both caucus with the Democrats. The average age of Members of the House at the beginning of the 114th Congress was 57.0 years; of Senators, 61.0 years. The overwhelming majority of Members of Congress have a college education. The dominant professions of Members are public service/politics, business, and law. Most Members identify as Christians, and Protestants collectively constitute the majority religious affiliation. Roman Catholics account for the largest single religious denomination, and numerous other affiliations are represented. The average length of service for Representatives at the beginning of the 114th Congress was 8.8 years (4.4 terms); for Senators, 9.7 years (1.6 terms). One hundred eight women (a record number) serve in the 114th Congress: 88 in the House, including 4 Delegates, and 20 in the Senate. There are 46 African American Members of the House and 2 in the Senate. This House number includes two Delegates. There are 38 Hispanic or Latino Members (a record number) serving: 34 in the House, including 1 Delegate and the Resident Commissioner, and 4 in the Senate. Fourteen Members (11 Representatives, 2 Delegates, and 1 Senator) are Asian Americans or Pacific Islanders. Two American Indians (Native Americans) serve in the House. The portions of this report covering political party affiliation, gender, ethnicity, and vacant seats will be updated as events warrant. The remainder of the report will not be updated.
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The Veterans Health Administration (VHA) of the Department of Veterans Affairs (VA) operates the Nation's largest health care delivery system with about 222,000 employees supporting its mission. It is also the largest provider of health care education and training for medical residents and other health care trainees in the United States. In FY2008, VHA provided medical care to approximately 5.6 million unique patients and spent approximately $43.5 billion for medical care and research. A coalition of veterans' service organizations (VSOs) has been calling on Congress to provide VHA with a budget which is "sufficient, timely, and predictable." They have asserted that VHA has underestimated its budget in the past. For instance, according to the Government Accountability Office (GAO), due to "unrealistic assumptions about the impact of some of [VHA's] policies, inaccurate calculations, and insufficient data for useful budget projections," in June 2005 the George W. Bush Administration submitted a $975 million supplemental VHA appropriations request to Congress, and in July of that same year the President submitted an additional $1.977 billion supplemental VHA appropriations request to Congress. Congress has generally not enacted the VA budget by the beginning of the fiscal year. In most of the past 20 years (FY1989 to FY2009) VA received its annual appropriation prior to the beginning of the fiscal year only on four occasions—in FY1989, FY1995, FY1997, and FY2009 (see the Appendix ). According VSOs, these delays in the enactment of the budget have exacerbated operational challenges—such as delaying capital expenditures, delaying recruitment, restricting acquisitions, limiting maintenance—faced by VHA network directors. Moreover, former VHA officials have testified about operational difficulties they faced during their tenures due to the uncertainty of funding. To mitigate these issues, VSO's have proposed that Congress change the funding process for VHA to an advance appropriation. This report discusses issues regarding authorization of an advanced appropriation for certain medical care accounts of VHA. To provide some context to the discussion of these issues, the first section of this report provides background on funding categories for federal programs as well as how they relate to the federal budget. It also reiterates the reasons that have been put forth by VSOs as a rationale to fund VHA under an advance appropriation, and the accounts that would be affected by an advance appropriation proposal. Lastly this section describes the approach used by VHA to construct the budget estimates that are critical to the determination of the funding level under an advance appropriation. The second section of this report discusses the definition of an advance appropriation and provides examples of federal programs that are currently funded under an advance appropriation or have been in the past. The third section outlines the two broad issues that Congress confronts in considering proposal to establish and implement an advance appropriation: (1) authorization issues, and (2) implementation issues. This report concludes with a section that provides some options Congress may opt to consider either independently or in conjunction with an advance appropriation proposal. To provide some context on funding VA health care programs under an advance appropriation it is essential to understand the funding categories for federal programs, and how they relate to the federal budget. One of the most basic characterizations of federal spending involves two separate categories, discretionary spending and direct spending. Discretionary spending is provided in, and controlled by, annual appropriations acts under the jurisdiction of the House and Senate Appropriations Committees. Direct spending, also referred to as mandatory spending, is controlled by substantive legislation under the jurisdiction of the various House and Senate legislative committees. In most instances, the substantive law that creates direct spending also includes the financing mechanism for it, often a "permanent appropriation" that provides funds automatically each year without the need for any further legislative action (e.g., Social Security and Medicare), or that provides funds automatically each year over a fixed, multi-year period (e.g., the periodic farm bill and highway bill). In some cases, a direct spending program does not have its own financing mechanism and requires financing through an annual appropriations act (e.g., veterans compensation and pensions); in these cases, however, the level of direct spending effectively is controlled in the substantive legislation, not the annual appropriations act. The annual budget resolution establishes a framework for the consideration of all legislation with a budgetary impact, including annual appropriations acts (regular, supplemental, and continuing) and direct spending measures, as well as revenue and debt-related measures. Different enforcement procedures are used with respect to annual appropriations acts and direct spending measures. The key enforcement tool applicable to the former is the "Section 302(b)" spending allocations, named after the pertinent section of the Congressional Budget Act of 1974, and the point of order that may be raised against measures that violate the allocations. Under this tool, the Appropriations Committee in each chamber divides its allocation of total discretionary spending for the fiscal year made under the budget resolution among its 12 subcommittees; the cost of each appropriations act then is compared to the Section 302(b) spending allocation assigned to the pertinent subcommittee to determine if the act adheres to the spending levels under the budget resolution. Other enforcement tools apply to the consideration of direct spending measures, including "Section 302(a)" allocations of total direct spending to committees (unlike the Appropriations Committees, the legislative committees do not subdivide their total allocations by subcommittee), the optional budget reconciliation process, and House and Senate "pay-as-you-go" (PAYGO) rules, among others. Funding for the Department of Veterans Affairs entails both discretionary spending and direct spending. In FY2008, for example, the Department's total spending of approximately $88 billion consisted of about $43 billion in discretionary spending and $44 billion in direct spending. Most of the Department's discretionary spending involves medical care while most direct spending involves compensation and benefits. For more than a decade VSOs have been repeatedly calling for "assured funding" or "guaranteed" or "mandatory" funding for VA health care. Although each of these terms has a different definition, in general, the VSO community has proposed moving funding for VA health care from a discretionary appropriation to a mandatory appropriation. VSOs claim that both the sufficiency of funding for veterans' health care as well as the timeliness and predictability of such funding would be addressed by funding VA health care under a mandatory appropriation . The Independent Budget has stated that: For almost two decades, the dysfunctional budget and appropriations process for veterans' health care has prevented VA officials from efficiently managing and planning for the future of veterans' health-care programs and services. Not knowing when or what level of funding it will receive from year to year—or whether Congress will approve or oppose Administration policy proposals directly affecting the budget—severely impairs VA's ability to recruit and retain staff, contract for services, procure equipment and supplies, and perform planning and administrative functions. Although legislation was introduced in previous Congresses to provide funding for VA health care under a mandatory appropriation, such proposals did not win widespread support among the authorization or appropriations committees. Also pay-as-you-go (PAYGO) budget rules adopted by Congress required offsets for any new direct spending program (see previous section on spending categories in the federal budget and enforcement procedures). Furthermore, some budget analysts had pointed out that a switch to a mandatory appropriation would: create incentives for undue expansion of the VHA; not be consistent with the longer term objectives of reforming the overall health care system; and boost federal spending at a time when other increases in federal healthcare spending would yield greater benefits. The analysts have also pointed out that converting VHA into a mandatory appropriation "would not entirely insulate it from budgetary pressures. Congress could cut the per-person funding amount or exclude certain groups of veterans from the formula used for computing annual funding." During the110 th Congress both the House and Senate Veterans' Affairs Committees held hearings to examine such proposals and heard from witnesses who testified for and against mandatory funding proposals for VA health care. Since mandatory funding proposals were not finding enough momentum to move forward, VSOs put forth a proposal in 2008 to provide advance appropriations for VA health care. In the 111 th Congress, the Veterans Health Care Budget Reform and Transparency Act of 2009 ( H.R. 1016 and a companion version S. 423 ) has been introduced. Under H.R. 1016 and S. 423 , the following accounts that fund VHA—medical services, medical support and compliance, and medical facilities (see description of these accounts below)—would be funded as an advance appropriation beginning with FY2011. The funding would be under a discretionary budget authority, and the legislation calls for a study by the Comptroller General (that is, the Government Accountability Office) on the adequacy and accuracy of the budget projections based on VHA's Enrollee Health Care Projection Model (see a discussion of the model below). While CRS does not take a position on the legislation, the succeeding sections discuss some possible issues concerning such a proposal, and offer options Congress may consider concerning the VHA funding process. Prior to discussing the proposal for advance appropriations, it is essential to discuss the current appropriations process for VA health care programs. The VHA is funded through multiple appropriations accounts that are supplemented by other sources of revenue. Although the appropriations account structure has been subject to change from year to year, the appropriation accounts used to support the VHA traditionally include medical care, medical and prosthetic research, and medical administration. In addition, Congress also appropriates funds for construction of medical facilities through a larger appropriations account for construction for all VA facilities. In FY2004, "to provide better oversight and [to] receive a more accurate accounting of funds," Congress changed the VHA's appropriations structure. The Department of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 2004 ( P.L. 108-199 , H.Rept. 108-401 ), funded VHA through four accounts: (1) medical services, (2) medical administration, (3) medical facilities, and (4) medical and prosthetic research. In FY2009, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ) renamed the medical administration account as the medical support and compliance account. To understand some of the implications of advanced appropriations discussed later in this report it is important to understand what each of these accounts currently fund. The medical services account covers expenses for furnishing inpatient and outpatient care and treatment of veterans and certain dependents, including care and treatment in non-VA facilities; outpatient care on a fee basis; medical supplies and equipment; salaries and expenses of employees hired under Title 38, United States Code; and aid to state veterans homes. In addition to the direct appropriation to this account, funds deposited in the medical care collection fund (MCCF) may be transferred to this account to remain available until expended. In its FY2008 budget request to Congress, the VA requested the transfer of food service operations costs from the medical facilities appropriations to the medical services appropriations, and the House and Senate Appropriations Committees concurred with this request. The medical support and compliance account provides funds for the expenses in the administration of hospitals, nursing homes, and domiciliaries, billing and coding activities, public health and environmental hazard program, quality and performance management, medical inspection, human research oversight, training programs and continuing education, security, volunteer operations, and human resources. The medical facilities account covers, among other things, expenses for the maintenance and operation of VHA facilities (including non-recurring maintenance projects ); administrative expenses related to planning, design, project management, real property acquisition and deposition, construction, and renovation of any VHA facility; leases of facilities; and laundry services. This account provides funding for VA researchers to investigate a broad array of veteran-centric health topics, such as treatment of mental health conditions; rehabilitation of veterans with limb loss, traumatic brain injury, and spinal cord injury; organ transplantation; and the organization of the health care delivery system. VA researchers receive funding not only through this account but also from the Department of Defense (DOD), the National Institutes of Health (NIH), and private sources. Historically, the major determinant of VHA's budget size and character was the number of operating beds—which was controlled by Congress. The preliminary budget estimate, to a large extent, was based on the funding and activity of the previous year. VHA developed system-wide workload estimates, by type of care, by forecasts submitted by field stations. Unit costs were derived from the field stations' reports of the estimated distribution of expenses by type of care. Costs associated with new programs were estimated by VA central office and added to the budget estimate. The costs associated with staffing improvements, pay increases and inflation were also added to this estimate. Therefore, it could be stated that the principal assumption at each phase of the budget formulation process was that the preceding year's budget was the starting point. In 1996, Congress enacted the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act of 1997 ( P.L. 104-204 ). This Act required VHA to develop a plan for the allocation of health care resources to ensure that veterans eligible for medical care who have similar economic status and eligibility priority have similar access to such care, regardless of where they reside. The plan was to "account for forecasts in expected workload and to ensure fairness to facilities that provide cost-efficient health care." In response to the above-mentioned Congressional mandate, as well as the mandate in the Health Care Eligibility Reform Act of 1996 ( P.L. 104-262 ) that required the VHA to establish a priority-based enrollment system, VHA established the Enrollee Health Care Demand Model in 1998. This model has evolved over time. The VHA's Enrollee Health Care Demand Model develops estimates of future veteran enrollment, enrollees' expected utilization of health care services, and the costs associated with that utilization. These 20-year projections are by fiscal year, enrollment priority, age, Veterans Integrated Service Networks (VISN), market, and facility. The VHA budget is formulated using the model projections. Each year, through the annual appropriations process, Congress appropriates funds to the accounts that comprise VHA. VHA's budget request to Congress begins with the formulations of the budget based on the Enrollee Health Care Projection Model (EHCPM) to estimate the demand for medical services among veterans in future years (a brief discussion of EHCPM is provided below). These estimates are then used to develop a budget request that is then included with the total VA budget request to Congress. To recognize the implications of funding some VHA accounts under an advance appropriation (AA), it is important to understand the current VHA EHCPM and how it is used to develop VHA's health care budget. While a complete description is beyond the scope of this report, this section provides a brief overview of the model. As described previously, VHA uses the EHCPM to forecast future resource requirements. The EHCPM model projects total expenditures for health care services in any given year by combining output from three model subcomponents: the enrollment projection model, the utilization projection model, and the unit cost projection model (A description of the EHCPM's three sub-models is given below). Outputs from these sub-models are then multiplied together for each of the 58 medical services (which include such services as inpatient medical, surgical, and psychiatric care; ambulatory care; pharmacy, including over the counter medications) for roughly 40,000 enrollee types. The enrollee types are defined by age category, by whether they were enrolled before or after eligibility reforms, by priority level, and by geographic sector. EHCPM applies four types of trend factors to account for general changes in medical costs and the anticipated changes in the efficiency of VA providers. The trend factors are utilization, inflation, intensity of service provision, and a measure of management efficiency. Moreover, the model accounts for anticipated changes in veteran morbidity and reliance on the VA health care delivery system, enrollment levels, and enrollment mix. Currently the modeled expenditures comprise approximately 84% of VHA's health care budget. The EPM is the least complex of the three sub-models. It develops projections by applying historic veteran enrollment rates to the forecast veteran population derived from U.S. Census data. Modeled enrollment rates are obtained by age, priority level, geographic sector, and participation in Operation Enduring Freedom (OEF) or Operation Iraqi Freedom (OIF) (OEF and OIF veterans are identified in the model as "special conflict status" veterans). The projected enrollee population is equal to current enrollment plus new enrollment minus deaths. Although enrollment rates reflect demographic trends in the veteran population, such as shifts in priority level and geographic migration, they do not account for trends in the generosity, availability, and affordability of private-sector health insurance that could lead veterans to enter or leave the VA health care system. The UPM is based on the Milliman Health Cost Guidelines (HCGs), a proprietary set of utilization-rate benchmarks derived from commercial data. The HCGs contain data on utilization for 37 of the 58 EHCPM health service categories. Milliman applies a complex set of adjustments to the HCG data to reflect the health status of VA enrollees, their reliance on VA, and the relative efficiency of VA facilities. Each year, utilization rates are adjusted to account for national trends in health care utilization and VA-specific trends in management efficiency. Since model management trends are calibrated against the local community in which each VA facility operates, projected changes over time in the efficiency of VA practice are implicitly tied to community practices. In a final step, adjusted HCG benchmarks are calibrated to actual VA workload in the model base year to account for differences between the VA and the private sector that are not captured by adjustment. Services without commercial counterparts (such as VA-specific outpatient mental health services, blind rehabilitation, and over-the-counter drugs and supplies) are projected directly from historical VA workload data. The average unit cost (that is, the cost of a particular medical service) is derived through the UCPM. This is done by allocating VA's base year budget obligation to base year VA workload in each service category. Many of the service categories in the UCPM are developed at a more detailed level than the service categories defined in the VA's cost accounting system. In these cases, the model relies on calculated relationships between VA cost levels and Medicare-allowable or billed charges to estimate VA unit costs by service category. Inflation and intensity trends are then multiplied by base year average unit costs to project unit costs in any given year. Usually, an appropriations act makes budget authority available beginning on October 1 of the fiscal year (FY) for which the appropriations act is passed ("budget year"). However, there are three types of appropriations that don't follow this pattern. They are: advance appropriations, advance funding and forward funding. These terms are defined below. An advance appropriation means appropriation of new budget authority that becomes available one or more fiscal years beyond the fiscal year for which the appropriations act was passed (that is beyond the budget year). For example, if the following language appeared in an appropriations act for FY2010, it would provide an advance appropriation for FY2011: "For medical services, $30,854,000,000 to become available on October 1, 2010 (the start of the FY2011)." Under the current scoring guidelines, new budget authority for an advance appropriation is scored in the fiscal year in which the funds become available for obligation. In this example, you would record the budget authority in FY2011. Advance funding is budget authority provided in an appropriation act to obligate and disburse (outlay) in the current FY funds from a succeeding year's appropriation. Advance funding is a means to avoid making supplemental requests late in the fiscal year for certain entitlement programs in cases where the appropriations for the current year prove to be insufficient. Forward funding is budget authority that is made available for obligation beginning in the last quarter of the FY for the financing of ongoing activities (usually grant programs) during the next FY. This funding is used mostly for education programs, so that obligations for grants can be made prior to the beginning of the next school year Several federal programs are currently funded under an AA or have been in the past. This section provides examples of two such programs. One program is still funded under an AA, while the second is no longer funded under an AA. The Corporation for Public Broadcasting (CPB) currently receives funding under an AA. One reason that has been cited in the literature for funding CPB under an AA is that it would "insulate public broadcasting from the year-to year financial and political pressures which annual appropriations imposed." Furthermore, according to the CPB, AA allows "CPB and grant recipients to include projected federal funding in their budget planning and program-acquisition processes two years before those budgets are implemented, and provides lengthy lead time for production of major programming" Another program funded under an AA was the Low Income Home Energy Assistance Program (LIHEAP). In 1990 ( P.L. 101-501 ), Congress authorized a July 1 st to June 30 th LIHEAP program year to allow states to plan for their heating/cooling seasons with knowledge of available funds. Therefore, in FY1993, Congress provided forward funding in the appropriations law and appropriated funds for FY1993 and an additional $1.4 billion for the 9-month period from October 1993 through June of 1994. Subsequently in FY1994, the program was funded for the period July 1994 through June 1995. In 1998, Congress authorized an advance appropriation for LIHEAP. As a result, the program was taken off the program year cycle and put back on fiscal years. LIHEAP was funded under an advance appropriation only in FY1999 and FY2000. There is no indication as to Congress' intention in changing this program from a forward funding to an advance appropriation. It could be assumed that it was meant to continue to give states some flexibility but without the complexities associated with program vs. fiscal years. Congress hasn't provided for an advance appropriation for LIHEAP in the appropriations laws since FY2000. Once again there is no publicly available information to provide any rationale for why Congress has not funded LIHEAP under an AA. As seen in this example it is possible for Congress to change various funding mechanisms (from a forward funding to an advance appropriation to a regular annual appropriation) for a program from time to time. Therefore, an AA does not guarantee that VHA health care appropriations would be insulated from the unpredictability of the appropriations process. As these examples illustrate, there are some federal programs that are currently funded under an AA. However, a majority of these programs are formula grant programs established by Congress to meet certain policy goals. These could not be equated to the largest integrated health care delivery system in the nation, and it is impossible to predict with any certainty the implications of funding certain VHA accounts under an AA. There are two broad issues related to advance funding for some accounts of VHA. The first issue is a budget enforcement issue related to current budget enforcement procedures in Congress, and the second relates to issues that may arise if such a proposal were to be implemented. An advance appropriation mechanism may not be able to insulate a program from budget enforcement and competition with other programs. Under the current congressional budget process, the House and Senate Budget Committees have adopted enforcement rules to maintain fiscal discipline; therefore, programs that are funded under an advanced appropriation (AA) need to be included in the yearly budget resolution. Congress may enforce the substantive provisions of the budget resolution through the use of points of order. Generally, these points of order prohibit the consideration of any legislation, or amendment that would cause a violation of the overall funding levels, the committee allocations, or the appropriations committees' subdivisions. In general, a point of order could be raised against any AA that causes a ceiling on AA to be exceeded and that is not specified in a list of accounts appropriate for funding by AA in that budget year. For instance, in the House FY2010 Concurrent Resolution on the budget ( H.Con.Res. 85 ), section 403 has placed limits on the amount and type of advance appropriations for FY2011 and FY2012, and listed the programs that are excepted from this budget enforcement rule. In the Senate FY2010 Concurrent Budget Resolution ( S.Con.Res. 13 ) certain accounts to be funded under an AA are included in the resolution. If these accounts are not listed a point of order could be raised, that would need a supermajority to overturn. H.Con.Res. 85 does not include language to exempt the medical services, medical support and compliance, and medical facilities accounts from any point of order. However, during the Senate debate of S.Con.Res. 13 , Senator James Inhofe offered an amendment ( S.Amdt. 742 ) that was adopted by the Senate. S.Amdt. 742 would allow for an advance appropriation for the medical services, medical administration, medical facilities, and medical and prosthetic research accounts of VHA and would not subject those accounts to a point of order under section 302 of S.Con.Res. 13 . Sections 402 and 424 of the conference report on the FY2010 Concurrent Resolution on the budget ( H.Rept. 111-60 ) have included language excepting the following accounts from point of order against advance appropriations: medical services, medical support and compliance, and medical facilities. Therefore, while the use of points of order may no longer apply to these accounts in the FY2010 Concurrent Budget Resolution ( H.Rept. 111-60 ), future budget resolutions may need to include language excepting these accounts. One concern for Congress would be the effects or impact of funding some accounts under an AA based on the estimates generated by the EHCPM. It has been acknowledged that "[VHA's] formulation of its budget is by its very nature challenging, as it is based on assumptions and imperfect information on the health care services [VHA] expects to provide." As stated previously, the EHCPM provides the basis for estimating VHA's budget request to Congress. While the EHCPM reasonably projects future enrollment estimates and is "likely to yield accurate projections in a stable policy environment," it has also been found that "the current specification of the EHCPM appears to lack the specificity to inform explicit scenarios regarding the relationships among VA benefit generosity, other sources of health coverage, veterans' enrollment decisions, and enrollee health status" Under such findings it is reasonable to assume that future year budget projections could have variances that could create budget shortfalls if there are unanticipated shocks to the VA health care system or to the surrounding policy environment. For instance, if under the current economic climate large numbers of veterans lose their employer provided health insurance coverage, and for the first time try to seek care from the VA health care system, the EHCPM may not be able to accurately forecast such a scenario. Furthermore, the recent RAND study on the EHCPM expressed concerns regarding the validity and accuracy of the current approach for projecting future expenditures under budget and policy scenarios beyond the VA's current capacity to provide care. While expenditures for medical services modeled through the EHCPM comprise about 84% of VHA's budget estimate to Congress, some programs such as long-term care are estimated separately by VHA and included in its budget estimates to Congress. The Government Accountability Office (GAO) has expressed concern with VHA's long-term care spending estimates because the estimates are based on cost assumptions that GAO believes to be unrealistically low and on a noninstitutional workload projection that appears to be unrealistically high. Furthermore, it has stated that "VA's long-term care spending estimates are questionable benchmarks for congressional budget deliberations." Given these concerns it is reasonable to consider whether funding VHA under AA could still create potential budget shortfalls, which Congress would have to address through a regular appropriations bill. Another issue that may arise would be how funding for VHA information technology programs including its electronic medical records system (Veterans Health Information Systems and Technology Architecture (VistA)) relate to funding the rest of the VHA under an AA . In October 2005, the VA began to reorganize its information technology (IT) functions to improve the management of its IT programs. Before the realignment, funding and approval of IT functions were controlled by each medical center director. The reorganization consolidated all IT functions throughout the VA under control of the VA Chief Information Officer (CIO). As a result of this reorganization, VHA's health IT budget was brought under central control. Currently, all IT programs within the VA are funded under the Information Technology account. Furthermore, to support health care, VA IT infrastructure provides VA facilities with voice services and data capture, processing, transmission, and analysis. Health care professionals maintain and transmit patient data and x-ray, MRI, and other images to serve veterans wherever service is required. In addition, VA is undertaking the migration of VistA into VA's new health care system, Health e Vet. Due to all these reasons, providing an AA for three accounts and funding IT accounts under a regular appropriation act could create a situation whereby, for example, VHA could not purchase computer software although it has procured medical equipment that needs software, or may not be able to transmit patient data through VA's IT infrastructure. Likewise, when VHA expands new services, based on funding in the medical services account, there is frequently an IT component that would need funding from the VA's IT budget. If Congress funds some accounts under an AA, and the IT budget under a regular appropriation then, for example, when a new community-based outpatient clinic (CBOC) is opened, the IT infrastructure that is needed to support the clinic may not be available. Another potential issue that may arise is VHA's ability to implement congressionally mandated policy changes. For instance, if Congress were to pass legislation to increase access to veterans in highly rural areas during FY2011, an advance appropriation might not be able to account for this legislative mandate, since funding for the medical services account would have already been appropriated for FY2011 during the FY2010 budget cycle. Although it may be not be as significant as the previous three implementation issues—since medical and prosthetic research account funds are available to VHA for a period of two years—funding some accounts of VHA under an AA and some accounts under a regular FY appropriation could potentially create accounting complexities for VA's medical research programs. Under the current legislative proposal ( H.R. 1016 ; S. 423 ), the following three accounts that comprise VHA would be funded under an AA: medical services, medical support and compliance, and medical facilities. Under this proposal the medical and prosthetic research account which funds VHA's research program would be excluded from being funded under an AA and would be funded under a regular FY appropriations act. This potentially could raise an issue with regard to timing of funding research projects and funding research support (personnel costs, administrative support, among other things). Under the current appropriations account set-up, research support from the medical care budget (distributed through the Veterans Equitable Resource Allocation (VERA) process ) includes one year funding for personal services costs for individuals on the medical care rolls who spend a portion of their VA time working on research projects, and includes administrative support provided to the research program by fiscal, engineering, acquisition and materiel management units of the VA. As stated before, this could potentially create a mismatch between funding research projects and funding research support. There are some options that might help Congress in deciding on the long-term financing of VA health care. One option would be for Congress to provide oversight and direction to VHA to modify its EHCPM so that it could provide better predictability for VHA funding in future years. VHA would have to develop analytic tools for measuring demand for health care, treatment capacity, and the fixed and variable costs associated with delivering care. Furthermore, forecasting the effects of VA policy and external influences on demand requires routine collection of data on veterans' employment, health insurance, health status, and overall health care utilization. These modifications could provide VHA and Congress with better estimates of funding needs, and thereby allow Congress to make informed policy decisions. Another option might be to create an independent entity modeled along the lines of the Medicare Payment Advisory Commission (MedPAC). Creation of such an entity could bring transparency to VHA's funding process and would create credibility, particularly among key constituent groups. MedPAC was established by the Balanced Budget Act of 1997 ( P.L. 105-33 ) to advise Congress on issues affecting the Medicare program. The Commission's statutory mandate includes advising Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program. Furthermore, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission meets publicly to discuss Medicare issues and policy questions and to develop and approve its reports and recommendations to the Congress. Such a program for VHA might independently analyze issues facing VHA and advise Congress on funding for both short-and long-term issues affecting health care for veterans. This could in turn provide an added layer of transparency and accountability to VHA's budget process.
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The Veterans Health Administration (VHA) of the Department of Veterans Affairs (VA) operates the Nation's largest health care delivery system, with about 222,000 employees supporting its mission. It is also the largest provider of health care education and training for medical residents and other health care trainees in the United States. In FY2008, VHA provided medical care to approximately 5.6 million unique patients and spent approximately $43.5 billion for medical care and research. A coalition of veterans' service organizations (VSOs) has been calling on Congress to provide VHA with a budget which is "sufficient, timely, and predictable." These organizations have asserted that VHA has underestimated its budget in the past. Moreover, VSOs contend that Congress has not enacted the VA budget by the beginning of the fiscal year. According to these organizations the delays in the enactment of the budget have exacerbated operational challenges—such as, differing capital expenditures, delaying recruitment, restricting acquisitions, limiting maintenance—faced by VHA network directors. To mitigate these issues VSO's have proposed that Congress change the funding process for VHA to an advance appropriation. In general, an appropriations act makes budget authority available beginning on October 1 of the fiscal year (FY) for which the appropriations act is passed ("budget year"). However, there are some types of appropriations that don't follow this pattern; among them are advance appropriations. An advance appropriation means appropriation of new budget authority that becomes available one or more fiscal years beyond the fiscal year for which the appropriations act was passed (that is, beyond the budget year). Under the current scoring guidelines (estimating the budgetary effects of pending legislation and comparing them to the budget resolution or to any limits that may be set in law), new budget authority for an advance appropriation is scored in the fiscal year in which the funds become available for obligation. In the 111th Congress, the Veterans Health Care Budget Reform and Transparency Act of 2009 (H.R. 1016 and a companion version S. 423) has been introduced. Under H.R. 1016 and S. 423, the following accounts that fund VHA—medical services, medical support and compliance, and medical facilities—would be funded as an advance appropriation beginning with FY2011. The funding would be under a discretionary budget authority, and the legislation calls for a study by the Comptroller General (of the Government Accountability Office) on the adequacy and accuracy of the budget projections based on VHA's Enrollee Health Care Projection Model (EHCPM). There are two broad sets of issues related to advance funding for some accounts of VHA: budget enforcement issues and implementation issues. Among budget enforcement issues a key issue is that an advance appropriation mechanism may not be able to insulate a program from budget enforcement and competition with other programs. Among implementation issues a key issue is that funding VHA under an advance appropriation, based on the EHCPM, could create budget shortfalls if there are unanticipated developments affecting the EHCPM. This report will be updated as events warrant.
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There is widespread awareness that the subject matter knowledge and teaching skills of teachers play a central role in the success of elementary and secondary education reform. Title II, Part A of the Higher Education Act (HEA) includes programs and provisions intended to improve the overall quality of the K-12 teacher preparation programs currently administered by higher education institutions, hold these programs accountable for the quality of their graduates, and strengthen recruitment of highly qualified individuals to teaching. The 110 th Congress will likely consider legislation that would reauthorize the HEA, including its provisions in Title II addressing the quality of the K-12 public school teaching force. The statutory authorities in the HEA expired at the end of FY2004; however, they have been recently extended and currently remain effective. This report provides an overview of the current programs and provisions of HEA Title II, Part A, describes available information on their implementation, and identifies a number of the key issues that may be part of a debate over the reauthorization of this legislation. The report begins with a discussion of the broader context within which the reauthorization of HEA Title II, Part A might occur. This section considers the current presence of higher education institutions in the preparation of K-12 teachers, as well as the growing federal involvement in activities designed to strengthen the quality of K-12 teaching. Higher education institutions are involved in multiple ways in preparing individuals to enter K-12 teaching. Approximately 1,200 institutions of higher education award undergraduate degrees in elementary and secondary education. In addition to earning baccalaureate degrees in education, other undergraduates get ready to teach by participating in a teacher education program while earning a degree in an academic subject area. Still other individuals enter teaching through post-baccalaureate certificate programs or master's programs offered by higher education institutions. Finally, alternative routes to teaching that target, for example, individuals changing careers, may also involve higher education institutions. The quality of higher education programs preparing K-12 teachers has been sharply called into question over the past several years. Teacher preparation programs have been criticized for providing prospective teachers with inadequate time to learn subject matter and pedagogy; for teaching a superficial curriculum; for being unduly fragmented, with courses not linked to practice teaching and with education faculty isolated from their arts and sciences faculty colleagues; for uninspired teaching; and for failing to prepare teachers to function in restructured or technologically equipped classrooms. Most recently, critics have pointed to high rates of failure of recent graduates on initial licensing or certification exams. One of the most publically reported instances of high failure rates was in 1998 when 59% of prospective teachers in Massachusetts failed that state's new certification exam. The results were reported by institution, prompting questions about the quality of the preparation and training prospective teachers had received from those institutions with low pass rates. During the 1990s, other states, such as Texas and New York, began tracking the pass rates of the graduates from their teacher preparation programs and sought to hold those programs accountable for the performance of their graduates on licensing exams. The federal government ventured into this area as a result of the reauthorization of the HEA in 1998. As will be explored in this report, Title II of the HEA authorizes several programs targeting K-12 teacher preparation programs for improvement. It also includes provisions to increase the extent to which higher education institutions are held accountable for the quality of their teacher graduates. Most recently, the 107 th Congress amended the Elementary and Secondary Education Act (ESEA) to make K-12 teacher quality a central requirement for elementary and secondary school districts and state educational agencies receiving funding under ESEA Title I, Part A. The No Child Left Behind Act of 2001 ( P.L. 107-110 ) amended the ESEA to require state education agencies to have plans ensuring that by the end of the 2005-2006 school year, all teachers teaching core academic subjects will be "highly qualified." Title II, Part A of the HEA (as amended by the Higher Education Amendments of 1998, P.L. 105-244 ) provides for three competitively awarded grants to improve K-12 teacher quality—state grants, partnership grants, and recruitment grants. Appropriated funds are to be divided as follows: 45% to state grants, 45% to partnership grants, and 10% to teacher recruitment grants. The FY2006 and FY2007 appropriations were $59.895 million and the FY2008 appropriation is $33.662 million. The complete appropriations history of the program is provided in Table 1 . These one-time, three-year competitive grants are awarded to the state governor unless state constitution or law designates another person, entity, or agency as responsible for teacher certification and preparation. Participating states must provide a matching amount in cash or kind from non-federal sources equal to 50% of the amount of the federal grant. State grant funds must be used for one or more of the following activities: holding teacher preparation programs accountable for the academic and teaching quality of the teachers they prepare; reforming teacher certification requirements; creating alternatives to traditional teacher preparation programs and alternative routes to teacher certification; creating mechanisms that enable local educational agencies (LEAs) and schools to recruit highly qualified teachers, reward academically effective teachers and superintendents, and expeditiously remove incompetent or unqualified teachers; and addressing the problem of social promotion. Priority in the awarding of state grants is given to applicants that have undertaken initiatives to reform certification requirements designed to improve teacher skills and content knowledge, reformed mechanisms to hold higher education institutions accountable for teacher preparation, or developed efforts to reduce the shortage of highly qualified teachers in high poverty urban and rural areas. Each state receiving a state grant must report annually to ED and the House Education and the Workforce Committee and the Senate Health, Education, Labor, and Pensions Committee on progress toward certain specified objectives. Among these are increasing achievement by all students; raising the academic standards required for entering teaching (including incentives to require an academic major in the subject or a discipline related to the one in which the individual plans to teach); increasing the pass rate on initial licensing assessments; increasing the number of teachers certified through alternative routes; increasing the percentage of secondary school classes in core subjects taught by teachers with academic majors in those or related fields, or who are able to demonstrate competence through subject tests or classroom performance in core subjects; increasing the percentage of elementary school classes taught by teachers who have academic majors in the arts and sciences or who can demonstrate competence through high levels of performance in core subjects; decreasing shortages of qualified teachers in poor urban and rural areas; increasing the opportunities for professional development; and increasing the number of teachers able to apply technology to the classroom. Failure to demonstrate progress by the end of the second year of a state grant can lead to termination of the grant by ED. These one-time, five-year grants are awarded competitively to partnerships that must include at least three entities: a partner institution, a school of arts and sciences at a higher education institution, and a high need local educational agency (LEA). Other entities may join the partnership such as the governor or state educational agency (SEA). Partnerships must match from non-federal sources 25% of the partnership grant in the first year, 35% in the second, and 50% in each succeeding year. No single member of the partnership can retain more than 50% of the grant funds. These grants must be used for the following: holding teacher preparation programs accountable for the academic and teaching quality of the teachers they prepare; providing preservice clinical experience to teacher candidates and increasing the interaction between higher education faculty and elementary and secondary school staff; and providing professional development to improve teachers' content knowledge and teaching skills. Partnerships may also support such activities as recruiting teachers; preparing teachers to work with diverse student populations; providing leadership training to principals and superintendents; and disseminating information on effective partnership practices. In awarding these competitive grants, ED is to give priority to applicants that involve businesses, provide for an equitable geographic distribution across the U.S., and encourage activities that carry the potential for creating improvement and positive change. Each partnership that receives a partnership grant must include an evaluation plan in its application. That plan must include objectives and measures that are similar to those on which states must report, with the inclusion of an objective to increase teacher retention in the first three years of teaching. Failure to demonstrate progress on these objectives and measures by the end of the third year of a partnership grant can lead to termination of the grant. These one-time, three-year grants are awarded competitively to states or eligible partnerships (meeting the eligibility criteria for the partnership grants). States and partnerships have the same matching requirements for these grants as they have under their separate grant programs (see descriptions above). Recruitment grant funds must be used for either of the following: teacher education scholarships, support services to help recipients complete postsecondary education, and followup services during their first three years of teaching (each year of assistance requires a year of teaching in high need LEAs); or activities enabling high need LEAs and schools to recruit highly qualified teachers. The authorizing statute appears to specify that recipients of recruitment grants must report annually to the Secretary concerning progress being made to achieve the purposes of Title II Part A, and that failure to demonstrate progress by the end of the second year of a recruitment grant can lead to termination of the grant. Any LEA or school that benefits from activities under HEA Title II must, upon request, provide parents of students with information about the subject matter qualifications of students' classroom teachers. The Secretary must report to the House Education and the Workforce Committee and the Senate Health, Education, Labor, and Pensions Committee regarding evaluation of the activities funded under this title, and disseminate successful practices and information on ineffective ones. Information on the implementation and the impact of the program is available from preliminary results coming from ED's four-year national evaluation of the partnership grant program, and a recent Government Accountability Office (GAO, formerly the General Accounting Office) report on all of Title II, Part A. Among the interim findings from ED's national evaluation of the partnership grant program are the following: partnerships are predominantly implementing the professional development school model; participating teacher preparation programs are changing their goals, and aligning their offerings with district and school standards; the partnerships are increasing the collaboration between education faculty and arts and sciences faculty; and new relationships are emerging that link partnership institutions and other entities, such as businesses and nonprofit organizations. This interim report offers descriptive information; evaluation of the impact of partnership grants on K-12 students' academic achievement will be reported on in the future. The GAO in its report described program implementation. In that context, it identified some difficulties the program has had, and will have in evaluating its impact, and cited a key funding problem. The GAO found that, in general, Teacher Quality Enhancement Grant projects are focusing primarily on reforming requirements for certification and for teacher preparation (85% of grantees surveyed; includes projects funded under all three programs), providing professional development to current teachers (85% of grantees surveyed), and recruiting new teachers (72% of grantees surveyed). GAO posited that evaluating projects' impact on teaching quality will be hard to do. The report is critical of ED for not approaching this task systematically and for failing to provide adequate guidance on the assessment and reporting requirements necessary to allow for such evaluation. Given that the state grants are, by statute, one-time only grants, GAO concluded that, without change to the law, ED could be unable to expend the state grant funding. As noted above, nearly all states and territories have received state grant funding. With few eligible to receive new grants, ED might not be able to comply with the mandate that 45% of the annual appropriation be devoted to state grants. As requested by ED, the FY2005 appropriations legislation overrides the 45-45-10 split. In its FY2005 request, ED estimated that, without this authority, more than $22 million of the FY2005 request could lapse (i.e., have to be returned to the Treasury). This section describes the general teacher education accountability requirements of Title II, Part A, and their implementation. All states and nearly all teacher education programs in the country are affected by the accountability provisions in the Teacher Quality Enhancement Grant program. States receiving funds under the HEA must prepare an annual report card for the Secretary of Education on the quality of teacher preparation including information on the pass rate of graduates on all assessments used for teacher certification; waivers of certification requirements, particularly for teachers serving in high and low poverty school districts and in different subject areas; state teacher licensing assessments and requirements; state standards for initial certification; alignment of state teacher assessments with state standards and assessments for students; alternative routes to teacher certification and the pass rates of individuals following such routes; and criteria being used to assess the performance of teacher preparation programs. Any institution of higher education with a teacher education program enrolling HEA-aided students must release an annual report to the state and the public detailing the certification pass rates of its graduates, a comparison of its pass rates with the average pass rates of all such programs in the state, and whether the program is designated as "low-performing" (see below). A higher education institution that fails to provide the required information in a timely or accurate manner may be fined up to $25,000. To continue receiving HEA funds, a state must establish procedures for identifying low-performing teacher preparation programs and for providing them with technical assistance. An annual list of low-performing programs and those at risk of such designation must be provided to the Secretary of Education. States set the criteria for determining low performance and may include data collected under Title II Part A, such as pass rates of graduates. An institution of higher education with a teacher education program that has lost state approval or funding because of its designation as low-performing is ineligible for professional development funding from ED, and cannot enroll any students receiving assistance under HEA Title IV (source of the major federal student aid programs) in its teacher preparation program. The Secretary of Education is required to prepare an annual report on the quality of teacher preparation based on information contained in the state report cards. The report is based on data submitted by each state describing the quality of teacher preparation in the state, including pass rates on teacher certification assessment, waivers of certification requirements, and the identification of low-performing teacher education programs. In June, 2002, the Secretary issued the first full annual report as required under this legislation. Entitled Meeting the Highly Qualified Teachers Challenge: The Secretary ' s Annual Report on Teacher Quality , the report concluded that the teacher preparation system in this country has serious limitations. Not only does acceptable performance on certification assessments differ markedly from state to state, ED found that most states, in setting the minimum score considered to be a passing score, set those scores well below national averages. Although the Title II legislation requires teacher programs to report on the pass rates of "graduates," in implementing this requirement, ED allowed teacher education programs to report the pass rates of "program completers." Institutions requiring passage of the initial certification exam as a condition for program completion had 100% pass rates. Three subsequent annual reports reiterate many of the findings included in the first report, but find that areas in which progress is being made to improve teacher quality. GAO has also reported on the implementation of the Title II accountability provisions. In its December 2002 report (cited above), GAO concluded that ED could not accurately report on the quality of teacher education programs in general given the limitations of the information being collected as part of Title II accountability provisions. The report was also critical of the use of the term "program completer" in determining pass rates, noting that institutions and states could make their teacher preparation programs appear more successful than they actually were. This section briefly identifies a number of issues related to the Teacher Quality Enhancement Grants that might be considered during an HEA reauthorization process. Issues addressing the grant programs funded under this authority are considered separately from those arising from the general accountability provisions applying to all states and nearly all teacher preparation programs. Congressional consideration of the grant programs (state, partnership, and recruitment) may include at least the following issues. It is probably too early to tell whether the three grant programs authorized by Title II, Part A have achieved their objectives. Funding has been awarded over five fiscal years. It does not appear that any grantees have had their grants revoked for failing to demonstrate progress. The sole national evaluation of Title II, for which we have only preliminary results, is focused on the partnership grants. Further, as GAO noted in its report, evaluating the impact of Title II grants in general may be difficult given ED's administration of the programs. The current statute establishes a reporting and evaluating process applying to all grantees, with continued funding conditioned on demonstrating progress. In light of the GAO findings, the Congress may consider whether this process is adequate but not well implemented, or whether the process itself should be amended. As ED and GAO have observed, the mandated division of the annual appropriation for these programs and the one-time only nature of the state grants raise the prospect of ED being unable to expend fully the state grant portion of the appropriation. One or the other of these features of the current program structure will probably have to be modified if future funding is to be fully spent. The funding structure issue raises questions about the appropriate mix of programs and activities being funded under this authority. ED requested FY2004 and FY2005 appropriations authority to allow state grant funds to shift to partnerships; such authority was included in the FY2005 appropriations legislation. During the reauthorization process, the Congress may consider where the emphasis should be placed among these kinds of grants or the kinds of activities being supported. How important is it to have SEAs involved in addressing the improvement of teacher preparation or in strengthening teacher recruitment? Is the interaction among the various entities engaged in partnership grants likely to have a significant impact on the quality of teacher preparation and recruitment, and, if so, should support for partnerships be expanded? How should the Congress respond to the concern expressed by various higher education associations that the Title II programs offer little or no direct support for improving teacher preparation at higher education institutions? Where should the balance be placed among investment in such activities as teacher preparation, teacher recruitment, professional development, and accountability? How much support should be directed to alternatives to traditional teacher preparation programs and alternative routes to certification? The general accountability provisions of Title II, Part A applicable to states and higher education institutions with teacher preparation programs have generated significant debate since their inception. Several of the issues that have arisen are briefly identified below. As described earlier in this report, the standards for identifying teacher preparation programs as low-performing under Title II are set by each individual state. These may or may not involve the various criteria in the reports required from institutions and states, such as the pass rates of graduates on initial licensure exams. Federal consequences for an institution identified as low-performing flow only if its state takes specified action. To date, relatively few institutions have been identified as low-performing under the Title II provisions. Congress may consider whether to modify this framework. Proposals may be considered to bring the federal government more directly into the process through such steps as setting the low-performance standards or imposing federal penalties independent of any state action against the teacher preparation program. Alternatively, given how recently the current framework was initiated, some may want to maintain it without significant change and see what impact it has over time. Still others may argue for scrapping this federal effort since the standards are inconsistent across states. Congress may consider whether the emphasis in the Title II accountability process on licensing exam pass rates should be constrained or expanded. The utility of the current pass rate-based system from a national perspective may be limited because the selection of certification exams and the setting of passing scores are state specific and do not easily allow for interstate comparisons. Further, recent research concludes that many current licensing exams are not rigorous, measuring essentially basic skills. Increased institutional pass rates on such exams may say relatively little about whether teacher preparation programs are graduating students who will be good teachers. Nevertheless, the premise that teacher preparation programs should graduate students who can pass initial credentialing exams does not appear to be at issue. Indeed, there is some evidence that higher education institutions may respond to low pass rates with, what one set of researchers described as, "innovative strategies to enhance the content knowledge of prospective teachers as well as their writing and reading skills." For some policymakers, the limitations of the present system may suggest that the current federal involvement is but an initial step in a multi-step process necessary to improve teacher preparation program quality. For example, consideration may be given to establishing a single, nationwide standard, although such a proposal is likely to prove politically controversial. For others, the reporting burden and difficulty in making cross-state comparisons may suggest a refocusing of these provisions, perhaps to measures of state support for teacher preparation or the alignment of state certification exams with state standards for teacher preparation program approval. One of the more specific issues that the Congress may debate during the reauthorization process is the calculation of pass rates. This debate is likely to focus particularly on the 100% pass rates reported by some states and many institutions. As described earlier, such rates resulted in part from decisions made by ED regarding the definition of a graduate and in part from institutional and state policies. To the extent that increasing numbers of institutions report 100% pass rates the utility of these rates as an accountability measure is undercut. Congress may consider various alternatives to address this issue. For example, institutions might be required to report the extent to which graduates passed certification exams the first time they took them, regardless of how the institutions define a graduate. Alternative measures to gauge the teaching effectiveness of graduates of a program might be considered, such as changes in the academic performance of a teacher's students or expressions of school administrator satisfaction or dissatisfaction with a program's graduates.
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The Teacher Quality Enhancement Grants program (Title II, Part A of the Higher Education Act, or HEA) seeks to improve K-12 teacher preparation programs at higher education institutions. Title II Part A authorizes three types of competitively awarded grants—state grants, partnership grants, and recruitment grants—with the annual appropriation divided 45%, 45%, and 10% respectively among these kinds of grants. State grants are one-time, three-year grants for such activities as holding teacher preparation programs accountable for the quality of their graduates or reforming teacher certification requirements. Partnership grants are one-time, five-year grants to partnerships that must include at least three entities: an institution with a high performing teacher preparation program, a school of arts and sciences, and a high need school district. Among required uses are teacher preparation program accountability and professional development. Recruitment grants are one-time, three-year grants to states or partnerships, supporting scholarships with a teaching service requirement or activities to recruit highly qualified teachers for high need districts and schools. States receiving HEA funds must report annually on the quality of teacher preparation, including information on the pass rates of graduates on initial certification assessments. Higher education institutions enrolling HEA-aided students in their teacher preparation program must report annually detailing, among other things, the certification exam pass rates of graduates. States must establish procedures for identifying low-performing teacher preparation programs. If states withdraw approval or funding due to this designation, the affected programs cannot enroll students receiving HEA Title IV federal student aid. During the HEA reauthorization process, grant-related issues may include program effectiveness; mandated division of the annual appropriation when most states have received these one-time only grants; and the mix of kinds of grants and activities. Accountability issues may include inconsistency across states in standards for identifying low-performing teacher preparation programs; effectiveness of pass rate-based accountability for teacher preparation programs; reporting by states and institutions of 100% pass rates; and possible alternatives to the current framework. This report will be updated as events warrant.
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The growth of the unauthorized (also called illegal or undocumented) alien population during the 1990s coupled with changes in the distribution of the population within the United States has increased interest in funding of emergency medical treatment for this population. Although unauthorized aliens are ineligible for most federal means-tested programs, all aliens regardless of status are eligible for emergency Medicaid. Statute requires that all Medicare-participating hospitals with emergency departments treat all medically unstable patients and women in active labor. Between FY2001 and FY2004, there were no other federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens. On December 8, 2003 the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) which contains a provision to provide reimbursement to states for emergency care afforded to unauthorized aliens. Additionally it is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status. Currently, noncitizens' eligibility for federal Medicaid benefits largely depends on their immigration status and whether they arrived (or were on a program's rolls) before August 22, 1996, the enactment date of Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Legal permanent residents (LPRs) entering after August 22, 1996, are barred from Medicaid for five years, after which coverage becomes a state option. States have the option to use state funds to provide medical coverage for LPRs within five years of their arrival in the United States. Refugees and asylees are eligible for Medicaid for seven years after arrival. After the seven years, they may be eligible for Medicaid at state option. LPRs with a substantial (10-year) work history or a military connection are eligible for Medicaid. LPRs receiving Supplemental Security Income (SSI) on or after August 22, 1996 are eligible for Medicaid since Medicaid coverage is required for all SSI recipients. Finally, in the case of LPRs sponsored for admission after 1997, the income and resources of their sponsor are "deemed" available to them when judging their eligibility. Nonetheless, all aliens regardless of status who otherwise meet the eligibility requirements for Medicaid are eligible for emergency Medicaid. The Medicaid program is authorized by Title XIX of the Social Security Act, as amended. It is a federal/state matching program of medical assistance for low-income persons who are aged, blind, disabled or members of families with dependent children. Generally, as noted above, noncitizens face additional eligibility restrictions for Medicaid. In general, unauthorized aliens are ineligible for Medicaid with the exception of emergency Medicaid. Emergency Medicaid covers unauthorized aliens, nonimmigrants, and LPRs within the first five years of arrival for emergency conditions if they meet the other eligibility requirements of the program. Unauthorized aliens who are otherwise eligible for Medicaid except for their illegal status may receive "medical assistance under Title XIX of the Social Security Act ... for care and emergency services that are necessary for the treatment of an emergency medical condition (as defined in Section 1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure." This language from the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 restates and carries forward a provision which had been enacted 10 years previously as an amendment to the Medicaid provisions of the Social Security Act. Section 1903(v)(3) defines "emergency medical condition" as: a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—(A) placing the patient's health in serious jeopardy, (B) serious impairment to bodily functions, or (C) serious dysfunction of any bodily organ or part. Like other Medicaid recipients, unauthorized aliens must demonstrate that they are state residents, and many are not (or are unable or unwilling to prove that they are). This is particularly true of unauthorized aliens requiring emergency hospital care during attempted illegal entries. To be eligible for emergency Medicaid, unauthorized aliens must also be poor and either aged, disabled, or members of a family with children. Working age single males, for example, are generally not eligible for any form of Medicaid regardless of their financial status or residence. The reimbursement provision in P.L. 108-173 is similar to a provision in the Balanced Budget Act (BBA) of 1997 which appropriated $25 million each year, FY1998 through FY2001, for additional funding for state emergency health services for unauthorized aliens. The BBA specified that the funds should be divided among the 12 states with the highest number of unauthorized aliens, based on estimates provided by the former Immigration and Naturalization Service (INS). The money was allocated to each state based on the number of unauthorized aliens in the state as a percent of the unauthorized population of all 12 states. According to a notice published in the Federal Register by HHS's Centers for Medicare and Medicaid Services (CMS), the funds were available to eligible states for both "emergency medical services furnished to unauthorized aliens who, except for their alien status, would otherwise qualify for Medicaid and for amounts paid for services furnished to aliens who do not meet the Medicaid eligibility requirements." The emergency medical services covered were those defined by the Social Security Act, §1903(v)(3), quoted above. The notice included a table designating the 12 eligible states and their designated yearly allotments based on INS's estimates of their unauthorized alien population ( Table 1 ). Table 1 shows that 45% of the money appropriated in the Balanced Budget Act of 1997 for emergency services for unauthorized aliens was allocated to California which had 45% of the total unauthorized population of the 12 states. In addition, 89% of the total funding was allocated to the five states with the highest number of unauthorized aliens. The total cost incurred by the states for unauthorized aliens is often an issue since many contend that immigration, especially border control, is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, some argue that the burden to pay for immigration related cost should be born by the federal government not the states. However, others note that the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents of the provisions in PRWORA did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. CMS collected data from the 12 states with the highest number of unauthorized aliens on their total expenditures on emergency medical expenses for unauthorized aliens. Table 2 shows total emergency health service costs for unauthorized aliens, including both emergency Medicaid and expenditures on emergency services for individuals who did not meet the Medicaid eligibility requirements. It is important to note that these costs are reported by the states, and different states use different accounting procedures. It is unlikely, for example, that New Jersey and Washington spent no money on emergency services for unauthorized aliens. The data shown in Table 2 are the closest approximation available of the cost of emergency services for unauthorized aliens. With the caveats that the data reflect emergency services as defined by Medicaid and that differences in the percent paid by states may be the result of state differences in accounting procedures, the data show for those reporting both federal and state shares that the federal government pays more than half the cost of emergency services for unauthorized aliens. California, the most heavily impacted state, reported that 53% of its emergency costs for unauthorized aliens was reimbursed by the federal government. Maryland reported that 50.1% of its emergency cost was reimbursed, which is the smallest proportion of the states that reported both federal and state shares. In May 2004, the Government Accountability Office (formerly General Accounting Office) (GAO) released a study entitled Undocumented Aliens: Questions Persist about Their Impact on Hospitals ' Uncompensated Care Costs . The study concluded that since hospitals do not generally collect information on patients' immigration status, an accurate assessment of the impact of unauthorized aliens on hospitals' uncompensated care costs "remains elusive." GAO surveyed 503 hospitals, but as a result of the low response rate to the survey, was unable to determine the cost of uncompensated care provided to unauthorized aliens. In addition, over 95% of the hospitals which responded to the survey used the lack of a Social Security number as the only method to identify unauthorized aliens. It is unclear whether this method over or under estimates the amount of care provided to unauthorized aliens. The GAO study also reviewed the reported Medicaid spending for the 10 states with the highest estimated unauthorized populations: Arizona, California, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, North Carolina, and Texas. Although states are not required to report to CMS the amount of Medicaid expenditures for unauthorized aliens, several states provided data or suggested to GAO that most of their emergency Medicaid expenditures were for services provided to unauthorized aliens. In addition, five of the states reported that more than half of emergency Medicaid expenditures were for labor and delivery services. GAO found that emergency Medicaid expenditures for the 10 states have increased over the past several years but remain a small proportion, less than three percent, of each state's total Medicaid expenditures. Nonetheless, the study found that, between FY2000 and FY2002, in nine of the 10 states reviewed the state's emergency Medicaid expenditures grew faster than the total Medicaid expenditures. In addition, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens. The provision, which is to be administered by the Attorney General in consultation with the Secretary of HHS, has not been implemented to date. The funding is subject to a number of restrictions, as follows: Funding is "subject to such amounts as are provided in advance in appropriation Acts." To date no funds have been appropriated. Funds are available for reimbursement "only to the extent that such costs are not otherwise reimbursed through any other Federal program." No payment can be made "with respect to services furnished to an individual unless the immigration status of the individual has been verified through appropriate procedures" established by the Secretary of HHS and the Attorney General. Obviously, the lack of an appropriation has been the primary impediment to the implementation of this provision. However, according to HHS and former INS officials, the other restrictions would also pose difficulties. First, it is difficult to determine that no other federal funding exists, given the availability of other non-specific funding sources (e.g., Medicaid DSH payments, discussed below). Second and probably more seriously, there is no procedure for determining the immigration status of hospital patients. IIRIRA also authorized reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in state custody. In 1997, the Conference Committee on the FY1998 Commerce, Justice, and State (CJS) Appropriations Act adopted the recommendation of the House Appropriations Committee for "a pilot project for reimbursement for emergency ambulance services in Nogales, Arizona." The Nogales pilot project began at the end of FY1998. A subsequent report to Congress on the feasibility of expanding the Nogales project, did not recommend expanding or continuing the project since the Border Patrol had to redirect enforcement resources to administer the reimbursement of ambulance costs. The report suggests that if Congress wants to create a program for reimbursement that it "should develop a coordinated policy that includes the Department of Health and Human Services (HHS), State and local health services, and other authorities. We do not believe that under current law the HHS has the authority to reimburse States for this activity." Although there is no Medicaid funding for the specific purpose of reimbursing hospitals for the cost of unauthorized aliens, the Medicaid statute requires that states make disproportionate share (DSH) adjustments to the payment rates of certain hospitals treating large numbers of low-income and Medicaid patients, including unauthorized aliens. These payments implicitly recognize the disadvantaged situation of hospitals treating large numbers of Medicaid patients and other patients with no insurance. States must define hospitals in their state Medicaid plans qualifying as DSH hospitals and the DSH payment formulas. However, the identification of unauthorized aliens among the Medicaid patients and uninsured as a component of either the DSH designation or payment formula is not required, and thus, there are no data on the amount of DSH payments used for unauthorized aliens. There were several bills introduced in the 107 th Congress which would have created a grant program to provide additional funding to states for emergency health services for unauthorized aliens. These programs would have been similar to the one created in BBA97. Although none of the bills passed, the bills are similar to legislation that has been introduced in the 108 th Congress. S. 169 introduced by Senator Kyl on January 24, 2001, would have authorized $2 billion in each fiscal year FY2002-FY2005 to be divided among the 17 states with the highest number of unauthorized aliens. S. 2449 introduced by Senator Bingaman on May 2, 2002, would have appropriated $50 million in each fiscal year FY2003-FY2007 to be divided among the 15 states with the highest number of unauthorized aliens. The bill would have also amended PRWORA to allow states to use state funds to provide health benefits to all noncitizens regardless of immigration status. On June 24, 2002, during the Senate Finance Committee mark-up of the Work, Opportunity, and Responsibility for Kids (WORK) Act of 2002 (substitute H.R. 4737 ), Senator Kyl introduced an amendment that would have authorized additional funding to certain states to cover the emergency medical costs of treating unauthorized aliens. The measure was defeated. Section 1011 of The Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) signed into law on December 8, 2003, provides reimbursement states for emergency care afforded to unauthorized aliens. For each fiscal year FY2005-FY2008 the provision appropriates $250 million of which: $167 million is allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; and $83 million is allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states. P.L. 108-173 directs the Secretary of Health and Human Services (HHS) to pay local governments, hospitals, or other providers located in the state (including providers of services rendered through an Indian Health Service facility) for the costs of furnishing emergency health care services to unauthorized aliens during that fiscal year. It also requires the Secretary of HHS to establish, no later than September 1, 2004, a process, including measures to protect against fraud and abuse, under which entities would apply for reimbursement for claims associated with emergency health care services provided to unauthorized aliens. Advanced payments will be made quarterly based on the applicants' projected expenditures. (See Appendix for the preliminary allocations under this provision.) On July 21, 2004, CMS released a policy paper outlining the proposed implementation approach and general framework for submitting claims under Section 1011. The paper states that since the legal obligation to provide emergency treatment only applies to those hospitals participating in the Medicare program, that only Medicare participating hospitals can apply to receive funds under Section 1011. According to the CMS policy paper, the grant program would also cover ambulance transportation of an alien to a hospital to be treated for an emergency medical condition. CMS also requires that providers seek funds from all available funding sources before requesting payment under Section 1011. CMS proposes a single-payment pool for each state from which each provider in the state would receive payment on a quarterly or annual basis. The CMS policy paper states that for payment under Section 1011, hospitals must collect and maintain information regarding the immigration status of the patients. CMS proposes that providers request information on a patient's citizenship or immigration status prior to discharge, but after the patient is identified as self-pay and not Medicaid eligible. Individual level immigration information would be maintained at the hospital and not routinely transmitted to CMS, as CMS would designate a contractor to review and determine the number of claims and the percentage of patients qualifying for reimbursement. CMS contends that this approach would minimally increase paperwork for hospitals, as much of the information can be gathered from existing Medicaid enrollment forms. Nothing in the paper suggests that the information should be transmitted to the Department of Homeland Security (DHS); however, some are concerned that DHS could use hospital records to locate unauthorized aliens, making aliens less likely to seek medical treatment. Reportedly, after receiving comments on the proposed implementation plan (i.e., the policy paper), CMS has revised the policy, and will not require providers to ask about a patient's immigration status to receive reimbursement under §1011. In addition, the conference report for the Consolidated Appropriations Resolution, 2003 ( H.Rept. 108-10 ) instructs the former INS to provide a one-time payment to hospitals in Cochise, Pima, Santa Cruz, and Yuma Counties, Arizona for unreimbursed costs associated with treating unauthorized immigrants. The conferees directed the payment because they "believe hospitals in Cochise, Pima, Santa Cruz and Yuma Counties, Arizona are bearing an unfair burden as a result of illegal immigrants injured as a result of interaction with the Border Patrol, ... [and that] this one-time funding infusion is appropriate until a nation-wide solution is developed in fiscal year 2003." The conferees also directed the former INS, in coordination with the Department of Health and Human Services, to provide a report by July 1, 2003 to the Committees on Appropriations with recommendations to address the issue of unreimbursed cost of treating unauthorized aliens. The "Local Emergency Health Services Reimbursement Act of 2003" ( S. 412 ) introduced by Senator Kyl on February 13, 2003, and its companion the companion bill ( H.R. 819 ) introduced by Representative Kolbe on February 26, 2003, are similar to Section 1011 in P.L. 108-173 . S. 412/H.R. 819 would appropriate $1.450 billion for each fiscal year FY2004 to FY2008 to reimburse states for emergency care to unauthorized aliens. Of the monies appropriated: $957,000,000 would be allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; $493,000,000 would be allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states. The bills specify that monies paid to the states from this program may only be used to make payments for costs incurred by the provision of emergency health care to unauthorized aliens, and require the reallocation of unused funds. H.R. 690 introduced by Representative Gutierrez on February 11, 2003 would extend medicaid coverage for organ transplants to aliens under the age of 18 who are residing in the United States on the date that the bill is enacted or who develop the medical condition necessitating the transplant while residing in the United States. Representative Flake introduced H.R. 1515 on March 31, 2003. H.R. 1515 would provide reimbursement for the unreimbursed costs of emergency medical care to aliens paroled into the United States for medical reasons. The bill would direct the Secretary of the Department of Homeland Security to create a program to reimburse hospitals and other providers of emergency medical care (e.g., physicians and ambulance services) for care to aliens paroled into the country for medical reasons, and would authorized such sums as necessary for the program. H.R. 3722 was brought to the floor under suspension of the rules on May 17, 2004. The vote to suspend the rules and pass H.R. 3722 occurred on May 18, 2004 at which time the motion was defeated 331 to 88. H.R. 3722 introduced by Representative Rohrabacher on January 21, 2004 would have amended §1011 of P.L. 108-173 to place certain conditions on the reimbursement to health care providers for emergency health services for unauthorized aliens. H.R. 3722 would have required as a condition of reimbursement that eligible providers obtain information on the alien's citizenship, immigration status, address in the United States, financial data which is required of non-indigent patients including health insurance status, and current employer in the United States (if applicable) as well as a biometric identifier. The bill would have also required that the health care provider submit the alien's information in an electronic format to the Secretary of Homeland Security. H.R. 3722 would have also made removable (deportable) aliens who do not provide payment for the provided health services, and do not give accurate information on the required questions or a biometric identifier. In addition, H.R. 3722 would have made employers of unauthorized aliens for whom the hospital received financial reimbursement for medical services, liable to HHS for the amount of the payment with certain exceptions. Lastly, the bill would have required the Secretary of State to do a study on the appropriateness of negotiating treaties under which countries provide for the international medical evacuation of their nationals who require emergency health care in the United States and provide funding through visa surcharges to pay for the evacuation of nationals seeking emergency health care from countries without treaties. Those in favor of H.R. 3722 argued that the bill would not have forced hospitals to report unauthorized aliens as only those hospitals who wished to be reimbursed for medical expenses provided to unauthorized aliens would have had to send reports to DHS. Those opposed to the bill argued that the added paperwork would be burden to hospital staff, and would detract from their other duties. Introduced on May 13, 2004 by Representative Jo Ann Davis, H.R. 4360 would make the grant program to provide reimbursement for emergency care afforded to unauthorized created in §1011 of The Prescription Drug Act ( P.L. 108-173 ) permanent in FY2009, and beginning in FY2009 would allocate $250 million from foreign aid funds to pay for the reimbursement. This amendment was introduced by Representative Thomas Tancredo during floor debate on the FY2005 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies ( H.R. 5006 ). The amendment would have prohibited CMS from using any appropriated funds to pay the salaries of personnel administering the grant program, created in Section 1011 of The Prescription Drug Act of 2003, which provides reimbursement for emergency care afforded to unauthorized aliens. The amendment failed by voice-vote. There are several policy issues concerning the provision of federal funding for states with large populations of unauthorized aliens. As discussed above, the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. Nonetheless, others argue that immigration is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, they argue that the burden to pay for immigration-related cost should be born by the federal government, not the states. Additionally, some question the wisdom of only providing funding to help cover the costs of unauthorized aliens when no federal funds are provided to states to cover the emergency medical costs of nonimmigrants and legal permanent residents who have been in the country for less than five years. Another issue concerns the lack of reliable data on the number and distribution of unauthorized aliens. As the 2000 census of the U.S. population is being released, preliminary data analyses offer competing population totals that, in turn, imply that illegal migration soared in the late 1990s and that estimates of unauthorized residents of the United States have been understated. The Department of Homeland Security estimates that there are about 7 million unauthorized aliens living in the United States. In testimony before the House Committee on the Judiciary Subcommittee on Immigration and Claims, Jeffrey Passel, a demographic researcher at the Urban Institute, offered an estimate of 8 to 9 million unauthorized residents. At the same hearing, economists from Northeastern University using employment data reported by business establishments as well as 2000 census totals concluded that the unauthorized population may be 11 million. These discrepancies suggest that assessments of the unauthorized population by state may be an inaccurate and problematic basis for distributing grant funds. None of these estimates addresses the distribution among states of the unauthorized population; however, anecdotal reports suggest that unauthorized aliens may be dispersed among many states rather than concentrated in a few states as previously presumed. If this is true, a program which limits the number of states eligible for additional reimbursement for medical treatment of unauthorized immigrants may exclude smaller states that have proportionally high numbers of unauthorized aliens in relation to their population, but not high absolute numbers of unauthorized aliens.
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There has been interest in the amount of money spent, as well as the amount of federal funds available to provide emergency medical care to unauthorized (illegal) aliens in the United States. It is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status. Additionally, prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) on December 8, 2003 there were no federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens (undocumented immigrants). Although the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) barred unauthorized aliens from receiving most Medicaid benefits, they are eligible for emergency Medicaid services. Unauthorized aliens are also eligible for emergency medical services provided by the states. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) signed into law on December 8, 2003 includes a provision, §1011, to provide reimbursement to states for emergency care afforded to unauthorized aliens. For each fiscal year FY2005-FY2008 the provision appropriates $250 million to states to be distributed based on estimates of the number of undocumented aliens residing in the state and on the number of apprehensions for the six states with the highest number of apprehensions. This program is similar to one created in the Balanced Budget Act of 1997 (BBA97) which had expired. In addition, the Illegal Immigrant Reform and Immigrant Responsibility Act of 1996 (IIRIRA) authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens, and reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in custody. Neither program has been funded. However, in FY1998 Congress appropriated money for a pilot program in Nogales, Arizona to attempt to reimburse state and local governments for ambulance services. INS concluded from the pilot program that reimbursement for ambulance services was not a feasible program. H.R. 1515 would provide reimbursement for the costs of emergency medical care and ambulance services furnished to aliens paroled for medical reasons. The provisions in PRWORA which limited immigrant access to public benefits were the result of the desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. Nonetheless, many contend that since the federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens the burden to pay for immigration related costs should be born by the federal government not the states. This report will be updated as needed.
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Forests respond to various factors, such as amount of sunlight, temperature levels and variations, precipitation amounts and timing, and a host of disturbances (fire, pests, invasive species). Changes in climatic patterns—whether natural or human-induced—could affect these factors, possibly increasing temperatures, altering the hydrologic cycle, and exacerbating forest disturbances. Such changes could alter the dynamic balance of forest ecosystems, shifting forest habitats north and to higher elevations. Many are concerned that the natural ability of U.S. temperate forests to adapt to changing climate conditions may be insufficient to sustain production of desirable ecosystem services—timber, recreation, water, carbon sequestration, and more. Some predictions show climate-induced habitat shifts outpacing the natural rate of forest migration and dispersal, making forests vulnerable to pests, diseases, and invasive species and to extreme events, like wildfires, all of which can damage ecosystem services, such as water quality and desired animal habitats. Others contend that ecosystems have been able to adapt in the past, and they will be able to adapt again. Forest management can affect the ability of forests to respond and adapt to changing conditions. To date, legislative direction and funding for management of federal lands and for federal assistance in managing nonfederal lands has, at most, indirectly encouraged management for resilience (recovery from) and adaptation to changing conditions. Legislation on forest management generally has been either broadly focused—very general direction in climate or energy bills, for example—or specific to regional or local forestry problems, such as the extensive mountain pine beetle infestation in the northern and central Rocky Mountains. This report focuses on management approaches that might be employed to promote forests that are resilient and adaptable to disturbances and changing conditions, regardless of the cause. Forests can be managed to improve their resilience and adaptation to disturbances and possible climatic change and variability. Diverse forests can sustain the production of desired ecosystem services, such as clean water, wildlife habitat, recreational opportunities, timber and biomass, carbon sequestration, and more. Forest management for diversity could include changes in wildfire management, forest health, timber production, and forest regeneration; more intensive adaptation practices include reducing forest fragmentation, providing habitat corridors, and assisting migration. These practices are discussed in Appendix B . Domestic U.S. forests are dominated by relatively few forest types (compared to tropical forests), but contain an array of species mixes, as described in Appendix A . Within each of the many temperate forest types, often relatively few tree species dominate the overstory, and more tree and shrub species occur in the understory. The species and species mixes have evolved and adapted to survive within certain climatic conditions and complex ecological relationships. Historic temperature patterns and forest dynamics suggest that habitats are changing and will continue to change. However, some have expressed concerns that the predicted rate of change will exceed the natural adaptive rate, decreasing total temperate forest area. Thus, changes in climatic patterns are seen as potentially altering domestic forests and possibly depreciating their value in providing economically valuable goods and services. The 750 million acres of U.S. forests are owned and managed by many entities—the federal government, states, local governments, corporations, and other private landowners. The relative dominance of these landowner groups varies regionally, as shown in Appendix A . Federal forests are most common in the West. States and local governments own significant forestlands, especially in the Midwest (Minnesota, Michigan, and Wisconsin) and mid-Atlantic (Pennsylvania and New York) regions. Corporate forests tend to be concentrated in the most timber-growing productive areas—the Pacific Coast and the South—and are generally managed for industrial wood products. Other private forests dominate in the eastern regions. These landholdings vary widely in size and purpose, from small holdings (e.g., summer homes) that may occasionally sell timber for extra revenue to tens of thousands of acres managed by hunt clubs, land trusts, and other organizations. The principal federal forest management agency—the Forest Service in the Department of Agriculture (USDA)—is attempting to address the possible effects of climate change on land and resource management. In July 2010, the Forest Service issued its National Roadmap for Responding to Climate Change. This strategic plan provides general direction for national forest adaptation, for agency capacity-building, and for cooperation among landowners since climate changes affect all forests. The management intensity and expertise applied to private forests vary widely. The Forest Service and Natural Resources Conservation Service (also in USDA) have numerous programs to provide technical and some financial assistance to non-corporate private forest owners, directly and through state forestry organizations. Assistance programs could provide support for forest resilience and adaptation by non-corporate forest owners. Domestic forests have experienced significant changes in the past 30 years or more, with greater tree mortality from drought, wildfires, and a host of insects and diseases. Even under modest greenhouse gas (GHG) emissions scenarios, climate change is projected to increase temperatures and climate volatility, alter hydrology and water availability, and substantially expand the extent and impacts of disturbances. Change is not inherently bad, and can in many instances lead to desirable new forests and ecosystem services. The new forests would likely be a mix of existing natural forest species and exotic species, and the result could be radically different ecosystems. It is unclear whether these new ecosystems would continue to provide timber, wildlife habitat, and other economically beneficial values. There is a broad scientific consensus that average temperatures in the lower atmosphere have increased over the last century, and this trend is expected to continue and possibly increase. Forest species are adapted to specific habitats, generally defined by a particular pattern of temperature, hydrology, and other climatic factors. Warming temperatures could both alter existing habitats and their corresponding species mixes and spur habitats and species to migrate. In general, rising temperatures are expected to cause habitats to migrate upslope and expand northward, while contracting at their southern extremes. Generally, oak-hickory, oak-pine, ponderosa pine, and arid woodland habitats are expected to expand, while alpine and subalpine habitats, like spruce-fir and aspen-birch, are likely to decrease. One study has estimated that, by the end of the century, oak-hickory forests in southern New England could move 70-150 miles north, substantially increasing these forests and decreasing the area of other forest types (e.g., maple-beech-birch and spruce-fir forests). Research on forests of the northeastern United States provides an example of what has already happened and what more might happen. In Vermont's Green Mountains, temperatures rose by 1.1" C between 1964 and 2004, leading the spruce-fir and maple-beech-birch forest types to move upslope by more than 300 feet in elevation over the 40-year period. Even larger temperature increases are projected to occur for the region by 2100. Such temperature increases could mean that, by the end of the century, oak-hickory forests in southern New England could move north and increase their area by 50% to 400%. This would likely reduce the area of maple-beech-birch forests (and maple syrup production) by a quarter and move them upslope by more than 250 feet in elevation. This would coincide with retreat of nearly 2000 feet higher in elevation for boreal conifer (spruce-fir and white-jack-red pine) forests, and thus their elimination from many mountaintops. A similar retreat in alpine-tundra habitats has been reported in the Sierra Nevada Mountains of California. Conversely, a downslope expansion of several species in California reportedly occurred despite warmer temperatures, because of an accompanying shift in hydrologic patterns (more rain and snow at lower elevations). Experts predict that temperature changes will probably be accompanied by hydrologic changes, adding more stress to trees in some areas, while benefitting trees in other areas. Warming trends are expected to increase the volatility of precipitation events and could lead to both more rain and more drought. There is less agreement on precipitation projections among climate change models than there is on temperature predictions. For example, for the Northeast, precipitation predictions range from roughly 25% increases by 2100, to little change or small regional decreases. The severity and frequency of drought is expected to increase, especially in areas where drought is already an issue. This trend will likely add stress to U.S. forests, reducing tree growth and increasing tree mortality. "The primary immediate response of trees to drought is to reduce net primary production [plant growth].... Under extended severe drought conditions, plants die." Cases of widespread tree mortality have often occurred during the most severe droughts. Two examples are the extensive tree mortality in the southern Appalachian Mountains and the Great Plains during the dust-bowl droughts of 1920s and 1930s, and the die-off of multiple pine species in the Southwest during the 1950s drought. Climate models also project more frequent and intense ice storms, wind storms, and heavy rainfall, all of which can increase disturbances and tree mortality. Furthermore, increasing temperatures are expected to shorten U.S. winters, decreasing snowpack and hastening snowmelt, albeit with substantial regional variation. Early snowmelt and reduced snowpack are expected to increase summer moisture deficits (seasonal droughts), increasing stress on forests, increasing tree mortality, and making forests more vulnerable to disturbances. Early snowmelt also has been shown to increase the danger of landslides, flash floods, and wildfire. Disturbances are events that kill anywhere from a few trees to extensive stands, and include sudden events (e.g., severe storms and floods) as well as more drawn-out occurrences (e.g., wildfires, insect or disease infestations, and drought). Disturbances of various sorts occur naturally in temperate ecosystems. Disturbances kill and knock down trees, providing seedlings access to sunlight and space; when they occur at a modest scale, disturbances allow forests to adapt far more rapidly than without the disturbance. Pests—insects and diseases—are U.S. forests' greatest natural disturbance element. Insects and diseases, both native and exotic, can limit tree growth and kill trees. In 2008, nearly 9 million acres of trees (more than 1% of all U.S. forests) were killed by insects and diseases, a 32% increase from 2007. Unusually hot, dry weather patterns over a few years can increase insect survival rates, and are believed to be responsible for increased insect outbreaks in forests in the U.S. Southwest and West. Current data and models suggest that global warming will result in the redistribution of insect pests, resulting in the invasion of new habitats and forest types. The mountain pine beetle is an example of how climate variability and change can convert a regionally native insect into an invasive species. For the beetles, long, cold winters limit overwinter survival, and therefore have geographically restricted the insect. Warmer temperatures accelerate reproductive success, increasing the infestation while reducing the trees' ability to defend themselves. The current infestation has reached parts of northern Canada previously unaffected, and possibly allowing the beetle to invade eastern Canada and the eastern United States, where it has never existed before. Wildfires are another significant natural forest disturbance. Climate variability has historically been a key factor for wildfires in the western United States. Higher temperatures and drier conditions are expected to bring more severe fire weather. In addition, the variability between fire seasons is expected to increase. Warmer springs and earlier snowmelt have been shown to provide a productive growing season (i.e., a wet spring) often followed by a seasonal drought, turning the large quantities of biomass (plant matter) from the growing season into fuel for a potential forest fire. Some forests regenerate after extensive disturbances with fewer species, usually the strongest survivors, in a process called synchronization. A synchronized forest generally has a relative dearth of species and only one or a few age classes. Increased climate volatility, with more frequent and more extreme events to disturb forests, could increase the synchrony of U.S. forests, increasing their vulnerability by reducing the number and variety of a forest's defenses. For example, mountain pine beetles attack lodgepole pines of more than 5 inches in diameter; the synchronized regeneration of lodgepole pine forests following severe fires a century ago is a major factor in the current mountain pine beetle epidemic and extensive forest mortality. Greenhouse gas emissions can also affect forests. Increased CO 2 and nitrogen levels are expected to increase average growth rates (net primary productivity) in U.S. forests. This would likely increase carbon sequestration by U.S. forests, mitigating or offsetting some greenhouse gas emissions. Furthermore, increased atmospheric concentrations of CO 2 can also increase plant water-use efficiency. This could mitigate stress from any declines in precipitation, but higher temperatures and longer growing seasons also increase total water demands for sustaining plant growth. In addition, higher ozone concentrations can reduce growth rates, while nitrogen deposition can acidify soils, reducing forest productivity and degrading water quality. Because of the possible counteracting effects of increasing carbon, nitrogen, and ozone levels in the atmosphere and of increasing atmospheric carbon and temperature, it is unclear whether atmospheric changes would benefit or harm forests. One report noted that "increases in biomass across many forest types … [are] attributed to climate change. However, without knowing the disturbance history of a forest, growth could also be caused by normal recovery from unknown disturbances." Forest resilience—the ability to respond to and recover from disturbances and changing conditions—and forest adaptation—the ability to change or migrate in response to disturbances and changing conditions—historically have been key to ecosystem sustainability. Conversely, unsuccessful adaptation may lead to extinction. Diversity among and within plant and animal species in an area is an important aspect of providing for resilience and adaptation. Biodiversity has been described as "the fundamental building block of the services that ecosystems deliver." In contrast, fewer species tend to concentrate or exacerbate risks. . Higher levels of biodiversity generally contribute to ecosystem health and stability by providing a broader base, or toolbox, from which to respond, recover, or adapt. In other words, diverse ecosystems are more stable (resilient) over time and more adaptable (better able to evolve) in response to changing conditions, because they contain more variations that can potentially survive. Biodiversity occurs at three primary levels. The lowest or most basic level is genetic diversity —the variations in genetic composition among trees of the same species. Because of this variability, some individuals are better adapted to certain conditions—more tolerant to drought, more resistant to pests, and so forth. For example, individual white pine trees vary significantly in their resistance to white pine blister rust. Trees from the seeds of resistant individuals are also resistant, and planting resistant trees is a common approach to reducing pest problems. This approach is being tried to reestablish the American chestnut, which was virtually eliminated from eastern U.S. forests by an introduced fungus (the chestnut blight) early in the 20 th century. Clones and genetic monocultures are an extreme form, with no genetic diversity whatsoever (each plant is genetically identical to every other plant). Such practices have been used in agriculture for decades, and the condition occurs naturally in some plants (e.g., many aspen stands are multiple trees from a common rootstock, and thus are effectively monocultures); however, the lack of genetic variation in crops and livestock has also long been recognized as increasing risks from pests. The second level of biodiversity is species diversity —the variations in species within a stand of trees. Species diversity in temperate forests is modest, compared to the diversity of tropical forests. Nonetheless, as described in Appendix A , most U.S. temperate forest types include several major species. Even those types with a single dominant species typically contain several additional species. Species diversity tends to protect forests against pest epidemics, as most pests are host-specific, attacking only one or a few closely related species. Species diversity promotes the adaptability of forests to pests, fire, drought, and other disturbances, since different species respond differently to the disturbances. The third or highest level of biodiversity is stand diversity —the variation in tree ages and sizes among stands of trees, as well as in species. As with genetic and species diversity, stand diversity (also known as asynchrony) promotes forest resilience by providing a variety of conditions to respond to changes and disturbances. For example, the mountain pine beetle (discussed above) only infests lodgepole pine trees greater than 5 inches in diameter. Thus, a lodgepole pine forest containing stands of varying sizes can withstand an epidemic, because some stands will not become infested. Congress could have an expanded role in promoting resilient and adaptable forests. Congress establishes direction and provides funding for federal forests and for financial and technical assistance for management of nonfederal forests. For federal forests, current congressional direction indirectly encourages management that promotes resilient forests. For the USDA Forest Service (59% of federal forests), the basic direction is in the Multiple Use-Sustained Yield Act of 1960 (P.L. 86-517; 16 U.S.C. §§528-531): to produce a sustained yield of the multiple uses (goods and services) from the lands, without impairing long-term productivity. While not explicit direction to manage the national forests to assure resilience and diversity, the direction for sustained yields implies management for adaptation to changing conditions, including a changing climate. However, this and many other laws govern Forest Service management activities, and some observe that the total legislative direction is at best cumbersome and at times even contradictory. Congress also authorizes and funds technical and financial assistance for managing nonfederal forests. However, the federal government has no direct role in management of nonfederal forests; regulation of forestry practices on private lands is exclusively a state prerogative and responsibility. Nonetheless, provisions enacted in the 2008 farm bill ( P.L. 110-246 , the Food, Conservation, and Energy Act of 2008) require states to develop assessments of forest conditions, trends, threats, and priorities to receive funding. The national priorities for assistance include managing forests for multiple goods and values; protecting forests from disturbances; and enhancing production of public benefits. Climate change was listed explicitly as an issue for forestry assistance—clearly direction for federal assistance for nonfederal forest management to provide adaptable, resilient forests. Legislation in the 112 th Congress could affect management for forest adaptation, though to date no bills have been introduced with broad forest management implications. None of the bills introduced in the 111 th Congress provided guidance for federal management or assistance for forest adaptation to climate change. At a broad scale, the climate cap-and-trade bills in the 111 th Congress, such as S. 1733 and H.R. 2454 , generally included funding for forest adaptation, but with very little guidance on what to do or how to use the funding. At the other end of the scale, bills were introduced to address specific regional or local forest health problems, such as the mountain pine beetle epidemic in the northern and central Rocky Mountains (see, for example, H.R. 5192 , S. 2724 , and S. 2798 ). While forest ecosystems can adapt to changing climatic conditions over the long run (a century or more), the desired goods and services provided by forests may well be disrupted as forest ecosystems adapt. Some are concerned that the expected rate of climate change may be too abrupt for U.S. temperate forests to adapt or migrate without substantial losses. Tree species dispersal is very slow, due to long generation intervals, and thus conditions may change more quickly than tree species can disperse. Most trees alive today will still be alive in 2090, when global climate models predict significantly higher temperatures and altered hydrological patterns. Species and populations most likely to be harmed by climate change include habitat specialists that require special conditions; populations of trees on the southern and/or southeastern edges of their habitat, such as the boreal forests of the northeastern United States; species located in fragmented habitat (see "Fragmentation and Corridors," below); and species that are poor colonizers or dispersers (i.e., that have difficulty regenerating). Ecological community interactions play an important role in determining ecosystem migration. Such community interactions as species competition, nutrient chain relationships, and symbiotic relationships may limit migration. Forest management could assist resilience and adaptation to disturbances and to the accelerated rate of change projected by most climate models. Diverse, sustainable forests can continue to produce the desired array of ecosystem services, such as clean water, wildlife habitat, recreational opportunities, timber and biomass, carbon sequestration, and more. Management for sustainable forests suggests that "ecological adaptation" might replace "ecological restoration" as the underlying management approach to conservation and sustained production. For many years, various interests have approached forest management under the presumption that restoring forest ecosystems to historical conditions, commonly defined as pre-Euro-American settlement, is the best way to promote and sustain ecological integrity and forest productivity. However, climate change might substantially alter regional climates from the conditions of the last several centuries, or even millennia. Thus, "restoration" of historic conditions could be unsustainable or infeasible. Instead, forest management approaches could emphasize responses to disturbances to provide and enhance forest resilience and diversity at the genetic, species, and stand levels. The potential effects of climate variability and change on forested ecosystems are broad and varied. Uncertainty over changes in temperature, levels and timing of precipitation, and catastrophic events, combined with incomplete knowledge of ecological systems, leads to even greater uncertainty about natural ecological responses. Efforts to manage uncertainty include several continuing activities: conducting research on ecological conditions and changes; monitoring the results of climate change and of management efforts; and adjusting management based on the information gathered. Reducing threats, increasing diversity, and improving habitat connectivity are based on relatively simple, broadly accepted understandings of species, ecosystems, and the possible effects of climate change. However, there is substantial uncertainty as to the ability of forests to recover from and/or adapt to changes, due at least in part to the uncertainty of climate change impacts themselves. Annual variability and the unknowns about the long-term nature of climate change suggest an approach of monitoring changes in conditions and results, and of adjusting management to assist forests in recovering from and adapting to changing conditions. However, such research and monitoring can also be costly. The research and information needed to manage for forest resilience and adaptation cover broad subjects. Four topic areas have been identified by researchers as significant research gaps: 1. B aseline D ata . Baseline data on the current distribution of species and species mixes do not exist for many U.S. forests. Some argue that baseline data are necessary to measure the effects of changes in climate, to inform management strategies, and to improve predictions about the effects of changes. 2. Climate Change Predictions. Reduced uncertainty in climate change predictions could facilitate decision making. Generally, uncertainty in predicting the magnitude and extent of climate change restrains action. Some scientists maintain that reducing uncertainty in predictions of temperature and precipitation could make forest adaptation management less risky and less uncertain. 3. Forest Ecosystem Responses . Management strategies could be informed by further research on forest ecosystem responses to stressors, such as chronic or acute water stress, belowground processes, habitat migration, pests and diseases, and growth rate responses to atmospheric changes. Historic and paleo-ecological data can document past forest responses to different climatic conditions, and thus may be useful for predictions about future ecological changes. 4. Adaptive Management Efficacy . Relatively little is known about the effectiveness of adaptive management. It is a relatively modern development in forestry, and research on the effects of forest management can take several years to decades, due to the long generation cycles of forests. A lack of existing systematic measurement and monitoring programs may constrain the ability of scientists and managers to determine if forests are adapting to climatic and other changes, either naturally or as a result of management strategies. On-the-ground monitoring can provide insight into the stresses experienced by trees and the nature and direction of ecosystem change, thus providing information to guide management responses. Several monitoring programs exist, some of which might be a useful beginning for examining climate variability and impacts on forests, and the effectiveness of natural and managed adaptation, but none are specifically designed for this purpose. The USDA Forest Service's Forest Inventory and Analysis Program (FIA) began in 1917. FIA reports on the status and trends of tree species size and volume. For all classes of forest land ownership, FIA measures and reports total tree inventory, growth, mortality, and removals by harvest, as well as wood production and utilization rates by various products. FIA is comprised of a series of statistically validated permanent forest plots. It is widely considered to be successful at accurately measuring timber data, which is what it was designed to do. While valuable for some purposes, its has limited utility for identifying baseline forest conditions and measuring other changes because of its historic emphasis on commercial timber volumes. The European Union's intensive forest health monitoring network, EU/ICP-Forests Level II, is another ecosystem monitoring example. This program monitors habitat shifts for a wide spectrum of species across the European Union (about 1.07 billion acres) with 6,000 monitoring plots. It has also provided data and scientific rationale for policy decisions, promoted public awareness of ecosystem health, and created an early warning system for environmental issues, such as forest destruction, biodiversity changes, and deposition (precipitation of pollution). The Northwest Forest Plan was created by a record of decision for the Bureau of Land Management and the Forest Service by the Clinton Administration in 1994. This adaptive management plan instructed forest managers to experiment with, monitor, and interpret forest management strategies over an area of 10 million acres of federal forests in the Pacific Northwest. The plan established a large-scale regional program to monitor old-growth forests, northern spotted owl and marbled murrelet habitats, watersheds, and socioeconomic effects on local communities, tribes, and others. After 10 years, an assessment of the plan criticized managers for exercising too much caution in adaptive management strategies and experimentation, but found the established large-scale monitoring system to be extremely useful in both expected and unexpected ways. For example, a balance sheet resulting from the plan showed that forest growth outpaced losses to timber harvest, fire and other disturbances, something that many foresters had expected but that surprised others. Other landscape-scale programs include monitoring that could prove useful to assessing ecological responses to management and environmental changes; examples include the Sierra Nevada Forest Plan and the Southern Appalachian Forest assessment. In addition, other USFS programs provide information on forest conditions and responses to stimuli. For example, the National Fire Plan and the Forest Health Monitoring Program (focused on insects, diseases, and invasive species) could provide consistent approaches for assessing changing conditions and the results of management. Nonetheless, these efforts are geographically or topically limited, and may be of limited value for determining baselines and changing conditions. Forest management, whether plantations for timber production or protected natural areas, affects species diversity and stand structures. Traditional forestry practices can be modified to emphasize diversity for resilient and adaptable forests. For example, wildfire management can be modified to include prescribed burning and appropriate management response (see Appendix B ) to increase natural fire benefits. Similarly, timber harvesting, thinning, and stand regeneration practices can emphasize species for adaptable responses to disturbances and changing conditions, while forest certification is a means of providing oversight to assure sustained forest productivity. Some advocate more intensive actions to support forest adaptation, such as reducing forest fragmentation, protecting habitat corridors, and even managing species relocation. These possibilities are discussed in more depth in Appendix B . Many argue that forest management strategies need to respond and adjust to new insights about forest health from research and monitoring. The uncertainties of projecting future climate change and its effects on ecological systems suggest flexibility in management plans. Forest adaptation likely could be improved with up-to-date climate science and information about local changes for land managers. Some suggest that managers should be involved in monitoring changes in the forests themselves, because they see and know what changes are occurring. To do so, forest monitoring efforts would need to be expanded and the focus altered. However, such monitoring might be costly, and could divert managers' attention from decision making and implementation. "Adaptive management" is a commonly described management style of taking action, assessing the results, and modifying the future actions based on the results. Passive adaptive management implements the "best apparent management option," with feedback from research and monitoring to adjust future management activities. Active adaptive management allows for experimentation with monitoring, and allows management strategies to be altered quickly in response to new information—both research and on-site results—to address expected and ongoing changes. Forest management may need to be adaptive. Although important lessons can be learned from the past, past conditions might not be replicable in a changing future. Appendix A. Domestic U.S. Forests Most domestic U.S. forests are temperate forests, with relatively few tree species (compared to tropical forests), but various species mixes. The text box below describes the temperate forests that dominate most of the United States. Alaska contains mostly boreal forests of hemlock-Sitka spruce along the southern coast and panhandle, and of spruce-birch mixes in the interior. The United States also includes some tropical forests in southern Florida and Hawaii. Within each of the many temperate forest types, a few to several tree species dominate the overstory, and several to many additional plant species occur in the understory. These species and species mixes have evolved and adapted to habitats with certain climatic conditions and complex ecological relationships. Historical evidence of temperature patterns and forest dynamics suggest that forest habitats have changed and are continuing to change. Some observers, however, are concerned that the rate of climate change exceeds the natural adaptive rate, and will cause a decrease in total temperate forest habitat. If so, climate change could substantially change domestic forests and possibly degrade their value in providing desired goods and services. U.S forests are valuable assets. Forests provide many goods and services (collectively known as "ecosystem services"), such as timber, clean water, recreation, and more. The ecosystem services provided by forests may be vulnerable, if forests cannot adapt to the changing climate. However, management to ameliorate disturbances and to increase forest diversity and resilience could help avoid or minimize such possible losses. Most climate scientists and forestry experts agree that climate change could have significant ecological consequences, altering species mixes and increasing forest disturbances. While U.S. temperate forests have existed when the earth had significantly higher CO 2 concentrations and was significantly warmer, and will undoubtedly exist in a different climatic future, the issue is the nature and rate of the transitions from current forest conditions to future conditions. Forests take decades to adapt, and thus could be in transition for the next century or longer. The important question is: will U.S. forests continue to provide economically valuable ecosystem services as they adapt to climate and other changes? Although changing climatic conditions would likely affect all regions, the impacts are likely to vary by region and within regions, due to differences in latitude, hydrology, and topography, as well as in the impacts on individual species and species mixes. Particular species could be affected by specific disturbances, significantly altering the ecosystems. One historic example of the impact of an invasive species is the chestnut blight, which virtually eliminated chestnuts that had accounted for as much as a quarter of the trees in oak-hickory forests a century ago. As discussed further below, climate change makes the introduction of invasive species more likely. Different forest types are likely to be affected differently by climate change and may require different management strategies to promote their adaptation. Domestic Forest Ownership U.S. forests are owned and managed by many entities, including the federal government, states, local governments, corporations, and other private landowners. The relative importance of these landowner groups varies regionally, as shown in Figure A -1 . The largest federal forest management agency is the Forest Service, in the Department of Agriculture (USDA). These forests are primarily in the West, although the Forest Service is the largest landowner in the eastern regions. The Department of the Interior (DOI), particularly the Bureau of Land Management (BLM), administers most of the other federal forestlands, although the Departments of Defense and Energy also manage federal forests. Several states and local governments also own significant amounts of forestland; this is especially the case in the Midwest (Minnesota, Michigan, and Wisconsin) and Mid-Atlantic (Pennsylvania and New York) regions. Private forests are more common in the North and South regions. Corporate forests are substantially concentrated in the most productive areas for timber growing—the Pacific Coast (Washington, Oregon, and California) and the South—and are generally managed for industrial wood products. Other private forests—also called non-industrial private forests—dominate in the eastern regions. These landholdings vary widely in size and purpose, ranging from a few acres for a second home on a forested lakeshore or a woodlot on a farm, which occasionally provide timber revenues for the landowners, to tens of thousands of acres managed by hunt clubs, land trusts, and other organizations, where timber production is often a secondary or residual result of management. Forest Management Programs The Forest Service and the Department of the Interior are addressing the effects of climate change on federal land and resource management. The Forest Service released its National Roadmap for Responding to Climate Change in July 2010. This is a strategic plan that establishes general management guidance for national forest adaptation and for carbon mitigation from agency activities. It also acknowledges the need to build agency capacity and seeks to build cooperation among landowners recognizing that climate change affects all forests. The Interior Department established a Climate Change Task Force, which developed three reports analyzing the impacts of climate change and identifying relevant options for DOI agencies. The department has also created a climate change response council, eight regional climate science centers, and a network of landscape conservation cooperatives for managing climate-change impacts. The management of private lands varies widely. Some, such as many corporate timberlands, are managed intensively and rely on substantial forestry expertise. Others, including many of the non-industrial forests, are largely left to grow with little management effort. The Forest Service and Natural Resources Conservation Service (also in USDA) have numerous conservation programs that can provide technical and some financial assistance to private forest owners. Some assistance is available directly from the federal agencies, while some is provided through state forestry agencies. To the extent that these agencies recognize and are attempting to respond to climate variability and change, federal assistance programs to private forest owners are likely to provide information and support for forest adaptation. Appendix B. Management for Forest Adaptation Diversity of species and stand structures allow forests to be resilient and adaptable, whether intensively managed plantations for timber or protected natural areas. Traditional forestry practices, such as wildfire management and timber harvesting, can be tweaked to emphasize structures and diversity that enhance the ability of forests to respond and adapt to change. Landowners undertake many activities in response to disturbances, especially wildfires and insect and disease epidemics. Wildfire and forest health management practices to control damages and prevent or ameliorate possible damages affect biodiversity, and thus can be used to increase the resilience and adaptability of forests. Timber management can enhance or reduce forest adaptability, depending on the practices used and how they are implemented. More intensive actions, such as providing migration corridors or even assisting forest migration, may be warranted in some circumstances. Finally, monitoring is an important aspect to determine how forests are responding to management activities and changing conditions, to assure the sustained production of desired forest ecosystem services. Wildfire Management Wildfires are natural disturbances in nearly all temperate forests, with wide variations in intensity and frequency. For much of the 20 th century, fire was seen as inherently destructive to forests, and efforts were made to control and prevent all wildfires. This history of aggressive fire suppression, combined with historic logging and grazing practices, have made some ecosystems susceptible to unnaturally intense wildfires. Alternative wildfire management approaches—altering fire protection and control and reducing fuel levels—can enhance the resilience and adaptability of some forest ecosystems. Fire Protection and Control Wildfires do not burn uniformly; when burning within natural parameters (which may be difficult to define), wildfires tend to increase species and stand diversity and thus enhance forest resilience and adaptability. Thus, some have advocated that fires which do not threaten lives and resources be allowed to burn, saving taxpayer dollars and providing the biodiversity that comes from natural wildfires. In addition, because of weather conditions, fuel loads, and in some ecosystems, natural vegetation patterns, many crown fires cannot be controlled, although sometimes such fires can be guided away from high value areas and structures. Federal land management agencies have developed an approach that allows some wildfires to burn—the appropriate management response (AMR) . The approach "encompasses all the response actions necessary to manage a wildfire … from monitoring a fire at a distance to intensive suppression actions." AMR, at least in theory, allows fire managers to aggressively suppress fires, or portions of fires, that threaten lives, property, and resources; to use fire control methods to direct fires away from threatening situations; and to use fires, or portions of fires, to achieve management objectives, such as reducing fuel loads, when lives, property, and resources are not threatened. Critics of federal fire management, however, suggest that implementation of AMR has been rather limited. Fuel Reduction Efforts Some ecosystems have unnaturally high biomass fuel levels, because of aggressive suppression of all wildfires and past logging and grazing practices. In some ecosystems, reducing fuel levels to lower the severity of wildfires to historically natural intensities can generate the benefits of stand asynchrony and heterogeneity associated with natural wildfires. Fuel reduction efforts have been the focus on much of the debate over increasingly severe wildfires in recent years. The two primary tools for reducing fuels are prescribed burning and mechanical thinning (described below under "Timber Management"). Prescribed burning is deliberately setting fires in specific areas under identified conditions. (Some include wildfires not actively suppressed under Appropriate Management Response, described above, as prescribed burning, but the federal agencies use the term "wildland fire use" for such situations.) Prescribed burning is widely used for fuel management, because it reduces biomass (the fuels) to ashes (minerals), which act as fertilizer. It is particularly effective at reducing the smaller fuels, especially in the arid West where deterioration by decomposers (insects, fungi, etc.) is often very slow, and may well get slower if changing climatic conditions exacerbate drought. In fact, prescribed burning is the only treatment that directly reduces the fine and small fuels that are known to facilitate wildfires. Prescribed burns may also reduce the risk and extent of disturbances like wildfires and infestations of pests, diseases, or invasive species. Prescribed burns alter forest structure by removing some of the understory in a spatially heterogeneous manner, increasing diversity for more resilient, adaptable forests. Prescribed burns are not perfect tools. They are not fully controlled actions, and occasionally escape and cause extensive damages; for example, the Cerro Grande fire that burned 237 houses in Los Alamos, NM, in May 2000 was an escaped prescribed burn. Also, some are concerned that the emissions from prescribed burns may exacerbate climate change. Both wildfires and prescribed burns release large quantities of CO 2 . Advocates of prescribed burning contend that the burns merely shift the timing of fire, not the total amount burned—that the CO 2 released by prescribed burning equals what would have been released by wildfires without prescribed burns. Further, many argue that prescribed burns significantly reduce total CO 2 emissions by reducing the frequency of severe fires. Forest Health Management Forest health management is the term used for preventing, controlling, or eradicating insects, diseases, and invasive species. In contrast to wildfire management, the tools for forest health management are highly variable and often specific to a particular pest. For example, insects might be defoliators (destroying leaves or needles) or borers (infiltrating under the bark); diseases might defoliate or damage tree roots. Many pests are host-specific, attacking only one species of tree, while others can infest a wider array of hosts; for example, Douglas-fir tussock moth only feeds on Douglas-fir trees, while white pine blister rust can infest all white pine species, and gypsy moths can feed on nearly any tree species. Invasive species might be insects or diseases, or they could be plants or animals that displace or feed on native species. The tools for forest health management generally include manual controls, chemical controls, and biological controls. Manual controls include cutting and removing infested trees (often called salvage and sanitation harvesting, and discussed below) or invasive plants. Chemical controls include pesticides (insecticides, herbicides, etc.) of various sorts; special care is commonly taken with chemical use, because of the potential for effects on human health. Biological controls include an array of species to introduce pathogens, parasites, or predators to eliminate the target species. These approaches have varying degrees of specificity in controlling pests—manual methods can be very specific, but many chemicals are broad-spectrum. Biological controls can be very host-specific (e.g., parasitic wasps that only live on a particular species) or more broadly controlling (e.g., Bt [Bacillus thuringiensis] infects all Lepidoptera [moths and butterflies]). A longer-term strategy, and the only effective one for some diseases, is the selection and propagation of plants that are resistant to the disease or pest. Forest health management tools and practices can enhance or limit forest resilience and adaptation. Forest health management can be quite complicated, as the various tools are only effective for certain pests; for example, chemical methods are often ineffective for controlling borers and root diseases, while a different biological control may be needed for each pest. Because of the variety of tools, it is difficult to categorize the effects of the tools on resilience and adaptability. Nonetheless, forest health can be improved generally, if the management tools are selected and implemented to remove invasive species and expand the native genetic, species, and stand diversity of forests. Many observers distinguish between endemic or native species of insects and diseases and exotic or foreign pests, and suggest that eradicating exotic and invasive species would generally improve the ecological sustainability of ecosystems. However, changing conditions can lead native pests into new, adjoining ecosystems; for example, warmer winters have allowed the mountain pine beetle to migrate into jack pine stands of northern Alberta, where it has not occurred previously. Should an endemic species that moves into a new ecosystem be considered an exotic species, or should this migration be considered natural? This is an important but difficult determination for those who support eliminating invasive species. Timber Production and Management Timber production and management, or silviculture, has been an historically important part of forest management. Silvicultural decisions determine the timber harvesting, thinning, and reforestation practices employed on forest land—industrial plantations as well as private woodlots and publicly owned forests. These decisions affect the diversity of both existing and future forests by choosing which (if any) trees to cut, which trees to let grow, and in what patterns, thus determining the genetic, species, and stand diversity of forests. In addition, forest management certification is a means to assess and assure sustained forests over the long term. Timber Harvesting Timber harvesting is cutting and removing trees, usually to produce wood products (lumber, plywood, paper, etc.) Decisions about the cutting system to use, the rotation age (the age or size when trees is to be cut), and cutting unit size and dispersal affect forest diversity at all levels. Standard cutting systems typically yield even-aged stands, where all or most of the trees are in one or two age classes, and uneven- or all-aged stands, where the trees vary in age and size. All-aged stands are generally more asynchronous and often have greater tree species diversity, but even-aged stands are natural for many temperate species, especially those established through stand replacement fires or other forest-level catastrophic disturbances. The selection of which trees to cut is a critical aspect of the harvesting decision. Historically, the largest and straightest trees of particular species were preferred, because they produce the most and best wood products. However, leaving smaller trees, those with poorer form, and the less desirable species may result in a degraded forests, especially if these are the trees providing seed for future forests. Salvage and sanitation harvests, however, commonly focus on removing dead, dying, infected/infested, and at-risk trees, and thus can be a component of forest health management. (See above.) Leaving "legacy trees," with their superior growth characteristics and/or resistance to particular insects or diseases, is particularly important, because they can provide seeds for regenerating adaptable forests, as well being healthy, resilient trees themselves. Rotation age depends largely on the purpose of the forest: industrial plantations may maximize timber production, while conservation areas will likely emphasize tree sizes to maximize other ecosystem services. Lower rotation ages can speed forest adaptation by allowing species better adapted to climate change to regenerate (see below), while reducing forest synchrony and the period of time forests are vulnerable to pests and disease. However, shorter rotation ages also eliminate some ecosystem values associated with very old trees (e.g., habitat for certain animal species and carbon sequestration) and reduces overall stand asynchrony by resulting in fewer age classes of tree stands. Similarly, cutting unit size generally depends on the purpose of the forest. Larger sizes (40 acres or more for many even-aged forests) generally lower management costs and yield greater harvests in a single cutting operation. Small cutting units can increase biodiversity and stand asynchrony, and thus can contribute to resilient, adaptable forests. However, small cutting units can also cause problems for healthy forests, because they require more roads to remove the same amount of biomass. Roads are problematic for forest management, as road construction and inadequate road maintenance are primary sources of erosion and stream sedimentation. In addition, smaller cutting units and more roads contribute to forest fragmentation. (See "Fragmentation and Corridors," below.) All-aged management can intensify the road and fragmentation problems of small cutting units for healthy forests. Thinning Thinning is the practice of cutting and removing a portion of the trees in a stand. It is commonly done to enhance timber growth, to reduce wildfire threats by eliminating some fuels (especially fuel ladders); to halt or slow the spread of insect or disease infestations; to remove invasive species; to improve tree vigor; and to provide economic benefits. Because the biomass to be cut and removed is selected, thinning can also be used to enhance forest resilience and adaptability, by encouraging trees that are resistant to disturbances and that can recover more quickly when disturbances occur. At the broader scale, thinning can be used to enhance stand diversity, altering forest structure by removing trees to decrease stand density and uniformity, to increase forest asynchrony, and to expand the age, size, and species diversity of stands. Thinning is not a panacea, however. Many object to the potential impacts of mechanical treatments—soil erosion and water quality degradation; removal of valuable wood rather than improving forest health; short-term increase in fire risk from the small-diameter biomass that remains; and more. On the other hand, while the wood from thinning may have little value for traditional wood products, these activities can increase the supply of wood for biomass energy, offsetting consumption of fossil fuels. Natural Forest Regeneration Natural regeneration, generally following a timber harvest, relies on seeds from trees on lands surrounding the cutting units or uncut trees within the cutting units. It can help produce resilient and adaptable forests by providing genetic diversity for new stands, since many trees can provide seed sources for the regrown forest. Also, if the legacy trees and surrounding forest contain a mix of species, the regeneration is likely to reflect that species diversity. However, if historic and current harvests have removed all or most of the desirable (both in species and genetic characteristics) trees, natural regeneration might result in an unhealthy, genetically impoverished stand. Also, naturally regenerated trees sometimes takes several years to become established, which can allow invasive and non-tree species to dominate a site. Artificial Forest Regeneration Planting trees established in nurseries, called artificial regeneration, is a common alternative to natural regeneration. Forest management, especially for industrial plantations, has traditionally focused on retaining a few desired, previously established species. However, planting species and species mixes could promote resilient, adaptable forests. Suitability of species for planting could be related to resistance to pests, fire, drought, and other forest stressors. For example, aspen is a relatively short-lived species that recovers quickly from even the most intense fires; thus it could be planted among species slower to recover after fire in areas where fire is expected to increase. Because the understanding of future conditions can be ambiguous or uncertain, reforesting with species that are successful under a wide range of conditions seems likely to enhance reforestation success. Caution may be warranted, however, when reforesting with species and species mixes in anticipation of climate change. Some have suggested the need to plant trees beyond (further north and further upslope from) the situations where the species has been planted, but such planting could cause unexpected and unintended consequences, due to the complex nature of ecosystems and species interactions. To the extent that such planting is outside traditional practices, experimentation and monitoring may be necessary to improve the probability of regeneration success without unintended harm to ecosystem services. Tree nurseries could also contribute to adaptation by providing genetically appropriate planting stock. Trees can be bred for tolerance to stressors. Genetic options are already available for some species, including for drought hardiness, delayed or advanced growth initiation, and pest resistance. Genetic engineering (e.g., genetically modified organisms, or "GMOs") might also be useful, but could be controversial. Forest Management Certification Certification of forest management as sustainable might also contribute to forests that are adaptable and resilient. Forest certification organizations emphasize forest sustainability, including low-impact logging practices, and their certifications provide financial incentives (higher wood product prices and sometimes revenues from other ecosystem services) to landowners that encourage biodiversity and other practices that can assist adaptation. Certification is a process by which an independent organization examines forest management according to certain established principles of sustainable forestry to assure that the certified forests will continue to produce the desired ecosystem services (including wood products). There are several sustainable forest certification organizations, including the Forest Stewardship Council (FSC), the Sustainable Forestry Initiative (SFI), the Central Point of Expertise on Timber Procurement (CPET), and the Canadian Standards Association (CSA). Low-impact logging is a particular practice encouraged by certification that could contribute to sustainable, resilient forests, It is a collection of practices is intended to minimize forest disturbances from harvesting. Although developed largely for tropical forests, where logging can cause extensive damage to the residual trees, low-impact logging practices are relevant to U.S. temperate forests for resilience and adaptation. Some practices, such as designing cutting units to minimize road needs and to protect residual stands, are relatively commonplace in the United States. However, other low-impact logging practices which can aid adaptation are relatively less common, such as leaving legacy-trees, reducing the water quality impacts of road construction and maintenance, and adjusting rotation intervals. Fragmentation and Corridors Fragmented habitats are habitat parcels separated by stretches of other habitat, such as forest patches separated by farmland or housing developments. Species in fragmented habitats have physical barriers to dispersal. Many plant and animal species cannot move readily across farmland, highways, or other breaks in their habitat. Habitat fragmentation adds to the difficulties when ecological habitat shifts out-pace natural species migration rates. (See "Limits to Natural Adaptation," above.) Climate change might move suitable habitats faster than many species can disperse; fragmentation of habitats makes it more difficult for species to disperse to new suitable habitats. Habitat corridors can eliminate some dispersal barriers. Corridors are landscapes that contain continuous habitat with relatively few physical or biotic barriers to species migration. For most of the continental United States, broad habitat corridors are now fragmented by human land-use developments. Fragmented habitats along migration pathways can sometimes be connected through policies and practices to acquire lands and influence land management and to maintain connectivity where it is threatened. Some suggest designing landscapes to facilitate species spread. Others propose managing landscapes at large scales to maximize connectivity. Both may be difficult, because migration pathways may be more restricted in some places than others, depending on topography and other barriers to dispersal. It can be also difficult because such efforts encompass encouraging multiple landowners to act in coordinated, cohesive ways and may require innovative approaches to encourage species dispersal over a multitude of land uses. It may also require a politically challenging array of regulations and incentives to achieve large-scale connectivity and corridors. Nonetheless, habitat corridors are considered to be one of the least risky adaptation management strategies. Existing species have migrated or adapted to accommodate climate change in the past. However, given the increasing habitat fragmentation of the past two centuries, it seems likely that restricted natural dispersal of species will result in the extinction of species that might have otherwise survived. Although forests may eventually be productive and valuable after periods of transition, some animal species will likely be lost if corridors do not connect them with suitable habitats. Managed Relocation Managed relocation is another management strategy for assisting forest adaptation. Managed relocation (also known as assisted migration or translocation) is the intentional movement of trees and related species to locations where the probability of future success is predicted to be higher. It is akin to artificial forest regeneration, discussed above, but encompasses the regeneration of whole ecological systems, based on the premise that natural migration may not be able to keep pace with climate change. Many experts believe managed relocation is a high-risk strategy for adaptation. Due to the complexity of ecosystem community interactions and relationships, managed relocation efforts may require multi-species relocation. Some species depend on others for survival, with relationships ranging from mutualism or symbiosis (where both species benefit) to parasitism (where one species essentially lives off the other). Such community interactions would need to be understood in the ecosystems where species are relocated, to better understand the impacts and feasibility of relocation. Some advocates recommend experimentation with species introductions over a range of habitats, rather than solely within historical habitat, followed by monitoring to assess success. Effective managed relocation of ecosystems may require more accurate projections of habitat shifts than currently exist. Paleo-ecological data (from pollen records, tree rings, charcoal deposits, animal fossils, and more) and records of historical species ranges may provide insight into forest responses to climate change and natural species migration over longer periods. For example, northern populations of many temperate forest types may be pre-adapted to climate change from previous exposure to population expansion after the last ice age, and might therefore be a logical option for relocation north of current habitats. Some argue that the species introduced to new areas through managed relocation would be invasive species and the uncertainties about the possible success and impacts of relocation should restrain relocation efforts. Managed relocation clearly can disrupt the communities where relocation is being implemented. Although, ecologists have made a concerted effort to study invasive species, reliable predictions about invasive species dominance remain elusive. It can take decades for invasive species to dominate the ecosystems into which they have been introduced. This suggests efforts to monitor relocated species may be difficult, costly, and long-term. Future research could emphasize species' thresholds to trigger relocation, species prioritization, and best practices for relocation to minimize damage to host ecosystems and the ecosystem services they provide. However, for landowners with extensive holdings, such as some major forest products companies, managed relocation of desirable timber species might be a practical, if expensive, approach to assuring timber supplies and other key ecosystems services in the long term.
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U.S. forests are primarily temperate forests, often with relatively few species dominating over wide areas. Such forests respond and adapt to an array of environmental factors—sunlight levels and duration, temperature, precipitation, and a multitude of disturbances (e.g., fires, pests, and storms)—and these factors could be further altered by long-term shifts in natural climate variability and climate change. Many domestic forests are already under stress from drought, severe wildfires, and insect epidemics. Changing conditions and disturbances could diminish the goods and services that forests provide—timber, clean water, scenic vistas, carbon sequestration, and much more. Forests can be subject to management techniques to improve their resilience and adaptability, to assure continued production of the economically desired ecosystem goods and services. Congress provides management direction and funding for federal forests and financial and technical assistance for management of nonfederal forests. To date, such legislative direction and funding have at most indirectly encouraged management that promotes resilient forests. Congress could decide to broaden its role in promoting resilient and adaptable forests. However, thus far, no broad-based legislation has been introduced calling for direct federal forest management and nonfederal forestry assistance to sustain forests in the face of changing conditions. Biologically diverse forests are generally more resilient (better able to recover from changes and disturbances) and more adaptable (better able to respond to changing conditions), because they have a broader biological base from which to respond. Diversity occurs at the genetic level (among trees of a given species), at the species level (among trees in a stand), and at the stand level (among the ages and sizes of trees in a stand). Many are concerned that climate change and increased climate volatility may be too rapid for natural adaptation and migration to sustain production of the desired goods and services, because some species require special habitat conditions and because forest fragmentation from human development hinders forest migration. Others argue that natural variability is sufficient to sustain forests, even in the face of climate change. Research and monitoring are important components of understanding the extent and success of forest management efforts to promote resilient and adaptable forests. Management efforts could then respond to changing forest conditions by adjusting traditional forestry practices (e.g., prescribed burning, thinning, timber harvesting, tree planting, and more) or even by taking more intensive action to assist forest adaptation (e.g., reducing habitat fragmentation, creating habitat corridors, and assisting species relocation). A question for Congress and resource managers is whether or how to fund and implement research and monitoring programs to provide information for forest management in a time of changing conditions.
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"'Extradition' is the formal surrender of a person by a State to another State for prosecution or punishment." Extradition to or from the United States is a creature of treaty. The United States has extradition treaties with over a hundred of the nations of the world, although there are many with which the United States has no extradition treaty. International terrorism and drug trafficking have made extradition an increasingly important law enforcement tool. Although extradition as we know it is of relatively recent origins, its roots can be traced to antiquity. Scholars have identified procedures akin to extradition scattered throughout history dating as far back as the time of Moses. By 1776, a notion had evolved to the effect that "every state was obliged to grant extradition freely and without qualification or restriction, or to punish a wrongdoer itself," and the absence of intricate extradition procedures has been attributed to the predominance of this simple principle of international law. Whether by practice's failure to follow principle or by the natural evolution of the principle, modern extradition treaties and practices began to emerge in this country and elsewhere by the middle 18 th and early 19 th centuries. The first U.S. extradition treaty consisted of a single terse article in Jay's Treaty of 1794 with Great Britain. Its brevity notwithstanding, the article contained several of the basic features of contemporary extradition pacts: It is further agreed, that his Majesty and the United States, on mutual requisitions, by them respectively, or by their respective ministers or officers authorized to make the same, will deliver up to justice all persons, who, being charged with murder or forgery, committed within the jurisdiction of the other, provided that this shall only be done on such evidence of criminality, as, according to the laws of the place, where the fugitive or person so charged shall be found, would justify his apprehension and commitment for trial, if the offence had there been committed. The expense of such apprehension and delivery shall be borne and defrayed, by those who make the requisition and receive the fugitive. Since then, the United States has relied almost exclusively upon bilateral agreements as a basis for extradition. However, the United States has entered into several multilateral agreements that may also provide legal authority for extradition. Such agreements take two forms. One form is a multilateral agreement that exclusively concerns extradition. The United States is currently a party to two such agreements: the 1933 Montevideo Convention on Extradition, which apparently has never served as a basis for extradition, and the Extradition Agreement Between the United States and the European Union, which entered into force in February 2010. The provisions of the U.S.-EU extradition treaty are implemented via bilateral instruments concluded between the United States and each EU Member State. These instruments amend or replace any provisions contained in earlier treaties between the United States and individual EU Member States that conflict with the requirements of the multilateral agreement. The United States is also a party to several multilateral agreements that generally aim to deter and punish transnational criminal activity or serious human rights abuses, including by imposing an obligation upon signatories to prosecute or extradite persons who engage in specified conduct. Although these agreements are not themselves extradition treaties, they often contain provisions stating that specified acts shall be treated as extraditable offenses in any extradition treaty between parties. Extradition treaties are in the nature of a contract, and by operation of international law, [a] state party to an extradition treaty is obligated to comply with the request of another state party to that treaty to arrest and deliver a person duly shown to be sought by that state (a) for trial on a charge of having committed a crime covered by the treaty within the jurisdiction of the requesting state, or (b) for punishment after conviction of such a crime and flight from that state, provided that none of the grounds for refusal to extradite set forth in [the treaty] is applicable. Subject to a contrary treaty provision, federal law defines the mechanism by which the United States honors its extradition treaty obligations. Although some countries will extradite in the absence of an applicable treaty as a matter of comity, it was long believed that the United States could only grant an extradition request if it could claim coverage under an existing extradition treaty. Dicta in several court cases indicated that this requirement, however, was one of congressional choice rather than constitutional requirement. Congress appears to have acted upon the assumption that a treaty was not required for extradition in 1996, when it authorized the extradition of fugitive aliens at the behest of a nation with which the United States has no extradition treaty. That same year, Congress passed legislation to implement international agreements made between the United States and the International Tribunals for Yugoslavia and Rwanda, which were entered into as executive agreements rather than treaties. Pursuant to these agreements, the United States pledged to surrender to the requesting tribunal any person found within its territory who had been charged with or found guilty by the tribunal of an offense. The constitutional vitality of these efforts was put to the test shortly thereafter when the United States attempted to surrender a resident alien to the International Tribunal for Rwanda. Initially, a federal magistrate judge for the Southern District of Texas ruled that constitutional separation of powers requirements precluded extradition in the absence of a treaty. The government subsequently filed another request for surrender with the district court, and the presiding judge certified the request, holding that an extradition could be effectuated pursuant to either a treaty or an authorizing statute. In a 2-1 panel decision, the Fifth Circuit Court of Appeals upheld this ruling, concluding that "although some authorization by law is necessary for the Executive to extradite, neither the Constitution's text nor … [relevant jurisprudence] require that the authorization come in the form of a treaty." The Supreme Court subsequently declined a petition for writ of certiorari to review the appellate court's ruling. A question has occasionally arisen over whether an extradition treaty with a colonial power continues to apply to a former colony that has become independent, or whether an extradition treaty with a prior State remains in effect with its successor. Although the United States periodically renegotiates replacements or supplements for existing treaties to make contemporary adjustments, the United States has a number of treaties that pre-date the dissolution of a colonial bond or some other adjustment in governmental status. Fugitives in these situations have sometimes contested extradition on the grounds that the United States has no valid extradition treaty with the successor government that asks that they be handed over for prosecution. These efforts are generally unsuccessful since successor governments have ordinarily assumed the extradition treaty obligations negotiated by their predecessors. Extradition is generally limited to crimes identified in the treaty. Early treaties often recite a list of the specific extraditable crimes. Jay's Treaty mentions only murder and forgery; the inventory in the 1852 treaty with Prussia included eight others; and the 1974 treaty between the United States and Denmark identified several dozen extradition offenses: 1. Murder; voluntary manslaughter; assault with intent to commit murder. 2. Aggravated injury or assault; injuring with intent to cause grievous bodily harm. 3. Unlawful throwing or application of any corrosive or injurious substances upon the person of another. 4. Rape; indecent assault; sodomy accompanied by use of force or threat; sexual intercourse and other unlawful sexual relations with or upon children under the age specified by the laws of both the requesting and the requested States. 5. Unlawful abortion. 6. Procuration; inciting or assisting a person under 21 years of age or at the time ignorant of the purpose in order that such person shall carry on sexual immorality as a profession abroad or shall be used for such immoral purpose; promoting of sexual immorality by acting as an intermediary repeatedly or for the purpose of gain; profiting from the activities of any person carrying on sexual immorality as a profession. 7. Kidnapping; child stealing; abduction; false imprisonment. 8. Robbery; assault with intent to rob. 9. Burglary. 10. Larceny. 11. Embezzlement. 12. Obtaining property, money or valuable securities: by false pretenses or by threat or force, by defrauding any governmental body, the public or any person by deceit, falsehood, use of the mails or other means of communication in connection with schemes intended to deceive or defraud, or by any other fraudulent means. 13. Bribery, including soliciting, offering and accepting. 14. Extortion. 15. Receiving or transporting any money, valuable securities or other property knowing the same to have been unlawfully obtained. 16. Fraud by a bailee, banker, agent, factor, trustee, executor, administrator or by a director or officer of any company. 17. An offense against the laws relating to counterfeiting or forgery. 18. False statements made before a court or to a government agency or official, including under United States law perjury and subornation of perjury. 19. Arson. 20. An offense against any law relating to the protection of the life or health of persons from: a shortage of drinking water; poisoned, contaminated, unsafe or unwholesome drinking water, substance or products. 21. Any act done with intent to endanger the safety of any person traveling upon a railway, or in any aircraft or vessel or bus or other means of transportation, or any act which impairs the safe operation of such means of transportation. 22. Piracy; mutiny or revolt on board an aircraft against the authority of the commander of such aircraft; any seizure or exercise of control, by force or violence or threat of force or violence, of an aircraft. 23. An offense against the laws relating to damage to property. 24. a. Offenses against the laws relating to importation, exportation or transit of goods, articles, or merchandise. b. Offenses relating to willful evasion of taxes and duties. c. Offenses against the laws relating to international transfers of funds. 25. An offense relating to the: a. spreading of false intelligence likely to affect the price of commodities, valuable securities or any other similar interests; or b. making of incorrect or misleading statements concerning the economic conditions of such commercial undertakings as joint-stock companies, corporations, co-operative societies or similar undertakings through channels of public communications, in reports, in statements of accounts or in declarations to the general meeting or any proper official of a company, in notifications to, or registration with, any commission, agency or officer having supervisory or regulatory authority over corporations, joint-stock companies, other forms of commercial undertakings or in any invitation to the establishment of those commercial undertakings or to the subscription of shares. 28. Unlawful abuse of official authority which results in grievous bodily injury or deprivation of the life, liberty or property of any person, [or] attempts to commit, conspiracy to commit, or participation in, any of the offenses mentioned in this Article, Art. 3, 25 U.S.T. 1293 (1974). While many existing U.S. extradition treaties continue to list specific extraditable offenses, the more recent ones feature a dual criminality approach, and simply make all felonies extraditable (subject to other limitations found elsewhere in their various provisions). In addition to an explicit list of crimes for which extradition may be granted, most modern extradition treaties also identify various classes of offenses for which extradition may or must be denied. Common among these are provisions excluding purely military and political offenses. The military crimes exception usually refers to those offenses like desertion which have no equivalents in civilian criminal law. The exception is of relatively recent vintage. In the case of treaties that list specific extraditable offenses, the exception is unnecessary since purely military offenses are not listed. The exception became advisable, however, with the advent of treaties that make extraditable any misconduct punishable under the laws of both treaty partners. With the possible exception of selective service cases arising during the Vietnam War period, recourse to the military offense exception appears to have been infrequent and untroubled. The political offense exception, however, has proven more troublesome. The exception is and has been a common feature of extradition treaties for almost a century and a half. In its traditional form, the exception is expressed in deceptively simple terms. Yet it has been construed in a variety of ways, more easily described in hindsight than to predict beforehand. As a general rule, American courts require that a fugitive seeking to avoid extradition "demonstrat[e] that the alleged crimes were committed in the course of and incidental to a violent political disturbance such as a war, revolution or rebellion." Contemporary extradition treaties often seek to avoid misunderstandings over the political offense exception in a number of ways. Some expressly exclude terrorist offenses or other violent crimes from the definition of political crimes for purposes of the treaty; some explicitly extend the political exception to those whose prosecution is politically or discriminatorily motivated; and some limit the reach of their political exception clauses to conform to their obligations under multinational agreements. Separately, several multinational agreements contain provisions that effectively incorporate enumerated offenses into any preexisting extradition treaty between parties. A few of these multilateral agreements also specify that enumerated activities shall not be considered political offenses for purposes of extradition. A number of nations have abolished or abandoned capital punishment as a sentencing alternative. Several of these have preserved the right to deny extradition in capital cases either absolutely or in absence of assurances that the fugitive will not be executed if surrendered. More than a few countries are reluctant to extradite in a capital case even though their extradition treaty with the United States has no such provision, based on opposition to capital punishment or to the methods and procedures associated with execution bolstered by sundry multinational agreements to which the United States is either not a signatory or has signed with pertinent reservations. Additionally, "though almost all extradition treaties are silent on this ground, some states may demand assurances that the fugitive will not be sentenced to life in prison, or even that the sentence imposed will not exceed a specified term of years." Dual criminality addresses the reluctance to extradite a fugitive for conduct that the host nation considers innocent. Dual criminality exists when the parties to an extradition treaty each recognize a particular form of misconduct as a punishable offense. Historically, extradition treaties have handled dual criminality in one of three ways: (1) they list extraditable offenses and do not otherwise speak to the issue; (2) they list extraditable offenses and contain a separate provision requiring dual criminality; or (3) they identify as extraditable offenses those offenses condemned by the laws of both nations. Today, "[u]nder most international agreements ... [a] person sought for prosecution or for enforcement of a sentence will not be extradited ... (c) if the offense with which he is charged or of which he has been convicted is not punishable as a serious crime in both the requesting and requested state.... " Although there is a split of authority over whether dual criminality resides in all extradition treaties that do not deny its application, the point is largely academic since it is a common feature of all American extradition treaties. Subject to varying interpretations, the United States favors the view that treaties should be construed to honor an extradition request if possible. Thus, dual criminality does not "require that the name by which the crime is described in the two countries shall be same; nor that the scope of the liability shall be coextensive, or, in other respects, the same in the two countries. It is enough if the particular act charged is criminal in both jurisdictions." When a foreign country seeks to extradite a fugitive from the United States, dual criminality may be satisfied by reference to either federal or state law. U.S. treaty partners do not always construe dual criminality requirements as broadly. In the past, some have been unable to find equivalents for attempt, conspiracy, and crimes with prominent federal jurisdictional elements (e.g., offenses under the Racketeer Influenced and Corrupt Organizations [RICO] and Continuing Criminal Enterprise [CCE] statutes). Many modern extradition treaties contain provisions addressing the problem of jurisdictional elements and/or making extraditable an attempt or conspiracy to commit an extraditable offense. Some include special provisions for tax and customs offenses as well. As a general rule, crimes are defined by the laws of the place where they are committed. There have always been exceptions to this general rule under which a nation was understood to have authority to outlaw and punish conduct occurring outside the confines of its own territory. In the past, U.S. extradition treaties applied to crimes "committed within the [territorial] jurisdiction" of the country seeking extradition. Largely as a consequence of terrorism and drug trafficking, however, the United States now claims more sweeping extraterritorial application for its criminal laws than recognized either in its more historic treaties or by many of today's governments. Success in eliminating extradition impediments by negotiating new treaty provisions has been mixed. More than a few call for extradition regardless of where the offense was committed. Yet perhaps an equal number of contemporary treaties permit or require denial of an extradition request that falls within an area where the countries hold conflicting views on extraterritorial jurisdiction. The right of a country to refuse to extradite one's own nationals is probably the greatest single obstacle to extradition. The United States has long objected to the impediment, and recent treaties indicate that its hold may not be as formidable as was once the case. U.S. extradition agreements generally contain three types of nationality provisions: The first does not refer to nationals specifically, but agrees to the extradition of all persons. Judicial construction, as well as executive interpretation, of such clauses have consistently held that the word "persons" includes nationals, and therefore refusal to surrender a fugitive because he is a national cannot be justified.... The second and most common type of treaty provision provides that "neither of the contracting parties shall be bound to deliver up its own citizens or subjects.... " [Congress has enacted legislation to overcome judicial construction that precluded the United States from surrendering an American under such provisions. ]…. The third type of treaty provision states that "neither of the contracting parties shall be bound to deliver up its own citizens under the stipulations of this convention, but the executive authority of each shall have the power to deliver them up if, in its discretion, it be deemed proper do so." These three types of treaty provisions have been joined by a number of variants. A growing number go so far as to declare that "extradition shall not be refused based on the nationality of the person sought." Another form limits the nationality exemption to nonviolent crimes. A third bars nationality from serving as the basis to deny extradition when the fugitive is sought in connection with a listed offense. Another variant allows a conflicting obligation under a multinational agreement to wash away the exemption. Even where the exemption is preserved, contemporary treaties more regularly refer to the obligation to consider prosecution at home of those nationals whose extradition has been refused. Depending on the treaty, extradition may also be denied on the basis of a number of procedural considerations. Although the U.S. Constitution's prohibition against successive prosecutions for the same offense does not extend to prosecutions by different sovereigns, it is common for extradition treaties to contain clauses proscribing extradition when the transferee would face double punishment and/or double jeopardy (also known as non bis in idem ). The more historic clauses are likely to bar extradition for a second prosecution of the "same acts" or the "same event" rather than the more narrowly drawn "same offenses." The new model limits the exemption to fugitives who have been convicted or acquitted of the same offense and specifically denies the exemption where an initial prosecution has simply been abandoned. Lapse of time or statute of limitation clauses are also prevalent in extradition treaties: Many [states] ... preclude extradition if prosecution for the offense charged, or enforcement of the penalty, has become barred by lapse of time under the applicable law. Under some treaties the applicable law is that of the requested state, in others that of the requesting state; under some treaties extradition is precluded if either state's statute of limitations has run. ... When a treaty provides for a time-bar only under the law of the requesting state, or only under the law of the requested state, United States courts have generally held that time-bar of the state not mentioned does not bar extradition. If the treaty contains no reference to the effect of a lapse of time neither state's statute of limitations will be applied. Left unsaid is the fact that some treaties declare in no uncertain terms that the passage of time is no bar to extradition, and others rest the decision with the discretion of the requested state. In cases governed by U.S. law and in instances of U.S. prosecution following extradition, applicable statutes of limitation and due process determine whether pre-indictment delays bar prosecution, and speedy trial provisions govern whether postindictment delays preclude prosecution. U.S. extradition treaties commonly contain a number of other features, including provisions concerning the allocation of extradition-related expenses between the parties; the appointment of legal representation for the requesting country in extradition hearings; the transfer of evidence along with the extradited person; and the transit of a fugitive through the territory of either of the parties to a third country. U.S. extradition treaties, particularly the more recent ones, often have other less obvious, infrequently mentioned features. Perhaps the most common of these deal with the expenses associated with the procedure and representation of the country requesting extradition before the courts of the country of refuge. The distribution of costs is ordinarily governed by a treaty stipulation, reflected in federal statutory provisions, under which the country seeking extradition accepts responsibility for any translation expenses and the costs of transportation after surrender, and the country of refuge assumes responsibility for all other costs. Although sometimes included in a separate article, contemporary treaties generally make the country of refuge responsible for legal representation of the country seeking extradition. Contemporary treaties regularly permit a country to surrender documents and other evidence along with an extradited fugitive. An interesting attribute of these clauses is that they permit transfer of the evidence even if the fugitive becomes unavailable for extradition. This may make some sense in the case of disappearance or flight, but seems a bit curious in the case of death. A somewhat less common clause permits transportation of a fugitive through the territory of either of the parties to a third country without the necessity of following the treaty's formal extradition procedure. The Constitution provides that the judicial power of the United States extends to certain cases and controversies. Historically, this has led to discomfort whenever an effort is made to insert the federal courts in the midst of an executive or legislative process, such as the issuance of purely advisory opinions. The fact that extradition turns on the discretion of the Secretary of State following judicial certification has led to the suggestion that the procedure established by the extradition statute is constitutionally offensive to this separation of powers. First broached by a district court in the District of Columbia, subsequent courts have rejected the suggestion in large measure under the view that much like the issuance of a search or arrest warrant, the task is compatible with tasks constitutionally assigned to the judiciary. A foreign country usually begins the extradition process with a request submitted to the State Department sometimes including the documentation required by the treaty. When a requesting nation is concerned that the fugitive will take flight before it has time to make a formal request, it may informally ask for extradition and provisional arrest with the assurance that the full complement of necessary documentation will follow. In either case, the Secretary of State, at his discretion, may forward the matter to the Department of Justice to begin the procedure for the arrest of the fugitive "to the end that the evidence of criminality may be heard and considered." The United States Attorneys' Manual encapsulates the Justice Department's participation thereafter in these words: 1. OIA [Office of International Affairs] reviews ... requests for sufficiency and forwards appropriate ones to the district [where the fugitive is found]. 2. The Assistant United States Attorney assigned to the case obtains a warrant and the fugitive is arrested and brought before the magistrate judge or the district judge. 3. The government opposes bond in extradition cases. 4. A hearing under 18 U.S.C. §3184 is scheduled to determine whether the fugitive is extraditable. If the court finds the fugitive to be extraditable, it enters an order of extraditability and certifies the record to the Secretary of State, who decides whether to surrender the fugitive to the requesting government. In some cases a fugitive may waive the hearing process. 5. OIA notifies the foreign government and arranges for the transfer of the fugitive to the agents appointed by the requesting country to receive him or her. Although the order following the extradition hearing is not appealable (by either the fugitive or the government), the fugitive may petition for a writ of habeas corpus as soon as the order is issued. The district court's decision on the writ is subject to appeal, and extradition may be stayed if the court so orders. Although the United States takes the view that an explicit treaty provision is unnecessary, extradition treaties sometimes expressly authorize requests for provisional arrest of a fugitive prior to delivery of a formal request for extradition. Regardless of whether detention occurs pursuant to provisional arrest, as a consequence of the initiation of an extradition hearing or upon certification of extradition, the fugitive is not entitled to release on bail except under rare "special circumstances." This limited opportunity for preextradition release may be further restricted under the applicable treaty. The precise menu for an extradition hearing is dictated by the applicable extradition treaty, but a common checklist for a hearing conducted in this country would include determinations that 1. there exists a valid extradition treaty between the United States and the requesting state; 2. the relator is the person sought; 3. the offense charged is extraditable; 4. the offense charged satisfies the requirement of double criminality; 5. there is "probable cause" to believe the relator committed the offense charged; 6. the documents required are presented in accordance with United States law, subject to any specific treaty requirements, translated and duly authenticated ...; and 7. other treaty requirements and statutory procedures are followed. An extradition hearing is not, however, in the nature of a final trial by which the prisoner could be convicted or acquitted of the crime charged against him.... Instead, it is essentially a preliminary examination to determine whether a case is made out which will justify the holding of the accused and his surrender to the demanding nation.... The judicial officer who conducts an extradition hearing thus performs an assignment in line with his or her accustomed task of determining if there is probable cause to hold a defendant to answer for the commission of an offense. The purpose of the hearing is in part to determine whether probable cause exists to believe that the individual committed an offense covered by the extradition treaty. The rules of criminal procedure and evidence that would apply at trial have no application at the hearing. Warrants, depositions, and other authenticated documents are admissible as evidence. The individual may offer evidence to contradict or undermine the existence of probable cause, but affirmative defenses that might be available at trial are irrelevant. Hearsay is not only admissible but may be relied upon exclusively; the Miranda rule has no application; initiation of extradition may be delayed without regard for the Sixth Amendment right to a speedy trial or the Fifth Amendment right of due process; nor do the Sixth Amendment rights to the assistance of counsel or cross examine witnesses apply. Due process, however, will bar extradition of informants whom the government promised confidentiality and then provided the evidence necessary to establish probable cause for extradition. Moreover, extradition will ordinarily be certified without "examining the requesting country's criminal justice system or taking into account the possibility that the extraditee will be mistreated if returned." This "noninquiry rule" is a judicially created rule premised on the view that "[w]hen an American citizen commits a crime in a foreign country, he cannot complain if required to submit to such modes of trial and to such punishment as the laws of that country may prescribe for its own people, unless a different mode be provided for by treaty stipulations between that country and the United States." If at the conclusion of the extradition hearing, the court concludes there is some obstacle to extradition and refuses to certify the case, "[t]he requesting government's recourse to an unfavorable disposition is to bring a new complaint before a different judge or magistrate, a process it may reiterate apparently endlessly." If the court concludes there is no such obstacle to extradition and certifies to the Secretary of State that the case satisfies the legal requirements for extradition, the fugitive has no right of appeal, but may be entitled to limited review under habeas corpus. "[H]abeas corpus is available only to inquire whether the magistrate had jurisdiction, whether the offense charged is within the treaty and, by a somewhat liberal extension, whether there was any evidence warranting the finding that there was reasonable ground to believe the accused guilty." In this last assessment, appellate courts will only "examine the magistrate judge's determination of probable cause to see if there is 'any evidence' to support it." Limitations on review or application of the rule of noninquiry may be modified by treaty or statute. Whether a particular treaty or statute precludes review or application of the rule, however, can be a complicated issue. For example, the U.N. Convention Against Torture (CAT) provides that no State Party "shall expel, return ... or extradite a person to another State where there are substantial grounds for believing that he would be in danger of being subjected to torture." Following U.S. ratification of CAT, Congress enacted Section 2242 of the Foreign Affairs Reform and Restructuring Act of 1998 (FARRA), which requires all relevant federal agencies to adopt appropriate regulations to implement this policy. Some fugitives have argued that CAT or FARRA operate as exceptions to the noninquiry rule. The argument has produced hollow victories at the appellate court level. The Fourth Circuit concluded that the rule of noninquiry posed no obstacle, but went on to hold that FARRA itself barred habeas review of a fugitive's torture claim. The Ninth Circuit, on the other hand, concluded that FARRA required the Secretary of State to pass upon on a fugitive's torture claim, but that "[t]he doctrine of separation of powers and the rule on non-inquiry block[ed] any [judicial] inquiry into the substance of the Secretary's declaration." If the judge or magistrate certifies the fugitive for extradition, the matter then falls to the discretion of the Secretary of State to determine whether as a matter of policy the fugitive should be released or surrendered to the agents of the country that has requested his or her extradition. The procedure for surrender, described in treaty and statute, calls for the release of the prisoner if he or she is not claimed within a specified period of time, often indicates how extradition requests from more than one country for the same fugitive are to be handled, and frequently allows the fugitive to be held for completion of a trial or the service of a criminal sentence before being surrendered. Extradition treaties may also provide that, in cases where a fugitive faces charges or is serving a criminal sentence in a country of refuge, he may be temporarily surrendered to a requesting State for purposes of prosecution, under the promise that the State seeking extradition will return the fugitive upon the conclusion of criminal proceedings. The laws of the country of refuge and the applicable extradition treaty govern extradition back to the United States of a fugitive located overseas. The request for extradition comes from the Department of State whether extradition is sought for trial in federal or state court or for execution of a criminal sentence under federal or state law. The Justice Department's Office of International Affairs must approve requests for extradition of fugitives from federal charges or convictions and may be asked to review requests from state prosecutors before they are considered by the State Department. Provisions in the United States Attorneys' Manual and the corresponding Justice Department's Criminal Resource Manual sections supplement treaty instructions on the procedures to be followed in order to forward a request to the State Department and thereafter. The first step is to determine whether the fugitive is extraditable. The Justice Department's checklist for determining extraditability begins with an identification of the country in which the fugitive has taken refuge. If the United States has no extradition treaty with the country of refuge, extradition is not a likely option. When there is a treaty, extradition is an option only if the treaty permits extradition. Common impediments include citizenship, dual criminality, statutes of limitation, and capital punishment issues. Many treaties permit a country to refuse to extradite its citizens even in the case of dual citizenship. As for dual criminality, whether the crime of conviction or the crime charged is an extraditable offense will depend upon the nature of the crime and where it was committed. If the applicable treaty lists extraditable offenses, the crime must be on the list. If the applicable treaty insists only upon dual criminality, the underlying misconduct must be a crime under the laws of both the United States and the country of refuge. Where the crime was committed matters; some treaties will permit extradition only if the offense was committed within the geographical confines of the United States. Timing also matters. The speedy trial features of U.S. law require a good faith effort to bring to trial a fugitive who is within the government's reach. Furthermore, the lapse of time or speedy trial component of the applicable extradition treaty may preclude extradition if prosecution would be barred by a statute of limitations in the country of refuge. Some treaties prohibit extradition for capital offenses; more often they permit it but only with the assurance that a sentence of death will not be executed. Prosecutors may request provisional arrest of a fugitive without waiting for the final preparation of the documentation required for a formal extradition request, if there is a risk of flight and if the treaty permits it. The Justice Department encourages judicious use of provisional arrest because of the pressures that may attend it. The Criminal Resource Manual contains the form for collection of the information that must accompany either a federal or state prosecutor's application for a Justice Department request for provisional arrest. Although treaty requirements vary, the Justice Department suggests that prosecutors supply formal documentation in the form of an original and four copies of a prosecutor's affidavit describing the facts of the case, including dates, names, docket numbers and citations, and preferably executed before a judge or magistrate (particularly if extradition is sought from a civil law country) copies of the statutes the fugitive is said to have violated, the statutes governing the penalties that may be imposed upon conviction, and the applicable statute of limitations if the fugitive has been convicted and sentenced: identification evidence; certified documentation of conviction, sentence, and the amount of time served and remaining to be served; copies of the statutes of conviction; and a statement that the service of the remaining sentence is not barred by a statute of limitations if the fugitive is being sought for prosecution or sentencing: certified copies of the arrest warrant (preferably signed by the court or a magistrate) and of the indictment or complaint if the fugitive is being sought for prosecution or sentencing: evidence of the identity of the individual sought (fingerprints/photographs) and of the evidence upon which the charges are based and of the fugitive's guilt in the form of witness affidavits (preferably avoiding the use grand jury transcripts and, particularly in the case of extradition from a common law country, the use of hearsay). If the Justice Department approves the application for extradition, the request and documentation are forwarded to the State Department, translated if necessary, and with State Department approval forwarded through diplomatic channels to the country from which extradition is being sought. The treaty issue most likely to arise after extradition and the fugitive's return to this country is whether the fugitive was surrendered subject to any limitations such as those posed by the doctrine of specialty. Under the doctrine of specialty, sometimes called speciality, a person who has been brought within the jurisdiction of the court by virtue of proceedings under an extradition treaty, can only be tried for one of the offences described in that treaty, and for the offence with which he is charged in the proceedings for his extradition, until a reasonable time and opportunity have been given him after his release or trial upon such charge, to return to the country from whose asylum he had been forcibly taken under those proceedings. The limitation, expressly included in many treaties, is designed to preclude prosecution for different substantive offenses but does not bar prosecution for different or additional counts of the same offense. And some courts have held that an offense whose prosecution would be barred by the doctrine may nevertheless be considered for purposes of the federal sentencing guidelines, or for purposes of criminal forfeiture. At least where an applicable treaty addresses the question, the rule is no bar to prosecution for crimes committed after the individual is extradited. The doctrine may be of limited advantage to a given defendant because the circuits are divided over whether a defendant has standing to claim its benefits. Additionally, one circuit has held that a fugitive lacks standing to allege a rule of specialty violation when extradited pursuant to an agreement other than treaty. Regardless of their view of fugitive standing, reviewing courts have agreed that the surrendering State may subsequently consent to trial for crimes other than those for which extradition was had. The existence of an extradition treaty does not preclude the United States acquiring personal jurisdiction over a fugitive by other means, unless the treaty expressly provides otherwise. Waiver or "simplified" treaty provisions allow a fugitive to consent to extradition without the benefit of an extradition hearing. Although not universal, the provisions constitute the least controversial of the alternatives to extradition. The removal of aliens under immigration law has traditionally been considered a practice distinct from extradition. Unlike extradition, the legal justification for removing an alien via deportation or denial of entry is not so he can answer charges against him in the receiving State; rather, it is because the removing country has sovereign authority to determine which nonnationals may enter or remain within its borders, and the alien has failed to fulfill the legal criteria allowing noncitizens to enter, remain in, or pass in transit through the sovereign's territory. Whether by a process similar to deportation or by simple expulsion, the United States has had some success encouraging other countries to surrender fugitives other than their own nationals without requiring recourse to extradition. Ordinarily, U.S. immigration procedures, on the other hand, have been less accommodating and have been called into play only when extradition has been found wanting. They tend to be time consuming and usually can be used only in lieu of extradition when the fugitive is an alien. Moreover, they frequently require the United States to deposit the alien in a country other than one that seeks his or her extradition. Yet in a few instances where an alien has been naturalized by deception or where the procedures available against alien terrorists come into play, denaturalization or deportation may be considered an attractive alternative or supplement to extradition proceedings. Although less frequently employed by the United States, "irregular rendition" is a familiar alternative to extradition. An alternative of last resort, it involves kidnaping or deceit and generally has been reserved for terrorists, drug traffickers, and the like. Kidnaping a defendant overseas and returning him to the United States for trial does not deprive American courts of jurisdiction unless an applicable extradition treaty explicitly calls for that result. Nor does it ordinarily expose the United States to liability under the Federal Tort Claims Act or individuals involved in the abduction to liability under the Alien Tort Statute. The individuals involved in the abduction, however, may face foreign prosecution, or at least be the subject of a foreign extradition request. Moreover, the effort may strain diplomatic relations with the country from which the fugitive is lured or abducted. Besides receiving persons through irregular rendition, the United States has also rendered persons to other countries over the years, via the Central Intelligence Agency and various law enforcement agencies. During the George W. Bush Administration, there was controversy over the use of renditions by the United States, particularly with regard to the alleged transfer of suspected terrorists to countries known to employ harsh interrogation techniques that may rise to the level of torture. Little publicly available information from government sources exists regarding the nature and frequency of U.S. renditions to countries believed to practice torture, or the nature of any assurances obtained from them before rendering persons to their custody. It appears that most, if not all, cases in which the United States has irregularly rendered persons have involved the transfer of noncitizens seized outside the United States, perhaps because persons within the United States (and U.S. citizens outside the country ) are provided procedural protections against being summarily transferred to another country under federal statute and the Constitution. The legal limitations against the rendition of noncitizens seized outside the United States are much more limited, though it would be a violation of both CAT and U.S. criminal law for a U.S. official to conspire to commit torture via rendition. A final alternative when extradition for trial in the United States is not available, is trial within the country of refuge. The alternative exists primarily when a U.S. request for extradition has been refused because of the fugitive's nationality and/or when the crime occurred under circumstances that permit prosecution by either country for the same misconduct. The alternative can be cumbersome and expensive and may be contrary to U.S. policy objectives. Appendix A. Countries with Which the United States Has a Bilateral Extradition Treaty Appendix B. Countries with Which the United States Has No Bilateral Extradition Treaty
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"Extradition" is the formal surrender of a person by a State to another State for prosecution or punishment. Extradition to or from the United States is a creature of treaty. The United States has extradition treaties with over a hundred nations, although there are many countries with which it has no extradition treaty. International terrorism and drug trafficking have made extradition an increasingly important law enforcement tool. This is a brief overview of the adjustments made in recent treaties to accommodate American law enforcement interests, and then a nutshell overview of the federal law governing foreign requests to extradite a fugitive found in this country and a United States request for extradition of a fugitive found in a foreign country. Extradition treaties are in the nature of a contract and generate the most controversy with respect to those matters for which extradition may not be had. In addition to an explicit list of crimes for which extradition may be granted, most modern extradition treaties also identify various classes of offenses for which extradition may or must be denied. Common among these are provisions excluding purely military and political offenses; capital offenses; crimes that are punishable under only the laws of one of the parties to the treaty; crimes committed outside the country seeking extradition; crimes where the fugitive is a national of the country of refuge; and crimes barred by double jeopardy or a statute of limitations. Extradition is triggered by a request submitted through diplomatic channels. In this country, it proceeds through the Departments of Justice and State and may be presented to a federal magistrate to order a hearing to determine whether the request is in compliance with an applicable treaty, whether it provides sufficient evidence to satisfy probable cause to believe that the fugitive committed the identified treaty offense(s), and whether other treaty requirements have been met. If so, the magistrate certifies the case for extradition at the discretion of the Secretary of State. Except as provided by treaty, the magistrate does not inquire into the nature of foreign proceedings likely to follow extradition. The laws of the country of refuge and the applicable extradition treaty govern extradition back to the United States of a fugitive located overseas. Requests travel through diplomatic channels, and the treaty issue most likely to arise after extradition to this country is whether the extraditee has been tried for crimes other than those for which he or she was extradited. The fact that extradition was ignored and a fugitive forcibly returned to the United States for trial constitutes no jurisdictional impediment to trial or punishment. Federal and foreign immigration laws sometimes serve as an alternative to extradition to and from the United States. This report is available in an abbreviated version, CRS Report RS22702, An Abridged Sketch of Extradition To and From the United States, by [author name scrubbed], which appears without the citations to authority, footnotes, or appendices found here.
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Abused, neglected, or abandoned children who also lack authorization under immigration law to reside in the United States (i.e., unauthorized aliens) raise complex immigration and child welfare concerns. In 1990, Congress created an avenue for unauthorized children who become dependents of the state juvenile court to remain in the United States legally and permanently as lawful permanent residents (LPR) under the Immigrant and Nationality Act (INA). If an LPR meets the naturalization requirements set in the INA, he or she can become a U.S. citizen. The Special Immigrant Juvenile was originally conceived for a small number of children of unauthorized alien parents who were declared dependent by state juvenile courts. Although the unauthorized alien resident population in the United States has grown substantially since 1990, the number of SIJs who became LPRs remained under 1,000 per year until FY2008. In that year, Congress enacted provisions in the Trafficking Victims Protection Reauthorization Act of 2008 that altered the eligibility criteria for SIJ status as part of a package of amendments pertaining to unaccompanied alien children. Now, the recent increase in unaccompanied alien children arriving in the United States has cast a spotlight on SIJ status because these unaccompanied children may apply for, and some may obtain, LPR status through this provision. This report provides a brief explanation of the statutory basis of SIJ status and how it has evolved. It also presents statistics on the number of children who have applied for and received SIJ status since FY2005. The report concludes with a discussion of the applicability of SIJ status for unaccompanied alien children. Children of unauthorized aliens who had been abused, neglected, or abandoned have long posed complex immigration and child welfare concerns. Prior to the statutory provisions added to the Immigration and Nationality Act (INA) in 1990, unauthorized minors who were declared dependent on the state juvenile courts were akin to stateless individuals in that there was no home where they could return. They were perceived as a particularly vulnerable group within the child welfare system, given the unique difficulties they faced as they transitioned into adulthood. For example, because they were not legally present in the United States, they could not be employed when they reached a legal working age. They would be subject to removal proceedings and deportation to a country where they might have little attachment or familiarity. The Immigration Act of 1990 ( P.L. 101-649 ) added the SIJ provision (among other major revisions) to the INA in response to growing concerns over foreign children in the United States who were homeless, orphans, or victims of abusive family situations. The provision enabled unauthorized alien children who become dependents of the state juvenile courts to remain in the United States legally and permanently. As originally enacted in 1990, the language establishing SIJ status was fairly simple. To be eligible for SIJ, the foreign national was an individual (i) who has been declared dependent on a juvenile court located in the United States and has been deemed eligible by that court for long-term foster care, and (ii) for whom it has been determined in administrative or judicial proceedings that it would not be in the alien's best interest to be returned to the alien's or parent's previous country of nationality or country of last habitual residence. It was a small provision included in a major overhaul of immigration law with little fanfare. Seven years later, in response to a perception that some unauthorized aliens might have been relinquishing parental rights so that their children could become SIJs, Congress added language amending the INA to ensure that the SIJ benefit was not "sought primarily for the purpose of obtaining the status of an alien lawfully admitted for permanent residence, rather than for the purpose of obtaining relief from abuse or neglect or abandonment." The 1997 act expressly amended the definition of a "special immigrant juvenile" to include only those juveniles deemed eligible for long-term foster care based on abuse, neglect, or abandonment . In addition, provisions in the 1997 act required that a juvenile who was in the custody of the federal government obtain specific consent from the Department of Justice to permit a juvenile court, which otherwise would have no custody jurisdiction over the juvenile alien, to exercise jurisdiction for purposes of a dependency determination. In 2008, Congress amended the SIJ provisions in the INA to broaden their applicability. The Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA, P.L. 110-457 ), among other things, amended the SIJ eligibility provisions to (1) remove the requirement that a juvenile court deem a juvenile eligible for long-term foster care and (2) replace it with a requirement that the juvenile court find reunification with one or both parents not viable. According to U.S. Citizenship and Immigration Services (USCIS) legal guidance issued in 2009, an eligible SIJ would include the following. [An unauthorized child] who has been declared dependent on a juvenile court; whom a juvenile court has legally committed to, or placed under the custody of, an agency or department of a State; or who has been placed under the custody of an individual or entity appointed by a State or juvenile court. Accordingly, petitions that include juvenile court orders legally committing a juvenile to or placing a juvenile under the custody of an individual or entity appointed by a juvenile court are now eligible. The TVPRA of 2008 also revised the "specific consent" provisions in the INA, transferring the authority from the U.S. Department of Homeland Security (DHS) to the U.S. Department of Health and Human Services (HHS), the federal department that also has custody of unaccompanied alien children. Subsequently, USCIS field guidance required that juveniles in the custody of HHS obtain "specific consent from HHS to juvenile court jurisdiction where the juvenile court order determines or alters the juvenile's custody status or placement." The process of becoming an SIJ and ultimately an LPR includes multiple steps, as the child petitions for SIJ status after the juvenile court decision and then applies to adjust to LPR status. In response to concerns that the process was taking too long, the law requires USCIS to adjudicate SIJ petitions within 180 days of filing. The law also states that the foreign national may not be denied SIJ status if he or she "ages out" because the determination is based upon the individual's age when the petition was filed. To promote efficiency, the otherwise mandatory personal interview may be waived for juveniles under 14 years of age who are seeking SIJ status , or when it is determined that an interview is unnecessary. A juvenile seeking SIJ status must demonstrate that an administrative or judicial proceeding has resulted in a determination that it would not be in the juvenile's best interest to be returned to the child's or the parent's previous country of nationality or country of last habitual residence. To pre-empt USCIS adjudicators from reconsidering the court's determination of abuse, abandonment, or neglect, t he field guidance states that the adjudicators "should f ocus on eligibility for adjustment of status and should avoid questioning a child about the details of the abuse, abandonment or neglect suffered." The law makes clear that a juvenile seeking SIJ status , at any stage of the SIJ process, cannot be required to contact the individual (or family members of the individual) who allegedly abused, abandoned, or neglected the juvenile. USCIS also must complete background checks, including biometric information clearances and name-checks of the juvenile . Juveniles seeking SIJ status are exempted from many of the inadmissibility grounds of the INA. Generally, foreign nationals in the United States without authorization, including unauthorized children, are barred from most federal public assistance benefits and programs. The exceptions are a narrow set of specified emergency services and programs, which include Medicaid for an emergency medical condition, immunizations and testing for and treatment of symptoms of communicable diseases, emergency disaster relief, and services or assistance such as soup kitchens, crisis counseling and intervention, and short-term shelters. Only LPRs with a substantial work history or military connection are eligible for the full range of programs, as are asylees, refugees, and other humanitarian cases (for at least five to seven years after entry). Those unauthorized juveniles who qualify as "unaccompanied alien children" are placed in the custody of the Department of Health and Human Services' (HHS) Office of Refugee Resettlement (ORR). Unaccompanied alien children are defined as those who lack lawful immigration status in the United States, are under the age of 18, and are either without a parent or legal guardian in the United States or no parent or legal guardian in the United States is available to provide care and physical custody. The unaccompanied alien children are cared for through a network of state-licensed ORR-funded care providers that provide classroom education, mental and medical health services, case management, and socialization and recreation. In May 2014, ORR reported that ultimately about 85% of the unaccompanied children in their custody are reunited with their families and that the average time in ORR care is about 35 days. The TVPRA of 2008 makes those juveniles granted SIJ status who had been in the custody of HHS or already receiving certain services provided by the ORR eligible for the Unaccompanied Refugee Minors' (URM) Program in ORR. Subject to the availability of appropriations, ORR is required to reimburse the state where the SIJ child resides for the state's foster care expenditures on behalf of the child. Children who receive SIJ status are not eligible for federal foster care through Title IV-E of the Social Security Act. Figure 1 shows a tenfold increase in the number of children filing I-360 petitions requesting SIJ status, spanning from 311 in FY2005 to 3,994 in FY2013. In terms of the number of I-360 petitions approved, the numbers have increased from 73 in FY2005 to 3,432 in FY2013. Data on the subsequent adjustments from SIJ status to LPR status typically lag, but they also show similar trends. Partial I-360 data for FY2014 (through May 2014) indicate that the upward trend is continuing. The LPR visa category of "Special Immigrants" encompasses several other subcategories and is statutorily limited to 7% of 140,000 (i.e., 9,800 foreign nationals) annually. Thus far, the total number of Special Immigrants admitted or adjusted each year has not reached the numerical limit. The natural or prior adoptive parents of the SIJ are not eligible for any immigrant benefits that LPRs and naturalized citizens may otherwise seek for their immediate relatives. As noted at the onset, the surge in unaccompanied alien children arriving at the Southwest border of the United States has heightened congressional interest in SIJ status. While the data presented in Figure 1 do not differentiate among those unauthorized children who arrived unaccompanied by their parents and those who were removed from their parents because of abuse, abandonment, or neglect, many observers point to the similarity in the spiking trends of both categories. An emerging issue is whether the increase in unaccompanied alien children since FY2008 is resulting in an increase in SIJ requests since FY2008. A recent survey of unaccompanied alien children found "abuse in the home" reported as one of the main reasons they fled. In addition, the Vera Institute of Justice conducted screenings of 11,719 unaccompanied children in ORR custody in FY2012 and found 3,724 children who might have been eligible for SIJ status. That an unaccompanied alien child is reunited with at least one parent or family member in the United States, some argue, does not prevent the child from seeking SIJ status based upon the abuse, neglect, or abandonment of the other parent. Some immigration and child welfare advocates assert that the number of children receiving SIJ status barely "scratches the surface of potentially eligible children," basing their conclusion on the assessment that many of the unaccompanied alien children arriving in the United States are eligible for SIJ status. While some call for giving unaccompanied alien children generous access to the SIJ process, others assert that such a practice would be an unintended consequence of the 2008 TVPRA changes to SIJ status. This conclusion is based upon the opinion that the 2008 TVPRA amendments were not intended to provide SIJ status to unauthorized alien children reuniting with family in the United States. As noted above, ORR reports that ultimately about 85% of the unaccompanied children in their custody are reunited with their families, an outcome that some argue makes the reunited children ineligible for long-term foster care as well as SIJ status. Some advocating for lower immigration and increased restrictions on immigration are also calling for legislation to revise the SIJ criteria so reunification with either or both parents is not viable.
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Abused, neglected, or abandoned children who also lack authorization under immigration law to reside in the United States (i.e., unauthorized aliens) raise complex immigration and child welfare concerns. In 1990, Congress created an avenue for unauthorized alien children who become dependents of the state juvenile courts to remain in the United States legally and permanently. Any child or youth under the age of 21 who was born in a foreign country; lives without legal authorization in the United States; has experienced abuse, neglect, or abandonment; and meets other specified eligibility criteria may be eligible for special immigrant juvenile (SIJ) status. Otherwise, unauthorized residents who are minors are subject to removal proceedings and deportation, as are all other unauthorized foreign nationals. The SIJ classification enables unauthorized juveniles who become dependents of the state juvenile court to become lawful permanent residents (LPR) under the Immigrant and Nationality Act (INA). If an LPR meets the naturalization requirements set in the INA, he or she can become a U.S. citizen. When Congress enacted provisions in the Trafficking Victims Protection Reauthorization Act of 2008, it altered the eligibility criteria for SIJ status as part of a package of amendments pertaining to unaccompanied alien children. Now, the recent increase in unaccompanied alien children arriving in the United States has cast a spotlight on SIJ status because these unaccompanied children may apply for, and some may obtain, LPR status through this provision. There has been a tenfold increase in the number of children requesting SIJ status between FY2005 and FY2013. In terms of approvals, the numbers have gone from 73 in FY2005 to 3,432 in FY2013. While the data do not differentiate among those unauthorized children who arrived unaccompanied by their parents and those who were removed from their parents because of abuse, abandonment, or neglect, many observers point to the similarity in the spiking trends of both categories. This report provides a brief explanation of the statutory basis of SIJ status and how it has evolved. It also presents statistics on the number of children who have applied for and received SIJ status since FY2005. The report concludes with a discussion of the applicability of SIJ status for unaccompanied alien children.
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Congress uses an annual appropriations process to provide discretionary spending for federal government agencies. The responsibility for drafting legislation to provide for such spending is currently divided among 12 appropriations subcommittees in each chamber, each of which is tasked with reporting a regular appropriations bill to cover all programs under its jurisdiction. The timetable currently associated with this process requires the enactment of these regular appropriations bills prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that deadline, one or more continuing resolutions (CRs) may be enacted to provide funds until all regular appropriations bills are completed, or the fiscal year ends. During the fiscal year, supplemental appropriations may also be enacted to provide funds in addition to those in regular appropriations acts or CRs. Amounts provided in appropriations acts are subject to limits, both procedural and statutory, which are enforced through respective mechanisms such as points of order and sequestration. The timing and policy focus of the FY2014 appropriations process was influenced by at least two significant factors—the late resolution of FY2013 appropriations and disagreement regarding the level of funding for FY2014 discretionary spending. First, annual appropriations actions for FY2013 were not completed until March 26, 2013 (Consolidated and Further Continuing Appropriations Act, 2013; P.L. 113-6 ), almost six months into the fiscal year. In addition, on March 1, 2013, the President issued a sequestration order that reduced non-exempt FY2013 discretionary spending. The dollar amount of these reductions was applied to the amounts subsequently appropriated for FY2013. Despite ongoing congressional concern related to these reductions, efforts to broadly restructure or eliminate them were unsuccessful, and the lower levels of funding that were available to agencies as a result of the sequester were in effect through the end of the fiscal year. Second, in addition to the issues related to FY2013 spending, the FY2014 appropriations process was affected by a lack of agreement between the House and Senate over future constraints on discretionary spending as required by the Budget Control Act of 2011 (BCA). Unlike the reductions that occurred in FY2013, the constraints on FY2014 discretionary spending are implemented through statutory discretionary spending limits. Separate limits apply to defense and nondefense spending. The first enforcement of these limits was to occur 15 days after Congress adjourned its session 2013 sine die . On December 10, 2013, the chairs of the House and Senate Budget Committees announced an agreement as to the level of FY2014 and FY2015 discretionary spending (the Bipartisan Budget Act; Division A, H.J.Res. 59 ), which was enacted into law on December 26, 2013 ( P.L. 113-67 ). No regular appropriations bills for FY2014 were enacted prior to the beginning of the fiscal year (October 1, 2013), and an interim CR to provide budget authority for the projects and activities covered by those 12 bills did not become law until October 17, 2013 (Continuing Appropriations Act, 2014; P.L. 113-46 ). As a consequence, a 16-day funding gap occurred between October 1 and October 16, 2013. Regular appropriations were ultimately enacted through an omnibus measure, which contained the texts of all 12 regular appropriations bills for FY2014 (the Consolidated Appropriations Act, 2014; H.R. 3547 , P.L. 113-76 ). Congressional consideration of three supplemental appropriations measures occurred late in the fiscal year ( H.R. 5230 , S. 2648 , and H.J.Res. 76 ). Of these measures, Congress has completed action only on H.J.Res. 76 , a measure that provides additional appropriations for military cooperation with the government of Israel related to the Iron Dome program. This report provides background and analysis with regard to the FY2014 appropriations process. The first section discusses the status of discretionary budget enforcement for FY2014, including the statutory spending limits and allocations under the congressional budget resolution. The second section provides information on the consideration and enactment of regular appropriations and an overview of aggregate discretionary spending. Further information with regard to these appropriations acts is provided in the various CRS reports that analyze and compare the components of the current House and Senate proposals. The third section explains congressional action that has occurred on CRs before and after October 1, and the fourth section discusses action on supplemental appropriations measures. The framework for budget enforcement of discretionary spending under the congressional budget process has both statutory and procedural elements. The statutory elements of budget enforcement are derived from the Budget Control Act of 2011 (BCA), which imposes separate limits on "defense" and "nondefense" discretionary spending that apply to each of the fiscal years between FY2012 and FY2021. Pursuant to procedures under the BCA, the initial limits for FY2014 through FY2021 are to be lowered each fiscal year to achieve certain budgetary savings. However, the Bipartisan Budget Act amended the BCA to set the FY2014 and FY2015 limits at specific levels. If discretionary spending is enacted in excess of these limits, enforcement will occur through sequestration at specified times after appropriations measures are enacted. The procedural elements of budget enforcement generally stem from requirements under the Congressional Budget Act of 1974 (CBA; P.L. 93-344 ; 88 Stat. 297; 2 USC 60-688). Through this CBA process, the Appropriations Committee in each chamber receives a procedural limit on the total amount of discretionary budget authority for the upcoming fiscal year, referred to as a 302(a) allocation. The Appropriations Committee subsequently divides this allocation amongst the 12 subcommittees, referred to as a 302(b) suballocation. The 302(b) suballocation restricts the amount of budget authority available to each subcommittee for the projects and activities under its jurisdiction, and so effectively acts as a cap on each of the 12 regular appropriations bills. Enforcement of the 302(a) allocation and 302(b) suballocations occur through points of order. The BCA requires that enacted discretionary spending for FY2014 that is subject to the defense and nondefense limits not exceed certain levels, and provides for enforcement of the limits through sequestration. The Office of Management and Budget (OMB) evaluates enacted FY2014 discretionary spending relative to the spending limits, and determine if sequestration is necessary to enforce those limits, within 15 calendar days after the 2013 congressional session adjourns sine die . For any discretionary spending that becomes law after the session ends, evaluation and any enforcement of the limits occurs 15 days after enactment. As discussed above, the BCA specifies both the level of the spending limits and a process through which they are to be reduced below their initial levels to achieve a certain amount of savings each of the fiscal years between FY2014 and FY2021. The revised FY2014 limits were $552 billion for defense spending and $506 billion for nondefense spending. Pursuant to the BCA requirements, these limits were further revised to about $498.1 billion for defense spending and about $469.4 billion for nondefense spending. The Bipartisan Budget Act amended these FY2014 levels to $520.5 billion in defense spending, and $491.8 billion in nondefense spending (about $1.012 trillion total). Both the House and Senate completed initial floor consideration of the FY2014 budget resolution during the month of March 2013. The House Budget Committee reported H.Con.Res. 25 on March 15, 2013. The House began floor consideration of the resolution on March 19, and adopted it on March 21, by a vote of 221-207. The Senate Budget Committee also reported its budget resolution proposal, S.Con.Res. 8 , on March 15. The Senate began floor consideration of the resolution on March 21, and adopted it on March 23, by a vote of 50-49. As part of the negotiations surrounding interim continuing appropriations for FY2014, the House and Senate agreed to a conference committee on S.Con.Res. 8 , on October 16. As of the date of this report, no agreement between the conferees has been reached. Both the House- and Senate-adopted budget resolutions assumed levels of discretionary spending different from the further revised BCA limits. These assumptions are compared to the revised, further revised, and amended BCA limits in Table 1 . The House-adopted budget resolution assumed FY2014 discretionary spending subject to the limits to be $552 billion for defense spending and $414.4 billion for nondefense spending (about $966.4 billion total). While this proposal maintained the same discretionary spending total that exists under the further revised BCA limits, it increased defense discretionary spending to its revised BCA level and achieved the offset necessary to keep total consistent with the further revised limits through reductions to nondefense discretionary spending. The Senate-adopted budget resolution assumed the levels of FY2014 discretionary spending to be the same as the revised limits—$552 billion for defense spending and $506 billion for nondefense spending ($1.058 trillion total). To provide for procedural budget enforcement during the consideration of FY2014 appropriations acts, the House Budget Committee report and Senate Budget Committee print accompanying each chamber's version of the budget resolution contains a 302(a) allocation for the Appropriations Committee. The House allocation was $966.4 billion for total FY2014 discretionary spending, consistent with the combined amounts of the existing FY2014 statutory discretionary spending limits, and also with the levels of discretionary spending assumed in the House budget resolution. On July 8, the House Budget Committee revised its 302(a) allocation to about $966.9 billion. The Senate 302(a) allocation was also $966.4 billion, consistent with the total of the existing FY2014 statutory discretionary spending limits, but less than the levels of discretionary spending assumed in the Senate budget resolution. Even without reaching agreement on a budget resolution, each chamber began to consider appropriations bills prior to the beginning of FY2014. In the House, the chamber adopted H.Res. 243 to provide for enforcement of the 302(a) allocation associated with the House version of the budget resolution ( H.Con.Res. 25 ). Pursuant to this allocation, the House Appropriations Committee reported its 302(b) suballocation on June 4, 2013. The distribution of defense and nondefense spending was based upon the assumptions underlying the House-adopted budget resolution, and not the further revised BCA limits. In the Senate, no action occurred prior to the enactment of the Bipartisan Budget Act to provide for an enforceable 302(a) allocation. The Senate Appropriations Committee adopted an FY2014 suballocation that served as an internal guideline to the subcommittees. The total amount of discretionary spending in this suballocation, as well as the distribution of defense and nondefense spending, was based on the levels assumed in the Senate-adopted budget resolution. The most recent action on discretionary spending enforcement associated with the budget resolution occurred through the enactment of the Bipartisan Budget Act. Section 111 of the act enabled the House and Senate Budget Committee chairs to provide 302(a) allocations for discretionary spending that comply with its amended limits for FY2014. The House allocations were filed in the Congressional Record for the House on January 14, 2014; the Senate allocations were filed the following day. The House and Senate currently provide annual appropriations in 12 regular appropriations bills. These bills provide discretionary spending for the projects and activities of most federal government agencies. While all of these bills may ultimately be considered and enacted separately, it is also possible for two or more of them to be combined into an omnibus vehicle for consideration and enactment. Alternatively, if some of these bills are not enacted, funding for the projects and activities therein may be provided through a full-year CR. The deadline for enactment of all regular appropriations bills is October 1, the beginning of the fiscal year. During the FY2014 appropriations process, the House Appropriations Committee reported 10 of the 12 regular appropriations bills, while the Senate Appropriations Committee reported 11 of the 12 regular bills. The House initially considered five regular appropriations bills on the floor and passed four of them before final action on regular appropriations occurred. The Senate began floor consideration of one regular appropriations bill, but did not complete it. No regular appropriations were enacted prior to the beginning of the fiscal year. On August 20, 2013, OMB projected that both the House and Senate regular appropriations bills would, in total, exceed one or both of the existing BCA discretionary spending limits. After a total amount for defense and nondefense FY2014 discretionary spending was provided through the enactment of the Bipartisan Budget Act, the House and Senate Appropriations Committees announced an agreement on regular appropriations for FY2014. This agreement was enacted as the Consolidated Appropriations Act, 2014 ( H.R. 3547 ; P.L. 113-76 ) on January 17, 2014. For up-to-date information on the status of regular appropriations measures, see the CRS FY2014 status table, available at http://www.crs.gov/pages/AppropriationsStatusTable.aspx . The 12 regular appropriations bills, along with the associated date of subcommittee approval, date reported to the House, and report number, are listed in Table 2 . Subcommittee and full committee action on approving and reporting regular appropriations bills occurred over about an 11-week period. The first regular appropriations bill to be approved in subcommittee was the Military Construction and Veterans Affairs and Related Agencies Appropriations bill ( H.R. 2216 ), on May 15, 2013. That same bill was also the first regular appropriations bill to be reported to the House, on May 28, 2013. In total, two regular appropriations bills were approved by their respective subcommittees during the month of May, four in June, and five in July. Of these, two each were reported by the House Appropriations Committee in May and June, and the remaining six were reported in July. The final bill to be reported to the House was the Department of State, Foreign Operations, and Related Programs Appropriations bill ( H.R. 2855 ), on July 30, 2013. Two of the 12 regular appropriations bills were not reported to the House. The first, the Department of the Interior, Environment, and Related Agencies Appropriations bill, was approved by the subcommittee on July 23, 2013, but consideration was not completed by the full committee. The second, the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations bill, was neither approved by the subcommittee nor considered by the full committee. The five regular appropriations bills to be considered on the House floor, along with the date consideration was initiated, date consideration was concluded, and vote on final passage, are listed in Table 3 . Such consideration occurred over about an eight-week period. The first bill to be considered on the House floor was the Military Construction and Veterans Affairs and Related Agencies Appropriations bill ( H.R. 2216 ). Consideration was initiated on June 4, 2013, and the bill was passed the following day, by a vote of 421-4. Two bills were considered and passed during the month of June, and two bills in July. The final bill to be considered and passed, the Department of Defense Appropriations bill ( H.R. 2397 ), was passed on July 24, by a vote of 315-109. The House began initial consideration of the Transportation, Housing and Urban Development, and Related Agencies Appropriations bill ( H.R. 2610 ), on July 30. Although a number of amendments were considered on July 30, no vote on final passage occurred at that time. In total, the House initially considered five regular appropriations bills during eight days of session. OMB projected the budgetary levels of the House regular appropriations bills on August 20, 2013. Defense discretionary spending subject to the (further revised) BCA limits was projected to be about $545.9 billion, which was about $47.9 billion in excess of the defense limit at that time. When defense spending designated under Section 251(b) of the BBEDCA for OCO/GWOT was accounted for, the total amount of nondefense discretionary spending was projected to be about $625.4 billion. Nondefense discretionary spending subject to the BCA limits was projected to be about $420.6 billion, however, which was about $48.8 billion below the nondefense limit at that time. When nondefense designated as for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief was accounted for, the total amount of nondefense discretionary spending was projected to be about $431.5 billion. The 12 regular appropriations bills, along with the associated date of subcommittee approval, date reported to the Senate, and report number, are listed in Table 4 . Subcommittee and full committee action on approving and reporting regular appropriations occurred over about a seven week period. The first regular appropriations bill to be approved by a subcommittee was Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations bill ( S. 1244 ), on June 18, 2013. On June 27, the first four bills were all reported to the Senate—Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations bill ( S. 1244 ), the Military Construction and Veterans Affairs and Related Agencies Appropriations bill ( H.R. 2216 ), Transportation, Housing and Urban Development, and Related Agencies Appropriations bill ( S. 1243 ), and the Energy and Water Development and Related Agencies Appropriations bill ( S. 1245 ). In total, four regular appropriations bills were approved by their respective subcommittees during June, and the remaining six in July; four regular appropriations bills were reported to the Senate during June, six in July, and one in August. The final bill to be approved in subcommittee and reported to the Senate was the Department of Defense Appropriations bill ( S. 1429 ), on August 1, 2013. One of the 12 regular appropriations bills was not reported to the Senate. The Department of the Interior, Environment, and Related Agencies Appropriations bill, was neither approved by the subcommittee nor considered by the full committee. The only regular appropriations bill to receive floor consideration in the Senate was the Transportation, Housing and Urban Development, and Related Agencies Appropriations bill ( S. 1243 ). On July 18, 2013, the motion to proceed was made in the Senate, and cloture was filed on that motion. Cloture was invoked on the motion to proceed on July 23, by a vote of 73-26, and the motion to proceed was agreed to by a voice vote on that same day. Between July 23 and August 1, the Senate considered the bill, disposing of a number of amendments thereto. The Senate attempted to close debate by invoking cloture, but was unsuccessful. OMB projected the budgetary levels of the Senate regular appropriations bills on August 20, 2013. Defense discretionary spending subject to the (further revised) BCA limits was projected to be about $552.2 billion, which is about $54.1 billion in excess of the defense limit. When defense spending designated under Section 251(b) of the BBEDCA for OCO/GWOT was accounted for, the total amount of defense discretionary spending was projected to be about $631.6 billion. Similarly, nondefense discretionary spending subject to the BCA limits was projected to be about $503.7 billion, which was about $34.3 billion in excess of the nondefense limit. When nondefense spending designated as for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief was accounted for, the total amount of nondefense discretionary spending was projected to be about $514.5 billion. On January 13, 2014, the House and Senate Appropriations Committee chairs announced an omnibus appropriations package that combined an agreement on each of the 12 regular appropriations bills into a single vehicle. This agreement was to be considered as a House amendment to a Senate amendment to an unrelated bill ( H.R. 3547 ). After adopting a special rule that provided for the consideration of the amendment ( H.Res. 458 ), the House concurred in the Senate amendment with an amendment, by a vote of 359-67, on January 15. The Senate concurred in that House action the following day, by a vote of 72-26. The bill was signed into law on January 17, 2014 ( P.L. 113-76 ). Prior to consideration on the House floor, CBO estimated the discretionary appropriations that would be provided through the enactment of the consolidated measure. These are listed in Table 5 , below. CBO estimated that appropriations subject to the FY2014 discretionary spending limits would not exceed those levels. When adjustments to the limits were accounted for, total appropriations were projected to be about $1.1 billion. Because neither regular appropriations nor a broad continuing resolution (CR) to provide temporary funding for the previous fiscal year's projects and activities was law on October 1, a funding gap commenced on that date for affected projects and activities. One day before that funding gap, a narrow CR was enacted that funded FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain DOD and DHS civilian personnel, and (3) other specified DOD and DHS contractors (the Pay Our Military Act; H.R. 3210 ; P.L. 113-39 , 113 th Congress). During the funding gap, consideration of appropriations was limited to a number of narrow CRs to provide funds for specified projects and activities, of which only one was enacted (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91 ; P.L. 113-44 ). The funding gap terminated with the enactment of a broad CR covering FY2013 projects and activities at an annualized rate of $986.3 billion, through January 15, 2014. (The Continuing Appropriations Act, 2014; H.R. 2775 ; P.L. 113-46 .) Funding was extended for three additional days by P.L. 113-73 ( H.J.Res. 106 ) to allow time for the enactment of the Consolidated Appropriations Act, 2014. Prior to the beginning of the fiscal year, congressional action with regard to continuing appropriations was primarily focused on the Continuing Appropriations Resolution, 2014 ( H.J.Res. 59 ), which was introduced on September 10, 2013. As introduced, this measure would have provided appropriations to broadly cover FY2013 projects and activities through December 15, 2013. At that time, the Congressional Budget Office (CBO) projected the annualized level of total regular appropriations that would be provided under this proposal to be $986.3 billion. The House considered H.J.Res. 59 on September 20, 2013. Such consideration occurred under the terms of a special rule ( H.Res. 352 ) that provided for the automatic adoption of an amendment containing provisions to prohibit the use of any federal funds to carry out the Patient Protection and Affordable Care Act (ACA). After adopting the special rule, the House considered and passed H.J.Res. 59 , by a vote of 230-189. Senate floor consideration of H.J.Res. 59 occurred between September 23 and September 27. Cloture on the motion to proceed was filed in the Senate on September 23, and invoked on September 25, by a vote of 100-0. The motion to proceed was subsequently agreed to by a voice vote. Cloture was filed on the bill that same day, and invoked on September 27, by a vote of 79-19. Prior to final action on the bill, the Senate adopted an amendment to H.J.Res. 59 , which proposed that a number of changes be made to the bill, including moving up the expiration date for the funding to November 15, 2013, and removed the House ACA provisions. The Senate passed H.J.Res. 59 , by a vote of 54-44. Congressional action to resolve House and Senate differences with regard to H.J.Res. 59 occurred between September 28 and October 1. On September 29, the House voted to concur with the Senate amendment with two additional House amendments. Both of these amendments related to the ACA, and the motions with regard to them were agreed to by votes of 248-174 and 231-192, respectively. On the morning of September 30, the Senate voted to table both House amendments (returning H.J.Res. 59 and all amendments thereto to the House), by a vote of 54-46. That afternoon, in response to the Senate action, the House voted to recede from its amendments to the Senate amendment (which had been tabled by the Senate) and instead concurred with the Senate amendment with a further amendment relating to ACA. The motion to recede and concur with an amendment was agreed to by a vote of 228-201. Early in the evening, the Senate voted to table this new House amendment, by a vote of 54-46. In response, the morning of October 1, the House insisted on its amendment and requested a conference with the Senate. Later that morning, the Senate tabled the House request, by a vote of 54-46. The other CR to receive congressional consideration prior to the beginning of the fiscal year was the Pay Our Military Act ( H.R. 3210 ), which was introduced on September 28, 2013. In the weeks before the beginning of the fiscal year, many observers expressed concern related to the effect that a potential funding gap and government shutdown would have on the military and certain associated civilian federal workers and contractors. The Pay Our Military Act was intended to address these issues, by providing appropriations to cover FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain DOD and DHS civilian personnel, and (3) other specified DOD and DHS contractors, in the event that a funding gap were to transpire. The House began floor consideration of H.R. 3210 on the same day that it was introduced, and passed it early in the morning of September 29, by a vote of 423-0. The Senate considered the measure on September 30, and passed it without amendment by unanimous consent. The measure was signed into law by the President that same day ( P.L. 113-39 ). The FY2014 funding gap occurred over the first 16 days of FY2014—October 1-16, 2013. During this period, the House considered and passed a total of 15 narrow CRs to fund particular projects and activities through December 15, 2013. CBO projected that the total amount of annualized regular appropriations subject to the discretionary spending limits that would have been provided by 13 of the 15 of these CRs was $108.306 billion, which is about 11% of the FY2014 statutory discretionary spending limits ($967.473 billion). The highest projected budget authority was for the National Institutes of Health Continuing Appropriations Resolution ( H.J.Res. 73 )—$29.173 billion total. The lowest projected budget authority was for the Department of Defense Survivor Benefits Continuing Appropriations Resolution ( H.J.Res. 91 )—$116 million total. All of these narrow CRs were considered on the House floor either under suspension of the rules, or pursuant to a special rule. With one exception ( H.J.Res. 91 ), none of these measures was considered on the Senate floor. The one narrow CR to be enacted during the FY2014 funding gap was the Department of Defense Survivor Benefits Continuing Appropriations Resolution ( H.J.Res. 91 ). This CR was introduced on October 8, 2013, in response to a dispute as to whether the Pay our Military Act ( P.L. 113-39 ) included an appropriation for death gratuities. The following day, the House suspended the rules and passed H.J.Res. 91 , by a vote of 435-0. On October 10, the Senate passed the measure by unanimous consent, and it was signed into law by the President that evening ( P.L. 113-44 ). According to CBO, the total amount of annualized budget authority for regular appropriations in this CR was $116 million. When spending was included in the calculation that was designated under Section 251(b) of the BBEDCA for OCO/GWOT, the total CBO estimate of the amount of annualized budget authority in the CR was $150 million. Congressional negotiations to terminate the funding gap ultimately resulted in action on H.R. 2775 , which had previously passed the House on September 12, 2013. On October 16, by unanimous consent, the measure was laid before the Senate and a substitute amendment, which contained the text of a broad CR in Division A, was agreed to. Cloture on the measure was subsequently invoked, by a vote of 83-16, and the bill was passed with the Senate amendment, by a vote of 81-18. That same day, the House concurred in the Senate amendment to H.R. 2775 , by a vote of 227-186. The bill was signed into law by the President early in the morning of October 17, 2013 (Continuing Appropriations Act, 2014; P.L. 113-46 ). The expiration date of this CR was January 15, 2014. As congressional negotiations on FY2014 regular appropriations were drawing to a close, it become evident that additional time would be needed to enact the Consolidated Appropriations Act. Consequently, on January 10, 2014, the chairman of the House Appropriations Committee introduced H.J.Res. 106 , a measure that would extend the effectiveness of the previous CR for three additional days—to January 18, 2014. On January 14, this measure was adopted in the House by a voice vote. The Senate approved it on the following afternoon, by a vote of 86-14, and it was signed into law by the President later that evening ( P.L. 113-73 ). CBO estimated the total amount of annualized budget authority for regular appropriations in the FY2014 CR (the Continuing Appropriations Act, 2014) that was subject to the BCA limits to be $986.3 billion. When spending designated under Section 251(b) of the BBEDCA for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief, was included, the total amount of annualized budget authority in this CR was $1.088 trillion. The three-day extension provided by P.L. 113-73 made no changes to the annualized level of budget authority. During the month of October, 2013, at about the time that the FY2014 CR was enacted, CBO projected that the annualized level of FY2014 discretionary spending under the CR would have caused spending to exceed one of the two BCA discretionary spending limits. While nondefense spending in the CR was projected by CBO to total $468.3 billion, which is about $1 billion below the nondefense limit, defense spending was projected to total $518 billion, which is about $20 billion above the defense limit. However, the Bipartisan Budget Act subsequently amended the BCA limits so that defense spending in the CR would be about $2.5 billion below the defense limit, and $23.5 billion below the nondefense limit. As a consequence, OMB announced on January 17, 2014, that no sequestration of the budget authority provided by the FY2014 CR would be necessary. On July 8, 2014, the President submitted a request to Congress for $4.346 billion in supplemental appropriations for FY2014, primarily for activities related to responding to the influx of unaccompanied and escorted children illegally crossing the Southwest border. In addition, funds were requested for wildland fire management to address a projected shortfall as a result of fire suppression activities expected over the summer months, and legislative language was proposed to establish a new adjustment to the statutory discretionary spending limits for wildfire suppression operations. The amount requested for immigration and border security activities was $3.731 billion and the amount for wildland fire management was $615 million. The President requested that such funds be designated as emergency spending, effectively exempting them from the statutory discretionary spending limits. Both the House and Senate have responded to this request with floor consideration of supplemental appropriations measures. Senator Mikulski, chair of the Senate Appropriations Committee, introduced S. 2648 , the Emergency Supplemental Appropriations Act of 2014, on July 23. This bill would provide a total of $3.571 billion in additional appropriations for FY2014 immigration and border security activities, wildland fire management, and military cooperation with the government of Israel related to the Iron Dome program. All of these appropriations were designated as emergency spending, as requested by the President. The Senate began consideration of S. 2648 on July 31. On that same day, however, a point of order under Section 306(a) of the Congressional Budget Act was raised and sustained for including matter under the jurisdiction of the Senate Budget Committee, after the Senate rejected a motion to waive the point of order. As a result, pursuant to Section 312(f) of the Congressional Budget Act, the bill was referred to the Committee on Appropriations. On July 29, Representative Harold Rogers, chair of the House Appropriations Committee, introduced H.R. 5230 , the Secure the Southwest Border Supplemental Appropriations Act, 2014. The original version of the proposal provided a total of $659 million in additional appropriations for immigration and border security activities, and rescinded the same amount of previously enacted appropriations for various purposes. On July 31, the House debated the bill pursuant to the special rule that provided for its consideration ( H.Res. 696 ). After the previous question was ordered pursuant to the rule, further proceedings were postponed. The following day, the House resumed consideration of H.R. 5230 pursuant to provisions in a second special rule ( H.Res. 710 ). This special rule amended the text of the bill upon its adoption to provide an additional $35 million for the Army National Guard associated with the border security activities in the bill. At the end of the bill's consideration, the House passed H.R. 5230 , by a vote of 223-189. On August 1, the Senate passed a separate measure providing the funding related to the Iron Dome that was proposed in S. 2648 . As was the case for S. 2648 , the $225 million in such spending was designated as emergency appropriations. By unanimous consent, the Senate considered and adopted H.J.Res. 76 with a substitute amendment. Later that same day, the House agreed to that Senate amendment by a vote of 395-8. The measure was signed into law by the President on August 4, 2014 ( P.L. 113-145 ).
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This report provides background and analysis on congressional action relating to the FY2014 appropriations process. The annual appropriations process currently anticipates that 12 regular appropriations bills will be enacted prior to the beginning of the fiscal year (October 1) to provide discretionary spending for federal government agencies. If all regular appropriations bills are not enacted by that time, one or more continuing resolutions (CRs) may be enacted to provide interim or full-year funds until regular appropriations are completed, or the fiscal year ends. During the fiscal year, supplemental appropriations may also be enacted to provide funds in addition to those in regular appropriations acts or CRs. Amounts provided in appropriations acts are subject to limits, both statutory (as provided by the Budget Control Act of 2011 [BCA]), and procedural (as provided by the Congressional Budget Act of 1974), and are enforced through respective mechanisms such as sequestration and points of order. The FY2014 BCA discretionary spending limits are to be first enforced within 15 calendar days after the congressional session adjourns sine die. Any necessary reductions to bring appropriations into compliance with those limits would occur through sequestration. The House-and Senate-adopted versions of the budget resolution differ as to total discretionary spending, as well as how it should be distributed between defense and nondefense spending. On December 10, 2013, however, the chairs of the House and Senate Budget Committees announced an agreement that would establish FY2014 and FY2015 discretionary spending levels (the Bipartisan Budget Act; Division A, H.J.Res. 59). This agreement was enacted into law on December 26, 2013 (P.L. 113-67). The regular appropriations process for FY2014 was concluded on January 17, 2014, when the Consolidated Appropriations Act, 2014 (P.L. 113-76), was enacted. Prior to this time, the House Appropriations Committee had reported all but two regular appropriations bills, while the Senate Appropriations Committee had reported all but one such bill. The House previously considered five regular appropriations bills on the floor and passed four of them. The Senate began floor consideration of one regular appropriations bill, but did not complete it. At the start of the fiscal year, each chamber's appropriations bills reflected the differing assumptions on the levels of FY2014 discretionary spending that were in the House- and Senate-adopted versions of the budget resolution. Once the House and Senate agreed to a total level of FY2014 discretionary spending in the Bipartisan Budget Act, however, the two chambers were able to resolve their differences with regard to the regular appropriations bills. A broad CR to provide temporary funding for FY2013 projects and activities did not become law until October 17, 2013 (The Continuing Appropriations Act, 2014; H.R. 2775; P.L. 113-46), resulting in a funding gap for affected projects and activities from October 1 until that time. Prior to the funding gap, a narrow CR was enacted providing funding for FY2014 pay and allowances for (1) certain members of the Armed Forces, (2) certain Department of Defense (DOD) and Department of Homeland Security (DHS) civilian personnel, and (3) other specified DOD and DHS contractors (the Pay Our Military Act; H.R. 3210; P.L. 113-39, 113th Congress). After the funding gap commenced, only narrow CRs to provide funds for specified projects and activities received congressional consideration, of which one was enacted (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91; P.L. 113-44). The Continuing Appropriations Act, 2014, provided funds at an annualized rate of $986.3 billion through January 15, 2014. Funding was extended to January 18, 2014, through the enactment of H.J.Res. 106 (P.L. 113-73). Congressional consideration of FY2014 supplemental appropriations measures (H.R. 5230, S. 2648, and H.J.Res. 76) occurred late in the fiscal year. The primary purpose of H.R. 5230 and S. 2648 is to provide additional funds to address the influx of unaccompanied and escorted children illegally crossing the Southwest border. On July 29, during floor consideration of S. 2648 in the Senate, the bill was referred to the Senate Appropriations Committee after a point of order under Section 306(a) of the Congressional Budget Act was raised and sustained. The following day, H.R. 5230 was passed by the House. No further action on these proposals has occurred as of the date of this report. H.J.Res. 76, a related measure that provides supplemental appropriations for military cooperation with the government of Israel related to the Iron Dome program, was adopted by both the House and Senate on August 1; the measure currently awaits presidential action. This report will be updated if further FY2014 appropriations are enacted. For up-to-date information on the status of appropriations measures, see the CRS FY2014 status table, available at http://www.crs.gov/pages/AppropriationsStatusTable.aspx.
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Congress has a long-standing interest in the criminal alien population and has supported efforts since the late 1980s to identify, detain, and remove these individuals. The Congressional Research Service (CRS) estimates that about 184,000 non-citizens were incarcerated in 2011 ( Table 2 ) and that the total non-citizen correctional population—which represent a subset of all aliens ever convicted of a crime—may be about 572,000 (see " Other Estimates of the Criminal Alien Population " below). More generally, all unauthorized immigrants within the United States are potentially subject to removal, and alien removals originating within the United States (i.e., "interior enforcement") are a basic element of immigration control. The Department of Homeland Security's (DHS) Immigration and Customs Enforcement (ICE) agency operates four key programs to identify and remove criminal aliens and other removable aliens. The Criminal Alien Program (CAP) is a screening program that identifies, detains, and initiates removal proceedings against criminal aliens, including within federal, state, and local prisons and jails. Secure Communities is an information sharing program between the Departments of Justice and Homeland Security that screens for removable aliens as people are being booked into jails. Agreements entered into pursuant to Immigration and Nationality Act (INA) §287(g) ("§287(g) agreements") allow DHS to delegate certain immigration enforcement functions to specially trained state and local law enforcement officers, under federal supervision. The National Fugitive Operations Program (NFOP) pursues known at-large criminal aliens and fugitive aliens. Funding for interior enforcement and programs targeting criminal aliens has expanded considerably since FY2005 as has the number of aliens arrested through them. Congress appropriated a total of about $567 million to ICE for these four programs in FY2013, up from $23 million in FY2004 (see " Appropriations " below). At the same time, the number of aliens arrested through ICE's major interior enforcement programs increased during these years from about 11,000 to about 270,000 ( Table 6 ). While ICE's interior enforcement programs are designed to focus in particular on criminal aliens, the majority of unauthorized aliens in the United States have not been convicted of a crime ( Figure 1 ). Some have criticized these programs because most of the aliens they identify have no criminal record or have committed only nonviolent crimes. Others note, however, that all unauthorized aliens have violated U.S. immigration law and may be subject to removal. Partly for these reasons, interior enforcement and programs targeting criminal aliens raise two key policy issues for Congress. First, when, if ever, should DHS exercise its "prosecutorial discretion" by not asserting its full enforcement authority? ICE's interior enforcement programs have greatly increased the agency's ability to identify potentially removable aliens, but the Obama Administration has argued that it only has resources to deport about 400,000 aliens per year (see " DHS Enforcement Priorities and Discretion "). The Administration has published formal guidelines to prioritize certain types of cases for enforcement and to exercise discretion in other cases. Some Members of Congress have objected to these policies, and some support legislation to limit the exercise of discretion (see " DHS Enforcement Priorities and Discretion "). A second set of questions concerns the role of state and local law enforcement agencies in immigration enforcement. While some Members of Congress and some local governments and law enforcement agencies favor a larger role for states and localities in immigration enforcement, others are concerned that such enforcement practices may undermine civil rights and may have a chilling effect on community-police relations. Certain jurisdictions have sought to limit their participation in such programs. But after initially treating Secure Communities as a voluntary federal-local partnership, the Obama Administration no longer permits local jurisdictions to "opt out" of it (see " The State and Local Role in ICE's Interior Enforcement Programs "). This report begins by defining and quantifying the criminal alien population, to the extent possible. The following sections describe current and historical programs designed in whole or in part to target this population, including CAP, Secure Communities, the §287(g) program, and NFOP. After describing how these programs function and key differences among them, the report reviews their recent appropriations history and enforcement statistics. The final sections of the report describe the controversies surrounding certain programs targeting criminal aliens—particularly the Secure Communities program and the §287(g) program—and legislative issues that may arise as a result. For over a century, U.S. immigration law has identified certain crimes that make an alien ineligible for admission to the United States and/or subject to deportation. Such crimes include crimes of "moral turpitude," crimes involving controlled substances, certain firearm offenses, and crimes related to espionage, sabotage, and related offenses. Yet the term "criminal alien" is not specifically defined in immigration law or regulation, and people use it to refer to several different types of noncitizen offenders. At the broadest level, a "criminal alien" is any noncitizen who has ever been convicted of a crime in the United States . This report adopts this broad definition unless otherwise noted. See Appendix A for a glossary of additional terms related to the criminal alien population. Not all criminal aliens are unauthorized or removable, and most removable aliens are not criminals (see Figure 1 ). Three groups of criminal aliens can be distinguished. First, the set of all criminal aliens includes both unauthorized aliens, all of whom are potentially removable, and legal aliens. Second, some criminal aliens who have been convicted of removable criminal offenses are subject to removal under the INA even if they are otherwise legally present. For example, a legal permanent resident (LPR) convicted of cocaine possession is subject to removal, but an LPR convicted of public intoxication is not. Third, a subset of these removable criminal aliens are aggravated felons , and therefore are ineligible for most forms of relief from removal and ineligible to be readmitted to the United States. As Figure 1 illustrates, all unauthorized aliens are potentially removable, indicated by cross-hatches in the figure, but the majority of unauthorized aliens have not been convicted of a crime and are not classified as criminal aliens. (Unlawful presence in the United States absent additional factors is a civil violation, not a criminal offense. ) The smaller circles in Figure 1 illustrate that some criminal aliens are removable on the basis of the specific crimes committed, and that some are unauthorized. This section presents publicly available arrest and incarceration data for criminal aliens at the federal, state, and local levels from 2001 through 2011. Following CRS's quantification of the criminal alien population, the section reviews other studies that produced comparable estimates. Appendix B describes related data issues in greater detail. Table 1 presents data from the Department of Justice (DOJ), Bureau of Justice Statistics (BJS) on the number and percentage of persons arrested for federal offenses, by citizenship status, for 2001, 2005, and 2010. Of the 179,489 persons arrested for federal offenses in 2010, 46% were not U.S. citizens and 16% had unknown citizenship status. The data in Table 1 also indicate that the proportion of noncitizens arrested for federal offenses increased across the period analyzed. Most federal arrests of noncitizen between 2001 and 2010 were for illegal entry. As Figure 2 illustrates, while federal arrests with known citizenship information increased 42%, from 109,699 to 151,456 during this period, noncitizen arrests for illegal entry—which increased noticeably after 2003—accounted for virtually all of this increase. Noncitizen arrests for all other federal offenses accounted for a declining share of all federal arrests, from 19% in 2001 to 5% in 2010. The growth of illegal entry cases caused arrests of U.S. citizens to account for a declining share of all federal arrests (from 62% in 2001 to 45% in 2010). These trends may reflect changes in enforcement and prosecution policies rather than increased noncitizen criminality. The number of Border Patrol apprehensions has always far exceeded the number of arrests for illegal entry, and DHS and DOJ have adopted policies to seek criminal charges against a higher proportion of such aliens, particularly since 2005 through Operation Streamline and related programs. Incarceration represents a second measure of the criminal alien population. Table 2 presents CRS tabulations of the total citizen and noncitizen prison and jail populations publicly reported by the Bureau of Justice Statistics for 2001 through 2011 (the most recent year for which complete data are available). Estimates of state and, especially, local incarcerated populations should be interpreted with caution for the reasons noted in Appendix B . As of June 30, 2011, a total of 2,334,381 prisoners (U.S. citizens and noncitizens) were incarcerated: 216,362 in federal prisons, 1,382,418 in state prisons, and 735,601 in local jails ( Table 2 ). According to BJS data presented in Table 2 , noncitizens comprised 7.9% of the combined federal, state, and local prisoner population in 2011, including 26.9% of the federal prison population, 5.2% of the state prison population, and 7.3% of the local jail population. As a basis for comparison, noncitizens comprised 7.1% of the total U.S. population in FY2011. The overall noncitizen proportion of the total prisoner population of 7.9% was up from 6.3% in 2001, with this change reflecting growth of the noncitizen population throughout federal and state prisons as well as local jails. Between 2001 and 2010, the noncitizen proportion of federal prisoners remained relatively stable at around 23% before increasing to 27% in 2011. The noncitizens proportion of state prisoners increased more slowly, growing from 4.3% of the total state-level incarcerated population in 2001 to 5.2% in 2011. And the proportion of noncitizens among those incarcerated in local jails increased at a rate comparable to that of state prisoners, from 6.1% in 2001 to 7.3% in 2011. Among federal and state prisons as well as local jails, the growth rate of noncitizens exceeded that of the native-born. This growth in the noncitizen incarcerated population corresponds closely with broader demographic changes. The total foreign-born population grew from 31.5 million to 40.4 million between 2001 and 2011, and represented 13.0% of the U.S. population in 2011. Thus, as Figure 3 illustrates, the noncitizen proportion of the incarcerated population in 2001-2011 mapped closely to the proportion of noncitizens in the U.S. population overall. Table 3 illustrates the types of crimes for which apprehended criminals were sentenced to federal prison in 2002, 2007, and 2012. It presents data from the U.S. Sentencing Commission by citizenship status and grouped into three categories: violent crimes, nonviolent crimes, and immigration crimes. The data indicate that for all three years shown, violent crimes made up less than 1% of all crimes committed by criminal aliens, compared to 4.5%-6% of crimes committed by citizens. For noncitizens, immigration crimes grew as a proportion of total federal offenses for which they received sentences, increasing from 50% of all crimes in 2001 to 66% in 2012. For citizens, by contrast, immigration crimes made up less than 5% of all crimes in any of the three years shown. Moreover, the citizen proportion of crime categories changed relatively little over the three years shown. The U.S. Census American Community Survey (ACS) represents an additional source of information that can be used to corroborate CRS's computations of the criminal alien population. The ACS is conducted continuously and yields annual estimates on the size and characteristics of the U.S. population, including a measurement of persons living in institutions, or "group quarters," which includes correctional facilities as well as juvenile facilities, nursing facilities, and other health care facilities. Although the ACS Public Use Microdata Sample does not distinguish among these various types of institutions, it can be used to derive an estimate of the criminal alien population by selecting characteristics of persons within the institutionalized population that likely correspond with this group. These characteristics include persons ages 18 to 55 living in group quarters who were noncitizens. According to these data, 2,319,019 persons were living in group quarters in 2011, most of which consisted of correctional facilities. This figure closely matches the 2,334,381 figure produced by the Bureau of Justice Statistics for the same year. Of this estimated criminal population, the analysis of ACS data yields an estimate for the noncitizen incarcerated population (between ages 18-55) of 187,684, or 8.09% of the total—an estimate similar to CRS's overall figure for 2011 (the most recent figure available) of 183,830 ( Table 2 ). While relatively few studies have attempted to quantify the criminal alien population, a body of evidence suggests that the foreign born are less likely to commit crimes and less likely to be incarcerated than the native born. For instance, a 2007 study estimated that the foreign born (including noncitizens and naturalized citizens) made up 35% of California's adult population but only 17% of its adult prison population. When the analysis expands to include all correctional institutions (not only prisons but also jails, halfway houses, and similar facilities) and to focus on the sub-population most likely to commit crimes (males between ages 18-40) the difference increases, with native-born institutionalization rates 10 times those of the foreign born. While these studies confront methodological challenges similar to those discussed in Appendix B , they suggest that the noncitizen proportion among all U.S. criminals (i.e., the criminal alien population) is no greater than—and possibly less than—the foreign-born proportion of the total U.S. population. In 2011, that proportion was 13.0%. Applying this proportion to the total incarcerated population of 2,334,381 (from Table 2 ) yields an upper bound estimate for the incarcerated criminal alien population of 303,470. DHS has produced its own estimates of the criminal alien population. Most recently, ICE has estimated that approximately 900,000 aliens are arrested for crimes every year, and that approximately 550,000 criminal aliens convicted of crimes exit law enforcement custody every year. ICE also estimates that 1.9 million criminal aliens currently reside in the United States. In 2011, the Government Accountability Office (GAO) estimated the U.S. criminal alien population in federal prisons and criminal alien incarcerations for state prisons and local jails. To enumerate the federal prison population, GAO used Bureau of Prison (BOP) data, which are considered relatively reliable and are collected consistently. To undertake the more challenging task of enumerating the criminal alien population in state prisons and local jails, GAO relied on data from the Department of Justice's State Criminal Alien Assistance Program (SCAAP). SCAAP data provide a direct count of cases for which state and local jurisdictions seek reimbursement for correctional officer salary costs incurred for incarcerating "undocumented criminal aliens" and thus provide an alternative method for estimating the criminal alien population to that presented by CRS above. However, because of the way SCAAP data are recorded, they may not accurately reflect the incarcerated criminal alien population at a given point in time. Based on these sources, GAO reported 52,929 criminal aliens in federal prisons, and 91,823 state prison and 204,136 local jail SCAAP incarcerations in 2009. Nationally, incarcerated persons represent roughly one-third of the total correctional population, with persons on probation and parole comprising the other two-thirds. Thus, CRS's estimate of the foreign-born incarcerated population (about 184,000 people) implies a total foreign-born correctional population of about 572,000; and CRS upper-bound estimate of about 303,500 foreign-born incarcerated persons implies an upper-bound estimate foreign-born correctional population of no more than about 945,000. In 1986, with passage of the Immigration Reform and Control Act ( P.L. 99-603 ), Congress made deporting aliens who had been convicted of certain crimes a formal enforcement priority. The law required the Attorney General "In the case of an alien who is convicted of an offense which makes the alien subject to deportation … [to] begin any deportation proceeding as expeditiously as possible after the date of the conviction." The former Immigration and Naturalization Service (INS) established a pair of programs in 1988 to comply with this requirement: the Institutional Removal Program (IRP) and the Alien Criminal Apprehension Program (ACAP). The programs forged partnerships with corrections facilities to identify deportable aliens convicted of crimes before their release from prison. They also worked with the Department of Justice Executive Office for Immigration Review to initiate deportation proceedings against aliens serving sentences for deportable offenses during their period of incarceration. The IRP and ACAP focused initially on aggravated felons, a class of serious criminal aliens created in immigration law by the Anti-Drug Abuse Act of 1988 ( P.L. 100-690 ) and enumerated in §101(a)(43) of the INA. The Anti-Drug Abuse Act defined aggravated felonies to include aliens convicted of murder, drug trafficking, or illegal trafficking in firearms or destructive devices. Between 1990 and 1996, Congress enacted a series of measures that expanded the definition of aggravated felons and created additional criminal grounds for removal. The mandates of the IRP and ACAP likewise expanded to include this broader list of offenses. In 1999, the INS issued an Interior Enforcement Strategy, which named as the agency's top interior enforcement priority the identification and removal of criminal aliens and the minimization of recidivism (i.e., illegal reentry by previously removed aliens). Accordingly, between 1998 and 2002, the INS devoted more resources to the removal of criminal aliens than to all other interior enforcement priorities combined. In the wake of the September 11 attacks, the new Department of Homeland Security (DHS) focused its enforcement activities on suspected terrorists and homeland defense, but with the continued growth of the foreign-born population after 2000, programs targeting criminal aliens also remained an enforcement priority. Within DHS, the IRP and ACAP initially were managed jointly by Immigration and Customs Enforcement's (ICE) Detention and Removal Operations (DRO) (renamed Enforcement and Removal Operations (ERO) in 2010) and its Office of Homeland Security Investigations. Between 2005 and 2007, the IRP and ACAP were combined into a single Criminal Alien Program (CAP) program within DRO. ICE currently operates four programs wholly or partly focused on criminal aliens (discussed in more detail below): CAP, Secure Communities, the §287(g) program, and the National Fugitive Operations Program (NFOP). The CAP, Secure Communities, and §287(g) programs are "jail enforcement" programs that screen individuals for possible immigration violations and for criminal-related grounds for removal in federal and state prisons and local jails. NFOP is a "task force" program that targets at-large criminal aliens, including fugitive aliens who have not been convicted of a crime (i.e., prior to entering the criminal justice process) and aliens who have been convicted of crimes and subsequently released from prison. The Criminal Alien Program (CAP) is an umbrella program that includes several different systems for identifying, detaining, and initiating removal proceedings against criminal aliens within federal, state, and local prisons and jails. According to ICE, "CAP aims to identify all foreign born nationals incarcerated in jails and prisons in the United States" and to prevent the release of criminal aliens from jails and prisons into the United States by securing final orders of removal prior to the termination of aliens' criminal sentences and by taking custody of aliens to complete their removal upon completion of their criminal sentences. CAP jail enforcement officers screen people to identify and prioritize potentially removable aliens as they are being booked into jails and prisons and while they are serving their sentences. CAP officers conduct biometric and biographic database searches to identify matches in DHS databases; and they interview arrestees and prisoners to identify potentially removable aliens without previous DHS records. When CAP officers identify removable aliens, they may issue an immigration detainer. The detainer is a request that the arresting agency hold the alien following completion of his or her criminal proceeding for up to 48 hours (excluding holidays and weekends) to allow ICE to take custody of the alien and to initiate removal proceedings. As of July 2013, there were 1,260 CAP officers monitoring 100% of U.S. jails and prisons, a total of over 4,300 facilities, including through the Secure Communities program (see "Secure Communities"). In addition to onsite deployment of ICE officers and agents, CAP uses video teleconference (VTC) equipment that connects jails and prisons to ICE's Detention Enforcement and Processing Offenders by Remote Technology (DEPORT) Center in Chicago, IL. CAP also works with state and local correctional departments that provide ICE with inmate rosters. ICE analyzes roster data and compares prisoner data to immigration databases. CAP also is responsible for managing the Law Enforcement Support Center (LESC), a 24/7 call-center that conducts database searches to check the identity and immigration status of arrestees on behalf of ICE officers as well as for state and local law enforcement agencies. And CAP is scheduled to take full responsibility for Secure Communities in FY2014. The CAP program also encompasses several specialized programs related to high priority criminal aliens. CAP's Violent Criminal Alien Section (VCAS) works with U.S. Attorneys to pursue criminal cases against recidivist criminal aliens; the program secured 8,761 indictments and 9,103 convictions in FY2012. CAP's Rapid Removal of Eligible Parolees (REPAT) program works with state law enforcement agencies to identify incarcerated criminal aliens eligible for parole and to facilitate their early release if the alien waives state-level appeals and agrees to be removed from the United States. CAP maintains a special partnership with Phoenix-area law enforcement agencies through the Law Enforcement Area Response (LEAR) program. Under this program, CAP officers are to respond to 100% of local agency requests 24 hours a day, 7 days a week. In FY2012, the LEAR program encountered over 4,200 aliens, resulting in more than 2,900 arrests and 1,500 immigration detainers. CAP also maintains Joint Criminal Alien Removal Taskforces (JCART) in the New York and Los Angeles field offices. The JCART program partners with ICE investigators; with the United States Marshals Service, CBP, and the Bureau of Prisons (BOP); and with local law enforcement agencies to identify and arrest high-priority at-large convicted criminal aliens. In FY2012, JCART encountered 948 aliens resulting in more than 550 arrests, and 250 immigration detainers. Secure Communities is an information sharing program between the Departments of Justice and Homeland Security that uses biometric data to screen for removable aliens as people are being booked into jails. The program was initiated in about a dozen jurisdictions in late 2008, with additional jurisdictions added over time; and in FY2013 it became operational in 100% of the approximately 3,180 state and local law enforcement jurisdictions in the country. Under the program, when law enforcement agencies book (i.e., take custody of) an arrestee and submit the person's fingerprints to the DOJ's Federal Bureau of Investigation (FBI) for criminal background checks, the fingerprints also are automatically checked against DHS's Automated Biometric Identification System (IDENT) database. Potential matches are forwarded to the LESC (see "Criminal Alien Program (CAP)"). ICE agents at the LESC confirm the identity of matched prints and screen their records for immigration violations and criminal histories. When the LESC determines that the arrestee may be a removable alien, the LESC evaluates the alien's criminal history and notifies the ERO field office for the arresting jurisdiction about the match. After being notified that a removable alien has been arrested, the local ERO supervisor reviews the record and decides how to proceed based on the priority attached to the case and based on the office's available resources (see "DHS Enforcement Priorities and Discretion"). If the office decides to initiate removal proceedings against an alien, ICE normally issues an immigration detainer. In contrast with the other ICE programs discussed in this report, Secure Communities does not include an enforcement component. Instead, removable aliens identified through Secure Communities are arrested and placed in removal proceedings by ICE agents outside of Secure Communities, typically including agents from the CAP program. CAP is scheduled to manage all Secure Communities operations beginning in FY2014. Section 287(g) of the INA permits the delegation of certain immigration enforcement functions to state and local law enforcement agencies. Agreements entered pursuant to INA §287(g) (commonly referred to as §287(g) agreements) enable specially trained state or local officers to perform specific functions relating to the investigation, apprehension, or detention of aliens, during a predetermined time frame and under federal supervision. Although §287(g) agreements were authorized as part of the 1996 Illegal Immigration Reform and Immigrant Responsibility Act ( P.L. 104-208 , Div. C, IIRIRA), the first §287(g) agreement was implemented in 2002, and 36 of the 39 current §287(g) agreements (as of August 2013) were signed in 2006 or later. As of December 31, 2012, more than 1,300 state and local law enforcement officers had completed ICE's four-week §287(g) training program and had been certified to conduct certain immigration enforcement duties. Prior to 2013, the §287(g) program encompassed both task force programs and jail enforcement agreements, but in February 2012 the Obama Administration announced plans to discontinue the task force programs, and the last of these agreements expired on December 31, 2012 (also see "ICE's Efforts to Address Concerns about §287(g) and Secure Communities"). Under the remaining jail enforcement agreements, specially trained officers within state and local corrections facilities are authorized to identify criminal aliens by interviewing them and screening their biographic information against the same DHS databases used by CAP agents and officers. Section 287(g) officers also use ICE's database and Enforcement Case Tracking System (known as ENFORCE) to enter information about aliens in their custody and to generate the paperwork for an immigration detainer and a notice to appear (NTA, initiating the formal removal process). State and local corrections officers are supervised by CAP officers. The National Fugitive Operations Program (NFOP) pursues known at-large criminal aliens and fugitive aliens. ICE created the NFOP in 2003 to expand the agency's ability to locate, arrest, and remove fugitive aliens. In 2009, with support from Congress, the NFOP expanded its focus to include locating, arresting, and removing at-large convicted criminal aliens, aliens who pose a threat to national security and community safety, members of transnational gangs, child sex offenders, and aliens with prior convictions for violent crimes. As of July 2013, the NFOP consisted of 129 fugitive operations teams (FOTs) covering all 24 ICE field offices. FOTs use data from the National Crime Information Center (NCIC) and other intelligence sources and work in partnership with federal, state, local, and international law enforcement partners to pursue criminal aliens and other priority cases. Based on these leads, NFOP teams make arrests and conduct other enforcement actions at worksites, in residential areas, and at other locations. According to ICE, the NFOP has contributed to a reduction in the total backlog of fugitive alien cases from 632,726 cases in FY2006 to 469,157 cases in FY2012. Table 4 summarizes key differences among ICE's four main programs targeting criminal aliens. One core distinction is between jail enforcement programs—including CAP, Secure Communities, and the §287(g) program—and task force programs—including NFOP. By their nature, jail enforcement programs are not highly targeted: they are designed to screen the entire population of people passing through some part of the criminal justice system. Those screened by jail enforcement programs are typically arrested by state and local law enforcement agents for non-immigration offenses. Conversely, task force programs tend to be more targeted operations, pursuing specific serious criminal aliens, fugitive aliens, or other criminals who have been identified by ICE. Under task force operations, ICE agents or other law enforcement officers with specific immigration training are the arresting agents. A second, related difference concerns who conducts immigration-related screening and who selects targets for immigration enforcement. Under all but the §287(g) program, ICE agents conduct immigration screening either in the jail (under CAP) or remotely (under CAP and Secure Communities); and ICE and DHS select the targets for task force operations based on at-large aliens' criminal records and immigration histories. Under the §287(g) program, local corrections officers with ICE training conduct immigration screenings during the booking process. Third, ICE programs target criminal aliens at different points in the criminal justice process. All three jail enforcement programs conduct screening during the booking process, meaning that many potentially removable aliens are identified even though they have never been charged with or convicted of a crime. (As noted above, unauthorized aliens are potentially removable regardless of whether they are eventually convicted of a criminal offense. Certain legal aliens only become removable if they are charged with and convicted of a removable criminal offense.) CAP also conducts screening of persons who have been convicted of crimes and are incarcerated. The NFOP program targets fugitive aliens at any point in the criminal justice process—including fugitive aliens who have never been convicted of criminal offenses—but focuses primarily on at-large convicted criminal aliens (including those who have served jail time and been released). Funding for the identification and removal of unauthorized immigrants has increased substantially since FY2004, the first year in which DHS received dedicated funding for detention and removal operations. Table 5 presents funding figures for overall ICE DRO/ERO operations and for the CAP, Secure Communities, NFOP, and §287(g) programs. DRO/ERO is ICE's largest Salaries and Expenses subaccount; CAP, NFOP, and Secure Communities are funded program activities within DRO/ERO; and §287(g) is funded under ICE's Office of State, Local, and Tribal Government Coordination. The appropriations record confirms Congress's interest in these programs. Congress roughly tripled funding for CAP and NFOP in FY2005 and FY2006 over the previous years, and appropriators directed ICE to conduct a study of how the Institutional Removal Program could be expanded nationwide. In 2008, appropriators expressed concern that ICE was "losing perspective on which aliens represent the most significant threat to the nation's social and economic fabric" and questioned "why a significant number of illegal aliens serving sentences in State and local correctional facilities after conviction for various non-immigration crimes are still released from custody without efforts made to deport those who are deportable." Accordingly, appropriators increased funding for the existing Criminal Alien Program in FY2008; and set aside $200 million in additional funding for a program to "improve and modernize efforts to identify aliens convicted of a crime, sentenced to imprisonment, and who may be deportable, and remove them from the United States once they are judged deportable." ICE used the additional funding to support CAP and to develop Secure Communities. Funding dedicated specifically to the identification and removal of criminal aliens (i.e., funding for CAP and Secure Communities) increased from just $6.6 million in FY2004 to $392.5 million in FY2010, a 58-fold increase, before dropping to $354.3 million in FY2013. This figure excludes funding for NFOP and the §287(g) program, both of which also include criminal aliens in their enforcement mandates. Altogether, the four programs targeting criminal aliens saw their funding grow from $23.4 million in FY2004 to a high of $690.2 million in FY2010 and FY2011, before declining to $567.4 million (pre-sequester) in FY2013. Funding for DRO/ERO operations overall increased from $959.7 million in FY2004 to a high of $2.75 billion in FY2012 and FY2013. More than $20 billion was appropriated to DRO/ERO programs between FY2004 and FY2013. Enforcement data are an indicator of how interior enforcement appropriations and programs have translated into enforcement actions. Table 6 presents data on primary enforcement actions by the four programs discussed in this report from 2004 through 2011. The table presents data on administrative arrests by CAP, Secure Communities, §287(g), and NFOP, as well as data on alien identifications, and removals and returns resulting from Secure Communities. Data in Table 6 should be interpreted with caution, particularly when it comes to Secure Communities, because, as noted elsewhere (see "Secure Communities"), Secure Communities is responsible for the identification of potentially removable aliens, but the program does not make arrests or place aliens in removal proceedings. Partly for this reason, the same individual may be counted as an identification, removal, or arrest by multiple programs in Table 6 . An individual also may be identified or arrested on multiple occasions, causing additional over-counts. In addition, some removable aliens are arrested or placed in removal proceedings outside of these four programs, and some aliens are returned or removed in a fiscal year after the year in which they are identified and/or arrested. With those qualifications, the data in Table 6 indicate consistent increases in the number of aliens identified and arrested by these four programs. Available data in Table 6 indicate that CAP made over 1.3 million administrative arrests between FY2004 and FY2012, while the §287(g) program and NFOP made about 240,000 and 243,000 administrative arrests, respectively. Secure Communities has quickly grown to identify an even larger number of removable aliens per year than CAP, with over 436,000 potentially removable aliens identified in FY2012. From FY2009 through FY2012, about 20.8 million sets of biometric data were submitted to Secure Communities, resulting in the identification of about 1.1 million matches in the IDENT database (i.e., potentially removable aliens). These identifications led to 324,811 administrative arrests and (through FY2012) 227,590 aliens removed or returned. Thus, about 5% of all submissions to Secure Communities have been identified as potentially removable aliens, and about 20% of people so identified (i.e., about 1% of all submissions) have been removed or returned. Table 7 presents a rudimentary measure of each program's cost (in dollars) per individual identified, arrested, and removed or returned. The figures were derived by dividing each program's annual appropriations ( Table 5 ) by the number of enforcement actions reported for the program in that year ( Table 6 ). These figures do not reflect precise estimates of arrest costs given the over-counting of certain arrest data and given that the programs share certain resources and administrative costs. Nonetheless, the figures are illustrative and allow broad comparisons across programs. In general, this analysis indicates that as the number of arrests and identifications for the programs have increased, the cost per case has declined substantially—particularly for Secure Communities identifications and for CAP arrests. After stabilizing at slightly over $800 per arrest in FY2007-FY2009, CAP's cost per arrest increased somewhat in FY2010-FY2012, reaching $982 per arrest in FY2012. Investments since 2004 in ICE's interior enforcement programs have resulted in a substantial increase in potentially removable aliens identified within the United States, and have contributed to DHS removing a record number of aliens in eight of the last nine years. Partly for this reason the Obama Administration has supported Secure Communities in particular. The growth and development of Secure Communities and the §287(g) program have been somewhat controversial, however, for at least two reasons discussed in greater detail below. First, because both of these programs screen 100% of people passing through certain law enforcement jurisdictions, they identify a large number of potentially removable aliens—including criminal aliens as well as aliens who have never been convicted of a crime. The Obama Administration has published a series of memoranda to prioritize certain aliens for removal and to exercise prosecutorial discretion in other cases (see "DHS Enforcement Priorities and Discretion"). Nonetheless, some Members of Congress have criticized these enforcement programs as casting too broad a net, while others have objected to the Administration's systematic exercise of discretion. Second, Secure Communities and the §287(g) program both rely on partnerships, to different degrees, with state and local law enforcement agencies (see "The State and Local Role in ICE's Interior Enforcement Programs"). Such partnerships have proven to be a powerful tool for expanding ICE's enforcement capacity, and some Members of Congress favor additional steps to expand the role of state and local law enforcement agencies in immigration enforcement, as discussed below. On the other hand, some Members of Congress have raised civil rights concerns about these partnerships, and concerns about their impact on police-community relations. ICE has taken certain steps to address these concerns. Not all potentially removable aliens who come into contact with DHS and other law enforcement agencies are placed in formal removal proceedings. DHS estimates that there were about 11.5 million unauthorized immigrants in the United States in January 2011, and the department apprehended or identified (at the border and within the United States) an average over 700,000 removable aliens per year from FY2008 to FY2012. Yet ICE and its partner agencies only have the detention bed space and institutional capacity to remove about 400,000 aliens per year. Thus, DHS—like the INS before it—has developed a system to prioritize certain aliens for removal. Since 2011, ICE has published a number of agency guidance memos concerning the agency's enforcement priorities and its criteria for exercising prosecutorial discretion in certain cases (see "ICE Memoranda"). DHS has announced that the ICE memos apply to all DHS enforcement agencies, and DHS also has invoked prosecutorial discretion in its policy to defer enforcement action in the case of certain individuals who were brought to the United States as children and who meet certain other criteria (so-called DREAMers; see "DHS Policies"). In March 2011, ICE Director John Morton published agency guidelines that define a three-tiered priority scheme that applies to all ICE programs and enforcement activities related to civil immigration enforcement. Under these guidelines, ICE's top three immigration enforcement priorities are to (1) apprehend and remove aliens who pose a danger to national security or a risk to public safety, (2) apprehend and remove recent illegal entrants, and (3) apprehend aliens who are fugitives or otherwise obstruct immigration controls. The 2011 guidelines further describe aliens within the first priority category to include aliens who have engaged in or are suspected of terrorism or espionage; aliens convicted of crimes (i.e., criminal aliens), especially violent criminals, felons, and repeat offenders; gang members; aliens subject to outstanding criminal warrants; and aliens who otherwise pose a risk to public safety. Thus, while the memo places all criminal aliens within its top enforcement priority category, it also describes an additional three-tiered system for prioritizing the removal of criminal aliens, with special attention directed to Level 1 and Level 2 offenders: Level 1 offenders: aliens convicted of "aggravated felonies," as defined in §101(a)(43) of the Immigration and Nationality Act, or of two or more crimes each punishable by more than one year (i.e., two or more felonies); Level 2 offenders: aliens convicted of any felony or three or more crimes each punishable by less than one year (i.e., three or more misdemeanors); Level 3 offenders: aliens convicted of two or fewer misdemeanors. The memo specifies that aliens are categorized based on their lifetime criminal records. For example, an alien previously convicted of an aggravated felony is considered a Level 1 offender even if they were most recently arrested for a traffic violation. ICE Director John Morton published an additional memo in June 2011 to provide further guidance to ICE officers, agents, and attorneys to target criminal aliens for enforcement. The memo clarifies that because ICE "is confronted with more administrative violations than its resources can address, the agency must regularly exercise 'prosecutorial discretion' … to prioritize its efforts." It states that any law enforcement agency may exercise prosecutorial discretion in the ordinary course of enforcement by deciding "not to assert the full scope of the enforcement authority available to the agency in a given case." In ICE's case, prosecutorial discretion may include, among other actions, deciding not to issue or to cancel a detainer; deciding not to issue an NTA (initiating removal proceedings); deciding to release an alien on bond; permitting an alien to voluntarily depart the country instead of placing the alien in formal removal proceedings; granting deferred action, parole, or a stay of a final removal order; and joining a motion to grant relief from removal. The memo further clarifies that ERO officers, special agents, and attorneys each may exercise discretion in any immigration removal proceeding. Finally, the memo identifies a list of at least 19 factors to consider when exercising prosecutorial discretion, including eight factors that should mitigate in favor of exercising discretion and four factors that should mitigate against exercising discretion. In December 2012, Director Morton published a memo concerning ICE's use of immigration detainers related to CAP, Secure Communities, the §287(g) program, and all other ICE enforcement efforts. Consistent with the March 2011 memo on civil enforcement priorities (see "Civil Immigration Enforcement Priorities"), the 2012 memo directs ICE officers to issue immigration detainers only against individuals who: have been previously convicted of or charged with a felony offense; have three or more prior misdemeanor convictions; are charged with or were previously convicted of a misdemeanor involving certain significant threats to public safety; have committed certain immigration offenses; or pose a significant risk to national security, border security, or public safety. The memo requires officers to indicate on a revised detainer form the specific reason (from the previous list) that is the basis for the detainer being filed. And the memo also reiterates that detainers are not required in these cases, directing ICE personnel to evaluate the merits and consider the exercise of discretion on a case-by-case basis. On August 18, 2011, DHS Secretary Janet Napolitano announced in a letter to Senator Richard Durbin and others that the March and June ICE guidance memos were Administration policy, and that the same guidance would apply to all DHS immigration agencies. The letter also indicated DOJ resources should be targeted toward high-priority cases. The White House issued a statement the same day to further clarify that DHS's enforcement priorities were a matter of Administration policy, developed "under the president's direction." At the same time, the White House and DHS announced that DHS and DOJ would begin to review removal cases that were awaiting hearings in immigration courts. Under the program, an inter-agency group of DHS and DOJ attorneys has reviewed backlogged cases to identify low-priority cases that may be amenable to prosecutorial discretion, with the goal of pulling such cases out of the immigration court docket in order to focus judicial and prosecution resources on higher-priority cases. According to data from Syracuse University, a total of 23,063 cases had been closed based on prosecutorial discretion as a result of the backlog review as of July 31, 2013, while the immigration court docket included 325,044 pending cases. On June 15, 2012, DHS issued a memorandum announcing that certain individuals who were brought to the United States as children and meet other criteria would be considered for deferred action for two years, subject to renewal. Deferred action is a "discretionary determination to defer removal action of an individual as an act of prosecutorial discretion." The Deferred Action for Childhood Arrivals (DACA) program builds on the ICE and DHS initiatives discussed above in that it is based on a grant of prosecutorial discretion, but it also relates to a broader policy debate about legalization for certain unauthorized migrants because the eligibility criteria described in the DACA program are similar to those that would grant legal status to certain aliens under legislation known as the "DREAM Act." According to DHS, the DACA program promotes the department's enforcement priorities because granting deferred action to low-priority cases frees up law resources to focus enforcement on higher priority cases. As of June 7, 2013, DHS had received a total of 539,128 applications to participate in the deferred action program; 22,787 (4%) of the applications had been rejected or denied; 365,237 (68%) had been approved; and the remainder remained under review or were being scheduled for review. Some Members of Congress have objected to the Immigration and Customs Enforcement (ICE) and Department of Homeland Security (DHS) policies on prosecutorial discretion, including the Deferred Action for Childhood Arrivals (DACA) program. During the 112 th Congress, some Members argued that the policies amounted to "administrative amnesty," and legislation in both chambers would have suspended or tightened several provisions of law related to prosecutorial discretion in immigration policy. The 113 th Congress also has held hearings on ICE's exercise of prosecutorial discretion, and legislation under consideration in the 113 th Congress would seek to limit DHS' discretion during immigration enforcement. For example, section 588 of the House-passed FY2014 DHS appropriations bill ( H.R. 2217 ) would prohibit DHS from using any funds to implement the ICE and DHS policy guidance on prosecutorial discretion and deferred action discussed in this report. Section 1201 of the Senate-Passed Border Security, Economic Opportunity, and Immigration Modernization Act ( S. 744 ) would limit DHS' prosecutorial discretion with respect to certain removable aliens by requiring the department to place 90% of aliens identified as visa overstays in removal proceedings or otherwise resolve their cases. The Strengthen and Fortify Enforcement Act (SAFE Act, H.R. 2278 ), as ordered reported by the House Judiciary Committee in June 2013, would limit ICE's discretion in several ways. With respect to immigration detainers, sections 108 and 111 would authorize states and localities to initiate their own immigration detainers against aliens identified through DHS jail enforcement programs; permit states and localities to detain such aliens for up to 14 days; and require DHS to take custody of such aliens within 48 hours. The sections also would require DHS to reimburse states and localities for all reasonable expenses of detaining such aliens. In addition, section 605 of the SAFE Act would require DHS and the Department of Justice to report annually on the number of notices to appear that were cancelled and to identify individual aliens benefitting from such an exercise of discretion. And section 608 would prohibit DHS from using any funds to implement the prosecutorial discretion and deferred action discussed in this report. Programs that involve state and local law enforcement agencies—directly or indirectly—in identifying and detaining removable aliens have enhanced ICE's enforcement capacity by allowing certain localities to devote their own resources to certain enforcement goals (see "Advantages of State and Local Enforcement"). Yet the involvement of state and local law enforcement agencies in immigration enforcement also may raise concerns about the effects of such programs on police-community relations and about civil rights issues (see "Concerns about State and Local Enforcement"). (Certain state and local laws designed to deter unlawful immigration also have raised constitutional questions and have been the subjects of legal challenges; these legal issues and selected court cases are discussed in other CRS reports, and are beyond the scope of this report.) Concerns about the §287(g) program and Secure Communities have prompted reviews of the program by the Government Accountability Office (GAO) and the DHS Inspector General (IG) and by an independent DHS Task Force; and ICE has taken steps to address concerns about the programs (see "ICE's Efforts to Address Concerns about §287(g) and Secure Communities"). While some Members of Congress share certain concerns about §287(g) and Secure Communities, others support these programs and some favor a broader state and local role in immigration enforcement (see "Legislative Issues"). Interior enforcement programs that involve cooperation between ICE and state and local law enforcement agencies allow a relatively small number of ICE agents to leverage a much larger number of state and local law enforcement agents. Overall, there are about 150 times more state and local LEAs in the United States than there are ICE agents: 1,133,000 state and local law enforcement personnel, including 765,000 sworn personnel with arrest powers, compared to 20,164 ICE agents, including 5,131 employed in enforcement and removal operations. State, local, and federal law enforcement officials made a total of 12,408,899 arrests (citizens and noncitizens) in 2011 compared to a total of about 55,762 arrests by ICE. Thus, even though most state and local arrests are of U.S. citizens and are unrelated to immigration enforcement, any policies that forge connections between ICE and state and local law enforcement agents may be force multipliers for ICE. State and local law enforcement agents may also have stronger connections to local communities, further enhancing their ability to contribute to ICE's enforcement efforts. Jail enforcement programs like Secure Communities, CAP, and §287(g) programs are particularly efficient tools to identify criminal aliens and other potentially removable aliens because they take advantage of natural "choke points" in the criminal justice system. When people are booked into jail after being arrested, corrections facilities typically create a biographic and biometric record of the arrestee, including the person's name, other identifying information, fingerprints, and photographs. By using these same data to check for possible immigration violations while individuals are already in law enforcement custody, jail enforcement programs can efficiently identify potentially removable aliens as they pass through the criminal justice system. According to ICE, electronic checks against DHS databases occur within minutes of fingerprint data being submitted to LESC (directly in the case of §287g program and CAP screening, or following submission of prints to the FBI in the case of Secure Communities). The LESC usually reviews any electronic matches and notifies an ICE agent or ICE field office within four hours from when a potentially removable alien has been identified. Moreover, because Secure Communities and the §287(g) program perform this screening as persons are being booked into jail, potentially removable aliens may be identified early in the criminal justice process. Thus, screening at booking gives ICE an opportunity to request an immigration detainer and initiate removal proceedings against certain aliens who might otherwise be released back into the community. Screening later in the criminal justice process, as in CAP's screening of prisoners who have already been convicted of crimes, may allow certain removable aliens to evade detection (i.e., removable aliens who are arrested but not convicted of a crime). Secure Communities exploits existing infrastructure to conduct immigration screening on an automated basis, relying on interoperability between DHS and DOJ databases. Data matching and prioritization occurs at the centralized LESC, creating economies of scale in the screening process. Thus, compared with CAP and the §287(g) program, Secure Communities may requires minimal additional personnel or infrastructure, and minimal direct coordination between ICE and state and local LEAs. Because screening occurs at the LESC and information about removable aliens is transmitted to ICE field offices, Secure Communities gives ICE a degree of control over enforcement. Conversely, the §287(g) program has faced criticism because in delegating authority to state and local law enforcement agents, it may give these offices undue discretion to shape immigration enforcement decisions, potentially resulting in different standards for immigration enforcement across jurisdictions and raising civil liberties concerns. Conversely, the CAP and §287(g) programs have a potential advantage over Secure Communities because they place additional immigration enforcement agents directly in state and local jurisdictions. Such officers may identify, interview, and process removable aliens, and so represent a more significant force multiplier for ICE than does Secure Communities on its own. CAP and §287(g) officers also may identify certain removable aliens (e.g., unauthorized aliens who enter without inspection and therefore are not in the IDENT database) who are not identified by Secure Communities. And while Secure Communities offers the advantage of more centralized control, the §287(g) program offers greater local control by allowing jurisdictions—at their own initiative—to devote additional resources to immigration enforcement as they deem necessary. A number of observers have raised concerns that ICE's enforcement programs, which ostensibly focus on identifying and prosecuting the most dangerous criminal aliens, also detain large numbers of noncriminal aliens and aliens convicted only of minor offenses. Table 8 illustrates the proportions of arrests from the §287(g) program and removals and returns from Secure Communities corresponding to four criminality levels: the three levels described above (see "Civil Immigration Enforcement Priorities"), and noncriminal offenses. For the §287(g) program, as the number of arrests increased between FY2006 and FY2011, the proportions of arrests involving Level 1 criminal aliens declined, while those for noncriminal arrests increased. Noncriminal offenses accounted for a plurality of §287(g) arrests each year between FY2007-FY2011. In FY2012, when the program was scaled back to include only jail screening programs, the proportion of non-criminal arrests fell sharply, to just 6%. For Secure Communities, slightly more than a quarter of aliens removed and returned as a result of the program have been Level 1 criminal aliens, including 30% in FY2012. Slightly over half of the aliens removed and returned as a result of Secure Communities have been Level 3 criminals or non-criminals, with the proportions in these categories falling in each program year. It bears emphasis that these Secure Communities data are based on the subset of unauthorized aliens identified by the program who are removed or returned, and therefore overstate criminality levels. Overall, a total of 15% of aliens identified by Secure Communities are classified as criminal aliens (i.e., have ever been convicted of a crime) and have been removed or returned. How to evaluate these statistics is the subject of debate. On one hand, appropriators intended Secure Communities "to improve and modernize efforts to identify aliens convicted of a crime, sentenced to imprisonment , and who may be deportable" (emphasis added); and appropriators required DHS to "present a methodology … to identify and prioritize for removal criminal aliens convicted of violent crimes " (emphasis added). Some have argued that using ICE resources to identify and remove aliens who have not committed crimes or have only committed minor offenses diverts scarce resources away from high-priority cases. On the other hand, appropriators also required DHS to "present a strategy for U.S. Immigration and Customs Enforcement to identify every criminal alien , at the prison, jail, or correctional institution in which they are held" (emphasis added). As long as Secure Communities and related programs make serious criminals their top priority, nothing in the programs' mandates appears to preclude a secondary focus on other removable aliens already in police custody—a task that falls squarely within ICE's broader mission "to identify, arrest, and remove aliens who present a danger to national security or are a risk to public safety, as well as those who enter the United States illegally or otherwise undermine the integrity of our immigration laws." Among the noncriminal aliens removed or returned as a result of Secure Communities, 79% were either ICE fugitives or persons with prior removal orders or confirmed returns. ICE's three jail enforcement programs interact in different ways with state and local law enforcement agencies, but all of them rely on such agencies, at least indirectly, as points of contact with potentially removable aliens as they are processed through the criminal justice system. By adding this filtering task to existing state and local law enforcement practices, jail enforcement programs may damage community-police relationships by undermining immigrant communities' trust in state and local law enforcement agencies. Some law enforcement professionals have argued that if communities come to associate state and local law enforcement agencies with immigration enforcement, immigrants and others may be reluctant to report crimes or to cooperate in policing activities. Moreover, a DHS task force on Secure Communities found that the program "has had unintended local impacts" that may harm police relationships with immigrant communities; and surveys conducted in several immigrant communities in 2012 found evidence that "increased involvement of police in immigration enforcement has significantly heightened the fears many Latinos have of the police, contributing to their social isolation and exacerbating their mistrust of law enforcement authorities." Some law enforcement professionals see community policing as particularly important with respect to immigrant communities because many immigrants come from countries and cultures without strong traditions of trust in law enforcement agencies; immigrants may already be fearful of interacting with law enforcement authorities due to concerns about their vulnerability to immigration enforcement activities; and many immigrants are not proficient in English. Maintaining strong relations between immigrants and local law enforcement agencies also may strengthen the role of local law enforcement agencies in gathering intelligence about potential security threats associated with immigrant communities. The risk that Secure Communities and related programs may have a chilling effect on community-police relations must be balanced against the public safety benefit from identifying, detaining, and removing a larger number of unauthorized aliens. While some state and local law enforcement officials see the threat to community relations as outweighing these potential benefits, as noted above, other state and local law enforcement officials and elected officials have embraced Secure Communities and the §287(g) program as powerful tools in their efforts to combat illegal immigration and associated criminal activity. Critics argue that while the great majority of law enforcement officers are well-intentioned, involving state and local law enforcement agencies in immigrant enforcement may increase the likelihood that biased officers will engage in racial profiling, as that term is commonly understood. By ensuring that all arrestees are screened for immigration violations, jail enforcement programs may provide an incentive for officers to arrest persons they suspect of being unauthorized aliens based wholly or partly on racial or ethnic characteristics. ICE and supporters of Secure Communities have emphasized that because the program conducts immigration screening for all individuals arrested in participating jurisdictions, it does not lead to racial profiling. However, universal screening during the booking process does not necessarily prevent selective and potentially biased enforcement by law enforcement agents in the field. Officers may anticipate that arrestees will be subjected to immigration screening, and that some will be placed in removal proceedings regardless of the circumstances of their arrests. The DHS Secure Communities task force found that the program's complaint procedures to guard against such profiling were inadequate. Racial profiling is difficult to document, especially where jurisdictions may not collect detailed arrest and search data. Previous research by academic researchers and advocacy organizations has found evidence of racial profiling following the implementation of CAP and of immigration enforcement by local law enforcement agencies under the §287(g) program. Yet, most research on racial profiling is anecdotal rather than statistical, and CRS was unable to identify any published studies showing racial profiling in the Secure Communities program. Immigrant rights and civil liberties advocates have raised concerns about the use of immigration detainers to hold suspected unauthorized aliens who have not been charged with a crime. Existing regulations permit immigration officers to issue an immigration detainer to request that a law enforcement jurisdiction hold an alien for up to 48 hours (not including weekends and holidays) in order to allow DHS to take custody of the alien and initiate removal proceedings, and that the jurisdiction notify DHS prior to releasing the alien; but several court cases have raised questions about ICE's detainer authority. Critics of Secure Communities and related programs have argued that no clear mechanisms exist for persons detained under DHS's detainer authority to challenge their detention. Critics have also argued that no clear policies exist indicating how local law enforcement agencies should respond to ICE immigration detainers. In particular, the following concerns have been raised: that some local law enforcement agencies may treat ICE detainers as a requirement not to release an individual on bond even though he or she may otherwise be eligible for bond; that persons with ICE detainers may face added barriers to mount a defense against criminal charges; that detained individuals may face added detention time even if their criminal charges are dropped; and that detained individuals may be held for more than 48 hours. The agency- and department-wide guidance memos and policies discussed above (see "DHS Enforcement Priorities and Discretion") were intended in part to address concerns about the §287(g) program and Secure Communities. ICE also has implemented additional changes to these to address the concerns described above ("Concerns about State and Local Enforcement"). Beginning in July 2009, ICE required all law enforcement agencies participating in the §287(g) program to sign revised §287(g) Memorandums of Agreement (MOAs) as a condition for their continued participation in the program. The new MOAs were designed to strengthen ICE oversight of §287(g) enforcement and were accompanied by additional training requirements and the deployment of additional ICE supervisors to §287(g) jurisdictions. At the same time, after ICE supported the rapid expansion of the §287(g) program between 2007 and 2009, the agency established an internal advisory committee in 2009 in collaboration with the DHS Office of Civil Rights and Civil Liberties (CRCL). Under these new procedures, ICE approved new §287(g) agreements at a much slower rate during beginning in 2010, and the agency discontinued §287(g) task force agreements in 2012. ICE also announced three major changes to the §287(g) program (in July 2009) and Secure Communities (in June 2011) designed to address each of the specific concerns raised above. First, ICE has taken steps to impose agency-wide enforcement priorities on the §287(g) program and Secure Communities. The 2009 MOAs established a uniform three-level enforcement priority system for the §287(g) program, which was then superseded by the 2011 agency- and department-wide memos and letter (see "ICE Memoranda"). The March and June 2011 guidance memos clarify ICE agents' ability to exercise discretion throughout the immigration enforcement process, and ICE specifically linked the memos to Secure Communities by releasing them in the context of the other June 2011 reforms to that program. The reforms also included the creation of a Homeland Security Advisory Council Task Force on Secure Communities composed of law enforcement professionals, ICE agents, and community and immigrant advocates. The task force's goal was to recommend how to focus the program on high-priority offenders and ensure discretion in Secure Communities jurisdictions, among other issues. The task force issued a report with findings and recommendations in September 2011, and ICE published a formal response to the task force in April 2012. Second, ICE has developed new record-keeping requirements and other tools to attempt to guard against pretextural arrests and racial profiling. ICE's ENFORCE tracking system has been modified to track data on the circumstances leading to aliens' arrests, information which may improve oversight of ICE's partnership programs. ICE and CRCL reportedly are developing new statistical data to be collected on a quarterly basis to evaluate whether Secure Communities is being implemented in a biased way or otherwise resulting in racial profiling, though such monitoring reportedly remains in the development stage as of July 2013. The new §287(g) MOA also seeks to prevent pretextural arrests by requiring agencies to pursue all charges for which aliens are initially arrested. Third, ICE and CRCL also have developed new materials to further reduce the risk of racial profiling and misuse of these enforcement programs. New training materials target ICE agents as well as local law enforcement agents involved in these programs. ICE and CRCL have also developed new immigration detainer forms clarifying that individuals should not be detained for more than 48 hours and that law enforcement agencies must provide detainees with information about how to file a complaint if they believe their civil rights have been violated. The evolving nature of the §287(g) program and Secure Communities highlights a broader legislative debate about the role of states and localities in federal immigration enforcement. Recent legislative developments include proposals both to limit and to expand the state and local role in immigration enforcement. As part of its effort to scale back the §287(g) program, the Obama Administration proposed cuts to the program's budget in each of the last two appropriations cycles. For FY2013, DHS proposed to reduce spending on the §287(g) program from $68 million to $51 million (a 25% reduction). The Senate supported the proposed cuts, but the Consolidated and Further Continuing Appropriations Act, FY2013 ( P.L. 113-6 ) included the House-passed funding level of $68 million. For FY2014, the Administration proposed a larger cut to the program, to $24 million. Some Members proposed additional cuts to the program during the House's floor debate on the Department of Homeland Security Appropriations Bill, 2014 ( H.R. 2217 ); but the House-passed version of the bill would continue to fund the program at the FY2012 level of $68 million. Secure Communities initially was described as an optional program, and state and local law enforcement agencies only participated after signing a memorandum of agreement (MOA) with ICE. Some Members of Congress opposed the program and called on jurisdictions to suspend their participation, and in 2011 the governors of Illinois, New York, and Massachusetts sought to rescind their Secure Communities MOAs. In contrast with the §287(g) program, however, Secure Communities operates as an information sharing program among federal agencies, and requires no active participation from local jurisdictions. Thus, ICE has determined that the department has the authority to operate Secure Communities as a mandatory program, and in August 2011, ICE terminated existing Secure Communities MOAs and clarified DHS's position that jurisdictions could not opt out of the program. Following this development, some jurisdictions have limited their participation by refusing to fully cooperate with ICE detainers issued as a result of Secure Communities. Citing concerns over fiscal costs and wrongful detentions, Cook County (Chicago), IL passed an ordinance in September 2011 to require county jails to disregard immigration detainers unless the federal government agreed in advance to pay the associated detention costs. New York City, Los Angeles, Newark, NJ, and Washington, DC also have passed measures limiting their cooperation with ICE detainers. And an August 2013 court settlement requires the Orleans Parish (New Orleans), LA sheriff's office to decline ICE detainer requests unless the subject is being held on certain felony charges; to notify detainees' lawyers prior to allowing ICE to interview detainees; and to prevent ICE from entering certain parts of county jails absent a criminal warrant or court order. At the state level, California Attorney General Kamala Harris issued law enforcement guidance in December 2012 that ICE detainers are not mandatory and directed law enforcement agencies in the state to make their own decisions about whether to honor such requests. And in June 2013, the state of Connecticut enacted a law permitting cooperation with ICE detainers only when detainer subjects have felony convictions, belong to gangs, are on terrorist watch lists, are subject to existing removal orders, or otherwise are considered safety risks. The SAFE Act ( H.R. 2278 ) includes several provisions to increase state and local participation in ICE's interior enforcement programs and to broaden the state and local role in immigration enforcement generally. Among other provisions, the act would authorize states and localities to enact and enforce criminal penalties that mirror federal immigration law, and would permit state and local law enforcement agencies to investigate, identify, arrest, and detain aliens for the purposes of enforcing immigration law to the same extent as federal law enforcement personnel. In support of this authorization, the act would require DHS: to provide states with direct access to federal programs and technology to identify removable aliens; to enter into a §287(g) agreement with any jurisdiction requesting such an agreement unless DHS has a "compelling reason" to deny the request; to provide state and local law enforcement agents with relevant training materials; and to reimburse states and localities for the costs of such enforcement. The act also would require states and localities to provide DHS with certain identifying information about removable aliens, reimbursing jurisdictions for the costs of such reporting, and would withhold certain federal funds from jurisdictions that fail to cooperate fully with federal immigration enforcement efforts. Appendix A. Glossary of Terms Despite its widespread use, no consistent definition of the term "criminal alien" exists. In this report, CRS uses "criminal aliens" to refer to any noncitizen who has ever been convicted of a crime. Certain crimes also have immigration-related consequences, such as being grounds for removal, and certain categories of criminal (and noncriminal) aliens are also the subjects of special ICE enforcement programs, including those described in this report. The following terms are often discussed in the context of these programs. Definitions are based on CRS's analysis of statutory definitions where noted and of DHS usage and prevailing definitions in other cases. Absconder : See "fugitive alien." Aggravated felon : A noncitizen who has been convicted of an aggravated felony (see below); aggravated felons are subject to removal from the United States, ineligible for certain forms of immigration relief, and ineligible to be readmitted to the United States. Aggravated felony : A crime identified in §101(a)(43) of the Immigration and Nationality Act (INA), a list that includes numerous state and federal offenses ranging from murder, rape, and trafficking in controlled substances to theft, bribery, and obstruction of justice. Crimes committed outside the United States may also be considered aggravated felonies if the term of imprisonment was completed within the previous 15 years. At-large criminal alien : A noncitizen who has been convicted of a crime in the United States and is not currently incarcerated. Not all at-large criminal aliens are removable. Criminal alien : A noncitizen who has been convicted of a crime in the United States. Not all criminal aliens are removable. Criminal immigration offense : A violation of federal criminal immigration law under Title 8 or Title 18 of the U.S. Code. The most common such violations for which aliens are convicted are 8 U.S.C. §1326 (reentry of a deported alien), 8 U.S.C. §1324 (bringing in and harboring certain aliens), 15 U.S.C. §1546 (fraud and misuse of visas, permits, and other documents), and 8 U.S.C. §1325 (entry of alien at improper time or place). Fugitive alien : An alien who has failed to leave the United States following the issuance of a final order of removal, deportation, or exclusion. Fugitive aliens were referred to as "absconders" prior to FY2007. Removable alien : An alien subject to formal removal (deportation) from the United States. This includes aliens who are inadmissible under INA §212 or deportable under INA §237, including nonimmigrant aliens who enter legally but violate the terms of their visas or overstay their visas. Most removable aliens have never been convicted of a criminal offense. Removable criminal alien : An alien who has been convicted of a removable criminal offense; such an alien is subject to removal from the United States. Removable criminal offense : A criminal offense described in §237(a)(2) of the Immigration and Nationality Act (INA), including crimes of moral turpitude, aggravated felonies, high-speed flight from an immigration checkpoint, failure to register as a sex offender, drug offenses, firearm offenses, and immigration-related document fraud, among others. Appendix B. Data on Arrests and Incarceration of the Criminal Alien Population Data Analyzed At the federal level, arrest data are compiled by the U.S. Marshals Service (USMS) Prisoner Tracking System and published by the Department of Justice (DOJ) Bureau of Justice Statistics (BJS) through its online Federal Justice Statistics Resource Center (FJSRC). Federal incarceration data are published by the Federal Bureau of Prisons (BOP) and complied by the Sourcebook of Criminal Justice Statistics. As of August 2013, the most recent published data available on noncitizen arrests were as of 2010. Figures for the federal noncitizen prison population from 2001-2011 are as of year-end and include sentenced as well as non-sentenced inmates, and inmates under jurisdiction as well as inmates in custody. Figures for the state noncitizen prison population from 2001-2011 are as of mid-year and include the same types of inmates as those in the federal figures. Figures for the local noncitizen jail population for all years (2001-2011) are as of mid-year and only include sentenced inmates and inmates in custody. For 2011, however, federal figures for the noncitizen incarcerated population were available only as of midyear. Hence, all 2011 figures – federal, state, and local – are as of mid-year. As of August 2013, published data on the noncitizen incarcerated population for 2012 were unavailable at the federal, state and local levels. State incarceration data come from annually published BJS reports, Prison Inmates at Midyear. Data for that report come from the National Prisoner Statistics (NPS) program of BJS, which obtains mid-year and year-end prisoner counts from correctional departments of all 50 states. BJS also conducts an Annual Survey of Jails , from which it creates national-level estimates of the number of inmates incarcerated in local jails. In addition, it conducts a complete count of the local jail population every five years through its Census of Jails . Together, these two local jail counts provide a consistent annual series of the total number of persons incarcerated in local jails, though these local data are problematic, as described below. Data Quality and Limitations Several obstacles challenge and limit the ability of researchers to accurately enumerate the criminal alien population or compare its criminal activity to other U.S. populations. For example, while federal BOP data include information on citizenship status, not all state and local criminal justice systems collect such information, creating substantial inconsistencies in data quality and completeness at the state and local level. There is no single and consistent national enumeration of prisoners in the United States similar to the decennial census or the Current Population Survey—much less one that focuses on subpopulations such as noncitizens. Hence, attempts to quantify the U.S. criminal alien population have relied on estimation techniques, assumptions about the criminal alien proportion of the total criminal population, and federal surveys and censuses of prison inmates. This section discusses several data limitations associated with collecting data at the various stages of the criminal justice system. Arrests and Incarcerations Are Imperfect Indicators of Immigrant Criminality Arrests and incarcerations are both imperfect measures of criminality. Arrest data overestimate criminality because some individuals who are arrested are subsequently released, or if charged, are not ultimately convicted. And local incarceration data also over-count certain individuals because some people are incarcerated in local jails even though they have not yet been charged or convicted of crimes. Conversely, incarceration data generally underestimate the total number of convicted criminals because they exclude persons on parole and persons sentenced to probation. For instance, of the 6,977,700 individuals included by BJS in its 2011 estimate of the total correctional population, 3,971,319 were on probation, 853,852 were on parole, and 2,239,751 were incarcerated in federal and state prisons or in local jails. One also must use caution when examining arrest and incarceration data because greater (or lesser) numbers of arrests and incarcerations do not always indicate an increase (or decrease) in criminal activity. They may indicate changes in enforcement policy. For instance, a reduction in arrests or incarcerations for illegal immigration entry may stem from fewer persons attempting to enter the United States illegally, but it may also reflect changes in resources or enforcement priorities. It is also noteworthy that some crimes are never reported: arrests and incarcerations only reflect the number of offenses known to law enforcement. Inconsistent State and Local Data Reporting In addition to these limitations with respect to data validity, efforts to estimate the criminal alien population also confront a significant limit with respect to data availability and reliability. First, there are no recent and complete publicly available data on arrests at the state and local levels that distinguish between U.S. citizens and noncitizens. Thus, this report limits its analysis of arrest data to federal statistics. Second, BJS's state and local incarceration data are based on the voluntary participation of each state's department of corrections and local jails. While all states contribute data to BJS on their prison population, states vary with respect to how they define terms, which poses challenges to estimating the size and character of the criminal alien population. For instance, some states report foreign-born prisoners and naturalized U.S. citizens rather than strictly noncitizens, potentially inflating counts of the criminal alien population. Local jail reporting practices are likely to be even more inconsistent than state practices given the far greater number of jurisdictions. And not all local jurisdictions even report on their foreign-born criminal populations. For these reasons, GAO concluded in 2005 that "there [are] no reliable population ... data on criminal aliens incarcerated in all state prisons and local jails." Additional Sources of Bias Several additional factors may impede efforts to quantify the criminal alien population. Because criminal activity can lead to removal, criminal aliens could have strong incentives to lie about their legal status or not to provide such information, although biometric technology increasingly permits authorities to identify certain removable aliens. Furthermore, serious crime is frequently intra-racial and intra-ethnic in nature. Unauthorized alien victims may be particularly reluctant to report crime for fear that contact with the criminal justice system may result in their own removal. Such behavior can have nontrivial effects on crime reporting in some jurisdictions, given the frequent intra-racial and intra-ethnic character of serious crime. Presentation of Publicly Available Data A separate data-related complication independent of data quality concerns differences between counts of criminal justice data that result from factors such as whether the data come from mid-year or year-end, include persons in privately operated community facilities, include persons convicted in Washington DC, and similar variations. In addition, differences can occur between analyzing raw data and defining criminal aliens with certain decision rules, versus using data published online by BOP that incorporate different decision rules. For instance, figures on federally incarcerated criminal aliens in this report differ slightly from those presented in the GAO report, although it is not clear from the GAO report or from the source for data contained in this CRS report how those different figures would be reconciled.
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Congress has a long-standing interest in seeing that immigration enforcement agencies identify and deport criminal aliens. The expeditious removal of such aliens has been a statutory priority since 1986, and the Department of Homeland Security (DHS) and its predecessor agency have operated programs targeting criminal aliens since 1988. These programs have grown substantially since FY2005, and deportations of criminal aliens—along with other unauthorized immigrants—have grown proportionally. Despite the interest in criminal aliens, inconsistencies in data quality, data collection, and definitions make it impossible to precisely enumerate the criminal alien population, defined in this report as all noncitizens ever convicted of a crime. The Congressional Research Service (CRS) estimates the number of noncitizens incarcerated in federal and state prisons and local jails—a subset of all criminal aliens—at 183,830 in 2011 (the most recent year for which complete data are available), with state prisons and local jails each accounting for somewhat more incarcerations than federal prisons. The overall proportion of noncitizens in prisons and jails corresponds closely to the proportion of noncitizens in the total U.S. population. DHS's U.S. Immigration and Customs Enforcement (ICE) operates four programs designed in part to target criminal aliens: the Criminal Alien Program (CAP), Secure Communities, the §287(g) program, and the National Fugitive Operations Program (NFOP). CAP, Secure Communities, and the §287(g) programs are jail enforcement programs that screen individuals for immigration-related violations as they are being booked into jail and while they are incarcerated; the NFOP is a task force program that target at-large criminal aliens. This report describes how these programs work and identifies their common features and key differences among them. While consensus exists on the overarching goal of identifying and removing serious criminal aliens, these programs have generated controversy, in part because many of the aliens identified by ICE have never been convicted of a crime, or have been convicted only of minor criminal offenses. Thus, the programs focus attention on questions about when—if ever—DHS should exercise "prosecutorial discretion" by not asserting its full enforcement authority in certain cases. ICE and DHS officials have testified that resource constraints mean that the department can deport only about 400,000 aliens per year—far fewer than the total number of potentially removable aliens identified. Officials have released a series of memoranda describing criteria to prioritize certain aliens for removal, and to consider exercising discretion in other cases. Some Members of Congress have objected to the Obama Administration's exercise of discretion, and some have proposed legislation that effectively would limit such discretion. A second set of questions concerns the role of state and local law enforcement agencies in immigration enforcement. Supporters of jail enforcement programs, including the Obama Administration, see them as efficient and even-handed ways to identify criminal aliens. The Administration has particularly focused on Secure Communities, which was deployed in every law enforcement jurisdiction in the country in FY2013. Yet some have raised concerns that jail enforcement programs are not narrowly targeted at serious criminal offenders. Critics also argue that involving state and local law enforcement agencies in immigration enforcement may damage police-community relations, may result in racial profiling, and may result in the wrongful detention of people who have not been convicted of criminal offenses and may not be subject to removal. Although ICE and DHS have taken steps to address both sets of questions, they remain topics of legislative interest in the 113th Congress.
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Federal government programs can be funded with two different types of spending: discretionary and mandatory. Discretionary spending is provided and controlled through annual appropriations acts. Discretionary programs include the operations of running executive branch agencies (e.g., federal wages and salaries) and can also include certain loans, grants, and other subsidy programs. Mandatory spending generally is controlled by laws other than appropriations acts. It includes spending on entitlement programs such as Social Security, and other outlays such as the farm commodity programs. Congress sets eligibility requirements and benefit formulas for mandatory programs. If recipients meet eligibility requirements, outlays are made automatically. Mandatory programs can be thought of as a multiyear appropriation in authorizing legislation (e.g., a farm bill). In the context of agriculture, mandatory spending programs can have (1) a payment formula (e.g., $1.95 per bushel minus the market price of corn, multiplied by the bushels produced on farm) or qualification criteria with no specified limit, (2) a statutorily authorized level of funding (e.g, $1.2 billion available for a conservation program during a fiscal year), or (3) an acreage allotment (e.g., enroll up to 250,000 acres nationally). Mandatory funds from the authorizing law are assumed to be available unless they are expressly reduced to smaller amounts by a subsequent act of Congress in the appropriations process or by the authorizing committees. The 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) authorizes spending on many mandatory agricultural, conservation, nutrition, and bioenergy programs. Farm bills are viewed by many Members and most in the agricultural community—including farmers and bankers—as a "contract." They do not want the farm bill to be reopened before it expires, or funding reduced below "promised" levels by intervening laws or appropriations. The mandatory budget projection of the farm bill when it was enacted was $604 billion over 10 years. Two-thirds of this amount ($406 billion) was for domestic nutrition assistance (e.g., food stamps); this mandatory budget category is outside the scope of this report. Most of the rest, about $147 billion over 10 years, is funded through the Commodity Credit Corporation (CCC) in the U.S. Department of Agriculture (USDA). The remaining mandatory outlays in the 2008 farm bill are from the Federal Crop Insurance Corporation ($47 billion over 10 years) and the Agricultural Disaster Relief Trust Fund ($4 billion over 10 years). The CCC perhaps is best known as the funding mechanism for the mandatory farm commodity program payments that farmers receive from the USDA Farm Service Agency (FSA), and some of the conservation payments from the Natural Resources Conservation Service (NRCS) and FSA. The CCC also is or has been the funding source for a relatively small subset of USDA programs for foreign trade, bioenergy, rural development, agricultural research, and other programs. In the 2008 farm bill, the 10-year projection for mandatory budget outlays was $86 billion for the farm commodity programs, $55 billion for conservation, $4 billion for trade, $0.9 billion for bioenergy, $0.9 billion for horticulture/organic agriculture, $0.4 billion for research, and $0.2 billion for rural development. These are large pools of mandatory funding from which many programs are authorized to operate. The CCC is a permanently authorized, wholly owned government corporation that has the legal authority to borrow up to $30 billion at any one time from the U.S. Treasury (15 U.S.C. 714 et seq.). In many ways, it operates like a revolving line of credit that allows USDA to make program payments when they are needed, separate from appropriations. The CCC (1) borrows from the Treasury in advance of appropriations; (2) makes payments to recipients in the farm commodity and other programs according to formulas written into authorizing legislation; and (3) later repays the Treasury for the funds it borrows with appropriations from the annual Agriculture appropriations law. This appropriation usually is an indefinite "such sums as necessary" appropriation that may be more or less than the CCC's most recent year's outlays, but it nonetheless restores a level of borrowing authority. Historically, mandatory agricultural funding was reserved for the farm commodity programs that began in the 1930s. Because payments from these programs are tied to commodity prices, which are highly variable and difficult to predict or budget, the CCC was created to remove unpredictable funding issues from the annual appropriations process. The concept of funding other agricultural programs with mandatory spending has expanded in recent years to include some conservation, rural development, research, and bioenergy programs. This expansion has generated both concern and support. Some consider this expansion to be beyond the chartered purpose of the CCC, while others prefer the stability and consistency of mandatory funding to that of the appropriations process. Although Congress as a whole makes final funding decisions, the rise in the number of agricultural programs with mandatory budget authority from the authorizing committees has not gone unnoticed or untouched by appropriators. In recent years, appropriations bills have reduced mandatory program spending below authorized levels. These reductions, estimated by the Congressional Budget Office (CBO), are commonly referred to as "changes in mandatory program spending" (CHIMPS). CHIMPS can offset increases in discretionary spending that are above discretionary budget caps. Similarly, authorizing committees also have reduced mandatory spending levels that initially were enacted. Authorizers may make such reductions for two reasons. First, they reduce programs to offset spending increases for other mandatory programs within their jurisdiction (new authorizing laws that require pay-as-you-go budget rules). Second, they reduce programs to get credit for budget reconciliation (savings that are required when a budget resolution adopted by Congress forces many authorizing committees to reduce program spending to address budget deficits). The U.S. Constitution grants the power over appropriations (the power of the purse) to Congress. House and Senate rules create a division of labor through the procedural separation between authorizations and appropriations. Legislative committees (such as, for agriculture, the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry) are responsible for authorizing legislation. Appropriations committees (such as the House and Senate Appropriations Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies) are responsible for annual appropriations. Procedural rules generally prohibit encroachment on committee responsibilities. However, as discussed above, multiyear appropriations for mandatory programs are provided in one step by authorizing legislation, and this bypasses the two-step authorization-appropriation process. The current tension over which committee is responsible for bringing final budget recommendations to the floor for certain agricultural programs—appropriators or authorizers—has roots dating to the 1930s and the creation of the farm commodity programs. Some of the farm commodity subsidies that are required by a farm bill are volatile and therefore difficult to budget because they depend upon both future market prices and yields. These payments resemble entitlements, and any appropriation that would be set in advance would likely be too little or too much. Thus a mandatory funding source—the Commodity Credit Corporation (CCC)—was created to remove an unpredictable funding issue from the annual appropriations process. This separation operated for many decades with little tension. But the dynamic changed, particularly in the late 1990s and in the 2002 farm bill, when authorizers began writing laws using mandatory funds for types of programs that typically were discretionary (for example, conservation programs to rehabilitate small watersheds and dams, rural development programs to improve small business opportunities, or agricultural research programs to fund university-based research). This created a sometimes more complicated and bifurcated process of establishing budget authority for certain agricultural programs. Tension arose over who should make final funding decisions for these activities that were typically discretionary. Should authorizers use multiyear mandatory funding that is set in permanent law outside the appropriations process? Or should appropriators determine funding on an annual basis in appropriations acts? The following specific questions have been raised: Appropriators ask whether creation of the CCC in the 1930s for the hard-to-predict farm commodity programs justifies modern mandatory spending on programs that are not highly variable and typically are considered discretionary. Given the use of CHIMPS in recent Agriculture appropriations bills, appropriators apparently believe that such mandatory spending is not always appropriate. The authorizing committees contend that appropriators in recent years have not funded the Agriculture Committees' priorities as much as authorizers had desired. Authorizers therefore maintain that they are justified to write legislation using the mandatory funding at their discretion. In a broader context, suppose that an appropriations subcommittee knows the amount of appropriations needed for a desired level of activity. With enough foresight about the use of CHIMPS, those goals could be met with a smaller discretionary spending allocation (the "302(b)" allocation) than the desired level. Some may suggest that a lower discretionary allocation to one subcommittee (assuming there will be CHIMPS) potentially allows other subcommittees to receive a higher allocation. Ultimately, Congress as a whole—not individual committees—makes the final funding decisions when it enacts laws and appropriations. Congress may fund programs both in authorizing laws and in appropriations acts. Some say that tension among committees, interest groups, and political parties is part of the process by which Congress enacts laws and appropriations. In general, the production agriculture community has not raised strong opposition to most of the recently enacted reductions in mandatory programs because the farm commodity programs have not been targeted. Nonetheless, they are not supportive of any reductions that increase funding for nonagricultural programs. Conversely, environmental and conservation supporters have been more vocal and expressed significant concern over the reductions—by both authorizers and appropriators—because many cuts have targeted conservation programs. These groups argue that when authorizers reduce conservation funding they undercut many of the programs that generated political support for the farm bill's initial passage. They also argue that cuts by appropriators circumvent commitments made in the farm bill by the authorizers. The 2002 and 2008 farm bills ( P.L. 107-171 and P.L. 110-246 , respectively) used mandatory funding from the CCC to support an increasing number of conservation, rural development, and other programs. The funding levels for these mandatory programs do not need to be determined in the annual appropriations process, since the authorizing committees set the eligibility rules, payment formulas, and/or mandatory funding levels in authorizing legislation. Funding for mandatory programs is thus available based on the authorization without appropriations action. In reaction to this growing use of mandatory funding, some appropriations bills have reduced or stopped funding for these newly mandatory programs, and used the savings to allow higher spending for certain discretionary programs. These CHIMPS have not affected the farm commodity programs or the nutrition assistance programs such as food stamps, both of which are customarily accepted by appropriators to be mandatory programs. When appropriators limit mandatory spending, they usually do not change the authorizing law. Their action has the same effect as changing the law, but only for the one year to which the appropriation applies. Appropriators put limits on mandatory programs by using language such as: "None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out section [ ... ] of Public Law [ ... ] in excess of $[ ... ]." Table 1 lists the CHIMPS in agricultural programs that Congress has enacted since FY2003 in appropriations acts. The practice peaked in FY2006, and subsequent changes have been smaller. The CHIMPS in Table 1 total $7.5 billion over the eight years from FY2003 through FY2010. Much of that amount is from the two years FY2005 and FY2006, when CHIMPS were more than double the amounts in other recent years. CHIMPS in eight conservation programs are among the most notable, accounting for $3 billion of the $7.5 billion total over eight years. Among individual programs, the Environmental Quality Incentives Program (EQIP) has the highest multiyear total, $1.2 billion over eight years. In addition to the CHIMPS that appropriators place in regular annual appropriations bills, authorizing committees sometimes reduce mandatory program authorizations to create offsets for new spending on other agricultural purposes, such as disaster assistance or child nutrition. When authorizers reduce mandatory spending, they change the authorizing law (e.g., the farm bill) directly. Table 2 lists the reductions to mandatory programs that Congress has enacted since 2003—not as part of a farm bill, but via budget reconciliation and other required offsets. The Conservation Security Program was reduced by $3.1 billion in FY2003 and $2.9 billion in FY2005 to create offsets for agricultural disaster assistance (each were 10-year reductions). In the 109 th Congress, the Agriculture Committees were compelled to find savings for budget reconciliation. In that reconciliation, authorizers cut $2.7 billion of mandatory funding over five years, from many of the same conservation, rural development, and research programs that had been the subject of CHIMPS in prior years. In doing so, the authorizing committees captured the savings for reconciliation, preempting similar action in future appropriations acts. More recently, a funding proposal for the Senate Agriculture Committee's Healthy, Hunger-Free Kids Act of 2010 ( S. 3307 ) proposes to reduce EQIP by $2.2 billion over 10 years to offset the cost of increases to the child nutrition program. Some of the support for this action rests on recognition that appropriators have already been limiting EQIP (this is discussed further in the example, " A Reduction by Authorizers: Proposed EQIP Offset for Nutrition "). The Administration also can take actions that reduce mandatory outlays, and these actions may affect the budget baseline. For example, USDA's negotiation with crop insurance companies over the Standard Reinsurance Agreement (SRA) proposes to reduce some payments, something USDA can do administratively within the scope of the authorizing legislation. Budgetary savings in the range of $6-$8 billion over 10 years were proposed initially. How these cuts are achieved—whether administratively through the SRA or legislatively through congressional action—has been a topic of debate. This is discussed later near the end of the section on " Budget Scorekeeping and Baseline Issues ." The baseline for a government program is a projection at a particular point in time of what the multiyear federal spending (budget authority or outlays) would be under current law if no policy changes were made. The baseline serves as a benchmark or starting point for future budget analyses. Whenever new provisions (such as in a farm bill, or CHIMPS in an appropriations bill) are introduced that affect federal mandatory spending, their impact (or "score") is measured as a difference from the baseline. Any increase in costs above the baseline level may be subject to certain budget constraints (such as pay-go). The process of scorekeeping and estimating baselines is done in Congress by the Congressional Budget Office (CBO), acting under the supervision of the House and Senate Budget Committees. The method or impact of calculating the budgetary savings from reducing mandatory programs can sometimes raise questions. For example, how much credit can or should appropriators get for limiting a program by using CHIMPS? What does a reduction by authorizers (or the Administration) do to the baseline level of funding that is available for a program? When mandatory funds are made available for only one fiscal year, the scorekeeping from a reduction is straightforward. The savings are equal to the limit placed on the program in relation to the full funding level in the authorizing act. Other mandatory funding is made available using "no year" money; that is, the mandatory funding is "to remain available until expended" (the funding is not limited to a single fiscal year). When appropriators block this type of mandatory funding in one year by using CHIMPS, they typically are not cancelling the authority to obligate funds in future years; therefore the funding is still available and could be used in a future fiscal year. Under CBO scoring procedures, appropriations acts in successive years can get credit for limiting the same pool of funding so long as the underlying "no year" funding authority remains available. Thus, what some might call an overstatement of budget savings can occur. For example, suppose a program has a $50 million mandatory authorization to remain available until expended. It can be blocked by $50 million in CHIMPS in one year and another $50 million in CHIMPS the following year. Over two years, $100 million in CHIMPS could be credited from this $50 million program. The next section has a specific example, " CHIMPS by Appropriators: The Dam Rehabilitation Program ." The method of calculating budgetary savings when authorizers make the reduction is somewhat more straightforward since it is a direct change in the authorizing law. However, because the authorizing law is changed, a reduction affects the budget for future legislation (such as a future farm bill) by reducing the budget baseline. As with many legislative developments, a farm bill debate is influenced by budgetary constraints imposed by Congress. The baseline establishes how much money authorizers have available to spend on a bill without having to seek offsets elsewhere. The calculation of a baseline assumes a continuation of current policies under expected economic conditions. Therefore, any reduction in existing program funding affects the baseline estimates for future years. As a mandatory program's budget authority is reduced, savings are generated by the difference between the previous authority and the new level. This reduction is usually not annual, like CHIMPS, but rather long-term (a 5- or 10-year budget window). It therefore affects the program's overall baseline. For example, if an authorizing act provides (or CBO estimates that a program will cost) $100 million each year for a 5-year farm bill, then the baseline for the program is $100 million each year. This baseline may likely extend beyond the life of the farm bill for an entire 10-year budget window. If the authorization for the program is reduced to $85 million each year, then the baseline is reduced by $15 million each year to $85 million (and the sum across a 10-year budget window from the $15 million/year reductions could result in $150 million of budget savings). In addition to Congress taking action to reduce spending, the Administration sometimes can make changes that reduce mandatory outlays and these actions may affect the baseline. For example, USDA periodically negotiates a Standard Reinsurance Agreement (SRA) with the private insurance companies participating in the federal crop insurance program. The current SRA negotiation proposes to reduce various payments to crop insurance companies for delivering the program to farmers, something USDA can do administratively within the scope of the authorizing legislation. Generally speaking, there is some support or at least recognition that a reduction in crop insurance delivery costs is needed. Budgetary savings in the range of $6-$8 billion over 10 years initially were proposed. How such cuts are achieved—whether administratively through the SRA or legislatively through congressional action—has been a topic of debate. Given the possibility of budget reconciliation in the next few years because of federal deficits, and the upcoming debate for a 2012 farm bill, leaders in the agriculture community do not want USDA to make such changes administratively because Congress would not get credit for the reduction. They would prefer to preserve the baseline and let Congress make any cuts. If action waits until a future farm bill, the Agriculture Committees could make similar reductions in crop insurance and be able to use the savings to offset other programs elsewhere in the farm bill—funds that would not be available if USDA makes cuts administratively. Alternatively, if budget reconciliation is used in the foreseeable future, these types of reductions to crop insurance might be one of the first choices to reduce outlays to help meet reconciliation targets, before reducing spending on other commodity or conservation programs. The Small Watershed Rehabilitation Program (a.k.a. the Dam Rehabilitation Program) is an example of CHIMPS that illustrates the potential for what some argue is double counting. It also is one of the few CHIMPS remaining in FY2010 (the second row of Table 1 ). During two periods, FY2003-FY2006 and FY2007-FY2010 (i.e., before and after budget reconciliation in February 2006), it reveals two types of double counting. Although appropriators did provide some discretionary funds during these same periods, they did not replace the level of the mandatory reductions. First, the 2002 farm bill authorized the Small Watershed Rehabilitation Program mandatory funding from the CCC as follows: $45 million in FY2003, $50 million in FY2004, $55 million in FY2005, $60 million in FY2006, and $65 million in FY2007—with each year's funds to remain available until expended. Using CHIMPS to block mandatory spending in the program, appropriators were given credit for $45 million in savings in FY2003, $95 million in FY2004 ($45 million carryover from FY2003 plus $50 million from FY2004), $150 million in FY2005 ($95 million carryover from FY2003-04 plus $55 million from FY2005), and $210 million in FY2006 ($150 million carryover from FY2003-FY2005 plus $60 million in FY2006). Thus, over four years, appropriators were given credit for a total of $500 million in savings from $210 million in mandatory authorizations, and used it to offset discretionary programs elsewhere in the annual Agriculture appropriations acts (see Table 3 , part 1). Next, to comply with budget reconciliation directives included in the FY2006 budget resolution ( H.Con.Res. 95 ), which resulted in the Deficit Reduction Act of 2005 ( P.L. 109-171 ), the Agriculture Committees cancelled the unobligated budget authority for the Dam Rehabilitation Program for FY2003-FY2006. They did, however, allow the $65 million for FY2007 to remain available until expended, as in the original 2002 farm bill. In addition, the 2008 farm bill authorized an additional $100 million of mandatory funds in FY2009 to remain available until expended. Continuing to use CHIMPS on the remaining and new amounts provided for the Dam Rehabilitation Program, appropriators were given credit for $65 million in savings in each of the FY2007 and FY2008 Agriculture appropriations bills, and $165 million in savings in each of the FY2009 and FY2010 bills (see Table 3 , part 2). Thus, in the four years from FY2007 through FY2010, appropriators were given credit for a total of $460 million in savings from $165 million in mandatory funds. On March 24, 2010, the Senate Committee on Agriculture, Nutrition, and Forestry marked up the Healthy, Hunger-Free Kids Act of 2010 ( S. 3307 ). The bill would reauthorize many of the USDA child nutrition programs and increase total funding by $4.5 billion over the next 10 years. To help offset the new spending, the bill includes a proposed reduction to the Environmental Quality Incentives Program (EQIP). Section 442 of the bill would reduce the mandatory budget authority for EQIP to $1.477 billion in FY2011 (currently at $1.588 billion in FY2011 under the 2008 farm bill) and $1.477 billion in FY2012 (currently at $1.75 billion in FY2012 under the 2008 farm bill). Under the CBO baseline, this reduction yields an estimated savings of $2.2 billion over 10 years. Much of the concern during the Agriculture Committee markup of the child nutrition bill appeared to revolve around the proposed reduction of EQIP funding to offset the bill's increases for child nutrition. Supporters of the offset point to the reduction as a way for the authorizing committee to do what the appropriators have been doing for years and use the offsets elsewhere for their own purposes. Others counter that a reduction of EQIP's funding authority—while still allowing an increase over previously appropriated levels—will not make the program immune from further cuts by appropriators. Some also point to the impact that a reduction will have in determining baseline funding for future farm bill debates. The popularity of EQIP and its backlog of unfunded applications have been cited as reasons not to reduce its funding authority but rather to look to other mandatory programs for possible offsets. An amendment by Senator Chambliss at the March 24, 2010, committee markup proposed to reduce authorized acres under the Conservation Stewardship Program (CSP) rather than EQIP. The amendment received support from both political parties; however, it failed to pass by a margin of one vote (10-11). Opponents of the amendment said that a reduction in CSP could reduce a future farm bill baseline more than the proposed reduction to EQIP. As this bill moves to the floor, additional debate on offset alternatives is expected. Some programs have been a source of reductions for both appropriators and authorizers. For example, the Conservation Security Program (CSP) was used by authorizers to offset two agricultural disaster assistance laws in 2003 and 2005, and again in budget reconciliation in FY2005. During this same period, appropriators both restored the funding that authorizers used for the first disaster bill, and reduced CSP through CHIMPS in FY2004-FY2007. First, CSP was created in the 2002 farm bill ( P.L. 107-171 , Sec. 2001). When enacted, it did not have a maximum enrollment limit or a cap on total funding. In March 2003, CBO's baseline projection for the cost of CSP was $6.9 billion over 10 years. The Agricultural Assistance Act of 2003 ( P.L. 108-7 , Division N)—a disaster assistance bill for crop and livestock growers—placed a limitation on CSP enrollment; that is, a it placed a cap on CSP that had not existed. This limitation resulted in a $3.1 billion reduction in CSP's estimated outlays over a 10-year period, and provided $3.1 billion to offset the cost of disaster assistance. The next year, the FY2004 appropriations bill ( P.L. 108-199 ) eliminated the cap that had been placed on the program in FY2003. This restored CSP's full funding. However, because appropriators have responsibility for only the single year of the appropriation, and because the former limitation on CSP was estimated to have budget effects only after 2007, only the one-year cost of the restoration (which was $0 in FY2004) was charged to the appropriation. But the effect was to increase the 10-year baseline projection by the $3.1 billion former offset. Later in 2004, the Emergency Supplemental Appropriations for Hurricane Disasters Assistance Act of 2005 ( P.L. 108-324 , Division B)—providing disaster assistance for crop and livestock growers—placed another cap on CSP that offset $2.9 billion of additional disaster assistance. In FY2005, CSP was one of 12 agricultural programs reduced by authorizers to meet budget reconciliation directives ( P.L. 109-171 , Sec. 1202). Its $649 million reduction was the largest reduction among the four conservation programs that were affected by reconciliation, and the second-largest among the entire group ( Table 2 ). Finally, each of the FY2004-FY2007 annual agriculture appropriations bills used CHIMPS to reduce the annual amount available for CSP. These reductions ranged from $12 million in FY2004 to $115 million in FY2007 ( Table 1 ). The Conservation Security Program was terminated in the 2008 farm bill ( P.L. 110-246 , Sec. 2301) and replaced by the Conservation Stewardship Program. Presently, funding for the new CSP has not been reduced by appropriators or authorizers. The tension between agriculture appropriations and authorizing committees over which committee is responsible for bringing final spending recommendations to the floor for certain mandatory agricultural programs (such as conservation) is not likely to wane. Nonetheless, it is Congress as a whole that makes the final decision by either endorsing or changing a committee's recommendations on the floor. Appropriators assert that many of these relatively new programs, like most other funding decisions, should rest with them and be discretionary in the annual appropriations process. Authorizers contend that a consistent funding stream is preferable for some programs and want to use the mandatory funds at their discretion, especially since they assert appropriators have not always funded the authorizers' priorities adequately. Beyond the jurisdictional tension, the budgetary effects of CHIMPS and other budget reductions are not always straightforward. For example, A multiyear total of CHIMPS by appropriators can exceed the mandatory funds made available for the program in the authorizing legislation. With enough foresight, CHIMPS can reduce the discretionary budget allocation that is needed for an appropriations subcommittee to fund its programs. A lower discretionary allocation to one subcommittee that uses CHIMPS potentially allows other subcommittees to receive a higher allocation. Reductions in mandatory programs by authorizing committees can affect future farm bill baselines. The Administration can take actions with mandatory programs that affect baselines, and this can put it at odds with Congress not only over policy implementation but also over the budget. These types of funding issues are increasingly important in an era of budget deficits and the potential for budget reconciliation. Because of the federal budget deficit, many people argue that the next farm bill is very unlikely to receive additional funds from outside the Agriculture Committees' jurisdiction to increase program spending. Thus, preserving the existing baseline is a high priority for many in Congress and affiliated agricultural, conservation, and rural development interest groups in order to maximize the resources available to write a new farm bill.
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Many agricultural programs receive mandatory funding through the U.S. Department of Agriculture's Commodity Credit Corporation (CCC). Mandatory funding is made available by multiyear authorizing legislation and does not require annual appropriations or subsequent action by Congress. However, mandatory funding can be reduced in the appropriations process or by the authorizing committees themselves. In contrast to mandatory funding, discretionary funding is made available by annual appropriations acts on a year-by-year basis through a different process originating in the appropriations committees. While mandatory spending in agriculture historically was reserved for the farm commodity programs, the authorizing Agriculture Committees have expanded its use to conservation, rural development, and energy programs in the recent farm bills passed by Congress. Mandatory spending creates funding stability and consistency compared to that of the appropriations process. Some argue, however, that this use of mandatory spending has moved beyond the statutory purpose of the CCC. This has created tension between authorizers and appropriators, leading to actions by appropriators that are called "changes in mandatory program spending" (CHIMPS). CHIMPS usually reduce or block mandatory outlays, but sometimes appropriators replace some of the blocked funding with discretionary appropriations. Nonetheless, CHIMPS generate savings that appropriators can use to offset increases in discretionary spending. Between FY2003 and FY2010, CHIMPS by appropriators to mandatory agricultural programs have totaled $7.5 billion. CHIMPS to eight conservation programs are among the most notable, accounting for $3 billion of this total. Among individual programs, the Environmental Quality Incentives Program (EQIP) has the highest multiyear total of CHIMPS, at $1.2 billion. Authorizing committees also have reduced mandatory program spending to generate savings after a farm bill has been enacted. The reason may be to offset spending increases for other programs within their jurisdiction or to comply with budget reconciliation directives. Notable among changes to authorizing laws (not CHIMPS), the Conservation Security Program was reduced in FY2003 and again in FY2005 to offset agricultural disaster assistance ($3.1 billion and $2.9 billion, respectively). Authorizers also received credit for $2.7 billion in budget reconciliation savings (over five years) across 12 programs in 2005, many of which had been reduced by appropriators in prior years through CHIMPS. More recently, the Senate Agriculture Committee's current funding plan for the Healthy, Hunger-Free Kids Act of 2010 (S. 3307) proposes to use $2.2 billion of reductions from EQIP over 10 years to offset the cost of increases for child nutrition. A proposed alternative to use an offset from the Conservation Stewardship Program (CSP) would have similar budgetary effects, and would likewise affect a mandatory program. The Administration also can take actions that reduce mandatory outlays. In renegotiating the Standard Reinsurance Agreement for the crop insurance program, the Administration has proposed changes that would reduce the baseline available for crop insurance by about $7-8 billion over 10 years. This has raised a debate over whether such reductions should wait so that Congress can get credit for any reduction, especially for future farm bills or possible budget reconciliation.
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On November 26, 2007, President George W. Bush and Iraqi Prime Minister Nouri al Maliki co-signed the Declaration of Principles for a Long-Term Relationship of Cooperation and Friendship Between the Republic of Iraq and the United States of America ("Declaration of Principles" or, "Declaration"). It portended a bilateral agreement to address political, economic, and cultural issues, as well as the continued presence of U.S. forces in Iraq after the December 31, 2008 termination of the U.N. Security Council resolution currently authorizing the Multinational Force in Iraq (MNF-I). The Bush Administration later announced that it would negotiate two agreements, an agreement providing the legal basis between the two countries for the continued presence and operation of U.S. armed forces in Iraq, termed a status of forces agreement (SOFA), and a strategic framework agreement to cover the overall bilateral relationship. The Declaration of Principles presaged U.S. "security assurances and commitments" to aid Iraq in defending against external and internal threats. Shortly after the announcement of the Declaration of Principles, Lieutenant General Douglas Lute, Assistant to President Bush for Iraq and Afghanistan, stated that the planned agreement would cover nearly every aspect of the future U.S. military role in Iraq, including the overall mission, force levels, and basing arrangements. He explained that the parties intended to conclude the agreement by July 31, 2008. Regarding Congress's role in the creation of the agreement, General Lute stated that the Bush Administration did not expect the agreement to rise to the level of a treaty, and that it did not foresee the need for "formal inputs" from Congress. After a year of negotiations, executive branch officials led by Ambassador Ryan Crocker finalized two agreements with the government of Iraq on November 17, 2008, after unanimous approval from Prime Minister al Maliki's cabinet on November 16. These were the "Strategic Framework Agreement for a Relationship of Friendship and Cooperation between the United States of America and the Republic of Iraq" ("Strategic Framework") and the "Agreement Between the United States of America and the Republic of Iraq On the Withdrawal of United States Forces from Iraq and the Organization of Their Activities during Their Temporary Presence in Iraq" ("Security Agreement," and together, with the Strategic Framework, the "Iraq Agreements" or the "Agreements"). Although the Bush Administration executed the Agreements as sole executive agreements, needing only the signature of Ambassador Crocker for entry into force, the Iraqi process for approval required three additional steps. First, before the Agreements could be signed, the Iraqi cabinet had to approve the final version of the two Agreements, which it did on November 16 as mentioned above. Second, the Iraqi Council of Representatives (COR) had to vote to approve the Agreements. Finally, the Iraqi Presidency Council, made up of Iraq's president and two vice presidents, had to give its approval. After finalizing the Agreements on November 17, therefore, the Iraqi government sent the Iraq Agreements to the COR for approval. On November 19, 2008, a session in the COR to hear the second public reading of the law to approve the Agreements was halted when a physical confrontation broke out due to a dispute over parliamentary process. Several members of the COR asserted that it was unconstitutional to consider approval of the agreements because the COR had not yet passed a general law on ratification of international agreements, required by Article 61 of the Iraq constitution. Other members stated that the law approving the Agreements would need two-thirds majority approval to pass, not a bare majority as had been previously decided. There was sentiment among many members that constitutional requirements were being bypassed in order to force the Agreements through the COR quickly without due consideration. Despite this opposition, and criticism from certain Iranian leaders influential among some Iraqi groups, the COR passed the law approving the Iraq Agreements by simple majority on November 27, 2008. Several Sunni and independent COR members agreed to vote for approval when an additional measure passed calling for a national referendum on the Agreements to take place in July 2009, which would allow the Iraqi people a chance to vote their disapproval, requiring the government of Iraq to pull out of the Agreements. Iraq's Presidency Council gave its approval of the Iraq Agreements on December 4, 2008, and they entered into force on January 1, 2009. Observers have asserted that preparations for the July 2009 referendum, including a law to govern the referendum process, have not taken place to date. The Strategic Framework sets out broad goals for the overall relationship and cooperation between the United States and Iraq. Section I states that the presence of U.S. forces is at the request and invitation of the government of Iraq; that the United States shall not use Iraqi land, sea, or air to launch attacks against other countries; and that the United States shall not request permanent military bases or a permanent military presence in Iraq. Section II requires the United States to "ensure maximum efforts to work with and through the democratically elected Government of Iraq" for political and diplomatic cooperation. Section III states that the defense and security cooperation between the parties shall be undertaken pursuant to the Security Agreement. Sections IV through VIII state that the parties "agree to cooperate" on issues of culture, economics, energy, health, environment, information technology and communications, and law enforcement and the judiciary. Section IX requires the parties to establish a Higher Coordinating Committee to monitor implementation of the Strategic Framework, and establish additional Joint Coordination Committees as necessary. Section X provides that the parties may enter into further agreements or arrangements as necessary to implement the Strategic Framework. Finally, Section XI provides in part that the Strategic Framework enter into force on January 1, 2009 following the exchange of diplomatic notes confirming that the two parties have completed their respective constitutional procedures to enter into the Strategic Framework. The Section also states that either party may withdraw from the agreement one year after notifying the other party of its intent to withdraw. The Security Agreement states in Article 1 that its scope and purpose is to "determine the principal provisions and requirements that regulate the temporary presence, activities, and withdrawal of the United States Forces from Iraq." The Security Agreement contains many provisions common to most U.S. SOFAs. Articles concerning taxes, claims, carrying weapons and wearing uniforms, for instance, are regularly included in SOFAs. The document, however, also contains a number of articles that are not typical of a SOFA and seem to expand the scope of the Security Agreement. Several articles, for example, concern the authority of U.S. forces to conduct military operations within Iraq. Article 4, "Missions," explains that Iraq requests the temporary assistance of U.S. armed forces in the conduct of military operations within Iraq. The Article also states that all military operations carried out pursuant to the Security Agreement must be approved by the government of Iraq and coordinated with Iraqi authorities through a Joint Military Operations Coordination Committee (JMOCC) to be established under Article 23. Article 22 gives U.S. forces authority to detain individuals in Iraq in accordance with Article 4. Article 27 authorizes military operations, among other actions, to deter external or internal threats or aggression against Iraq if mutually agreed by the parties. In addition to those concerning military operations, the Security Agreement contains other unusual provisions. Article 24 sets out timelines for withdrawal of U.S. troops from Iraq by December 31, 2011, with an earlier withdrawal deadline on June 30, 2009 for U.S. troop withdrawal from Iraqi cities and towns. Notwithstanding these timelines, the Article also states that the United States has the right to withdraw its armed forces from Iraq at any time, and Iraq has the right to request the departure of U.S. armed forces at any time. Article 25 concerns efforts to end the application of resolutions affecting Iraq under Chapter VII of the U.N. Charter. Article 23 requires the creation of a Joint Ministerial Committee, which in turn shall create the JMOCC and a Joint Committee, for the purpose of implementing and interpreting the Security Agreement, as well as settling disputes arising under the Security Agreement. Article 29 contemplates creation of further mechanisms for implementation of the Security Agreement, including new mechanisms not specifically prescribed by the provisions of the Security Agreement. Article 30 states that the Security Agreement is effective for three years, but that either party may terminate the Security Agreement one year after giving notice of its intention to withdraw. Like the Strategic Framework, Article 30 also provides that the Security Agreement enter into force on January 1, 2009 following the exchange of diplomatic notes confirming that the two parties have completed their respective constitutional procedures to enter into the Security Agreement. Despite earlier concerns about possible incompatibility between some provisions of the Iraq Agreements and the campaign promises of President Obama, the Obama Administration has indicated its intention to abide by the terms of both the Security Agreement and the Strategic Framework. President Obama stated in February 2009 that the United States would withdraw the majority of its troops from Iraq by August 2010, but that 35,000-50,000 troops would remain longer, with drawdowns continuing until December 31, 2011, as set out in the Security Agreement. Secretary of State Hillary Clinton stated in her nomination hearing that the State Department would actively pursue the cooperation activities set out in the Strategic Framework. Implementation of the provisions of the Security Agreement in Iraq, however, has not been without difficulties. General Ray Odierno, commander of U.S. forces in Iraq, stated that despite the requirement in the Security Agreement that U.S. forces withdraw from Iraqi cities and towns by June 30, 2009, some U.S. troops will not withdraw by that date where Iraqi security forces are not prepared to independently meet their duties, in order to provide support against remaining insurgents and training for Iraqi forces. According to a recent report, the United States and Iraq began negotiations to extend the presence of U.S. troops in Baghdad and Mosul past the June 30, 2009 deadline. Both General Odierno and an Iraqi government spokesperson further stated that the timetable for overall withdrawal by the end of 2011 could be renegotiated if a continued U.S. presence is necessary. In January 2009, General Odierno nevertheless asserted that the full withdrawal of U.S. troops would go forward as set out in the Security Agreement. With regard to joint operational command under the Security Agreement, Iraqi commanders have claimed that U.S. forces have often failed to pre-coordinate their activities with Iraqi officials, thus violating the provisions requiring Iraqi approval of U.S. operations, and that pre-coordination mechanisms have not functioned efficiently. Prime Minister al Maliki condemned a U.S. raid in the southern Iraqi town of Kut in late April 2009, which apparently occurred without coordination or approval from Iraqi officials as required under the Security Agreement. The Prime Minister characterized the raid as a "breach of the security pact" and called on the United States to "hand over those responsible for this crime to the courts." Several Members of Congress have proposed numerous pieces of legislation, both before and after the November 2008 finalization of the Agreements, designed to encourage or require the submission of the Iraq Agreements to Congress for formal approval. The language of some of these bills would require consultation and reporting from the President concerning the progress of negotiation of the Agreements. Congress has also conducted multiple hearings that have either focused on or at least touched on the Iraq Agreements. In these hearings, Congress has heard testimony from executive branch officials addressing the plans and important issues concerning the Iraq Agreements, and, prior to finalization of the Agreements, received promises from such officials to keep Congress informed on the progress of negotiations. This testimony has equipped Congress with information pertinent to deciding what further action can be taken to involve Congress more in the implementation of the Iraq Agreements. At congressional hearings, the Bush Administration and the Iraqi legislature also expressed their opinions regarding the Iraq Agreements. In answering Congress's concerns, the Bush Administration sought to reassure Congress of its intentions regarding the content and scope of the Iraq Agreements, while vigorously defending the President's asserted constitutional and legislated right to execute such Agreements without formal congressional approval or a specified congressional role. At a June 4, 2008, hearing before the House Subcommittee on International Organizations, Human Rights, and Oversight, members of the Iraqi Council of Representatives (COR) testified that the COR as a whole believed no U.S.-Iraq agreement was proper at the time because Iraq did not enjoy full sovereignty, and that the COR's approval was required for the Iraq Agreements to go into effect, statements that described similar sentiments reported at the time of the approval of the Iraq Agreements in November 2008. Congress's response to the Iraq Agreements has illuminated the priority concerns and positions of the various stakeholders involved in the Agreements. Several Members of Congress have asserted the necessity of congressional involvement in the Iraq Agreements, arguing that the Agreements require advice and consent of the Senate as a formal treaty under the Constitution, or congressional approval through normal legislation. Some Members have contended that any agreement with Iraq, given the importance of U.S. involvement in Iraq to the Congress and the American people, should be negotiated with meaningful consultation from the Congress, no matter what legal form the agreement takes. Some statements from Members have suggested that the Iraq Agreements, negotiated and executed out of the sight of Congress, may still unexpectedly bind the hands of the Obama Administration and Congress, and might include a role for U.S. troops in Iraq that exceeds the scope of the 2002 congressional authorization to use force in Iraq. President Barack Obama, Vice President Joseph Biden, and Secretary of State Hillary Clinton all asserted as Members of Congress that Congress should be involved in the negotiation of these Agreements and such Agreements should not be allowed to enter into force prior to congressional approval of some form. As senators, both Vice President Biden and Secretary of State Clinton introduced legislation to require consultation with, and approval from, Congress before the Agreements with Iraq were finalized. Then-Senator Obama was a co-sponsor of then-Senator Clinton's bill, S. 2426 (110 th Congress). On the other hand, certain Members have argued that President Bush completed the Iraq Agreements as sole executive agreements within the scope of his inherent powers and the congressional authorization to use force, characterizing demands for greater congressional involvement as unnecessary and possibly improper under the Constitution. After the Iraq Agreements were finalized, certain Members continued to express concerns about various aspects of the Agreements, including the legal protections for U.S. troops, the effectiveness of the timetable for withdrawal, and the true nature of the continuing U.S. commitment to the security of Iraq, among others. This remainder of this report is divided into two main parts: the first describes in detail the actions taken by Congress concerning the planned Iraq Agreements, including legislative initiatives and congressional hearings; the second provides a range of options for further congressional action concerning Congress's role in negotiating, executing, and implementing the Iraq Agreements. Congress, in response to the negotiation, execution, and implementation of the Iraq Agreements, has enacted legislation, proposed legislation, and held hearings. The enacted and proposed legislation, designed to ensure a congressional role in the Iraq Agreements, contains combinations of four main types of provisions requiring (1) reports to Congress, (2) consultations with Congress, (3) formal congressional approval, or (4) funding prohibitions. Table 1 below shows the types of provisions included in each piece of pertinent legislation. Several hearings focused directly on the Iraq Agreements, their contents and scope, issues of congressional involvement, constitutional prerogatives of the President in their execution, the possible extension of the U.N. mandate for Iraq in lieu of the Iraq Agreements, and the concerns and views of the Iraqi parliament. Members and witnesses discussed many of the same issues concerning the Iraq Agreements at hearings held that regarded the Defense and Foreign Affairs budgets, hearings on the Bush Administration's report on the result of the U.S. troop surge in Iraq, and nomination hearings for certain Obama Administration officials. Although the Iraq Agreements entered into force on January 1, 2009, some legislation has been proposed in the 111 th Congress concerning the Agreements. Representative Barbara Lee has introduced two bills regarding the Agreements, the first reiterating some demands in legislation proposed in the last Congress, and the second stating the sense of the House that the Iraq Agreements are not to be treated as binding. According to some statements by Obama Administration officials, the Administration intends to abide by and implement the Iraq Agreements as effective international obligations. These bills may provide a continuing source of congressional pressure on the executive branch concerning Congress's treatment of the Iraq Agreements. Representative Barbara Lee introduced this bill on January 8, 2009. The bill is identical in its language and provisions to H.R. 6846 (110 th Congress), which Representative Lee introduced on September 9, 2008, and S. 3433 (110 th Congress), which Senator Joseph Biden introduced on August 1, 2008. Some of the language of this bill may be problematic given the intervening finalization on November 17, 2008, and entry into force on January 1, 2009 of both the Strategic Framework and the Security Agreement. The sense of Congress provision in section 3 concerning extension of United Nations Security Council Resolution 1790, stating such resolution "currently" provides the mandate for the MNF-I, no longer holds true as of the end of December 31, 2008, at which point the mandate expired. Section 5 requires consultation with the appropriate committees by the Secretaries of State and Defense on the negotiations pursuant to the Declaration of Principles, as well as further updates as the negotiations progress; these negotiations, however, were ended as of November 17, 2008. These Committees may wish to receive a briefing on the now completed negotiations nonetheless, if such Committees do not feel they have been sufficiently briefed previously on the matter. Section 5 also encourages the Secretary of State to provide the text of any agreement including a U.S.-Iraq security commitment or arrangement prior to finalization. To the extent the Security Agreement and/or the Strategic Framework fall into this category of agreements, this provision cannot be effective, as the Agreements have already been finalized. The provision may be useful, however, in requiring any further agreements based on the Security Agreement or Strategic Framework, or negotiated independent of those agreements, to be provided prior to finalization. Section 6(a) prohibits entry into force of any agreement that contains a security commitment or arrangement but has not received some type of congressional approval. Again, to the extent that either the Security Agreement or the Strategic Framework fall into those categories of agreements, the provision is not effective, as both these Agreements entered into force on January 1, 2009, based on their own terms. As with the provision in section 5, however, section 6(a) is written broadly enough to perhaps encompass further agreements between the United States and Iraq. On January 8, 2009, this bill was referred to the Senate Foreign Relations, Armed Services, and Rules Committees, and no further action has been taken. This resolution was introduced by Representative Barbara Lee on January 15, 2009. In several whereas clauses, the resolution discusses the constitutional role of Congress concerning treaties and other international agreements; the constitutional powers of Congress with regard to war powers and appropriations; the lack of involvement of Congress in negotiation and finalization of the Security Agreement; the expected cost to carry out the Security Agreement through 2011; the need for Iraqi approval of U.S. military operations, and the historical use of treaties in cases of any foreign control of U.S. military forces; and the uncertain status of private security contractors with regard to jurisdiction of Iraqi courts. The resolution continues with a sense of the House provision stating that the Security Agreement is not a "genuine" status of forces agreement, and was finalized in a manner inconsistent with constitutional requirements; and should be considered by the Congress as advisory in nature and not legally binding. The resolution then calls for hearings to consider acceptance or rejection of the Security Agreement to the extent it contemplates the expenditures required for maintaining troops in Iraq through 2011; subjects U.S. military operations to the approval of the Iraqi government; and subjects private military contractors to Iraqi court jurisdiction. The resolution also calls for hearings to determine any impact of the Security Agreement on 50,000 Iraqi nationals held by the Iraqi government and U.S. forces and any other foreign nationals designated as "protected persons" under the fourth Geneva Convention. H.Res. 72 was referred to the House Foreign Relations Committee on January 15, 2009, and no further action has been taken. Congress enacted a provision during the 110 th Congress that prohibited the use of certain defense appropriations to implement any agreement with Iraq that would subject U.S. troops to the Iraqi judicial system, and a provision requiring a detailed report on the progress of negotiation of any U.S.-Iraq agreements relating to the U.S.-troop presence and U.S. mission in Iraq to be submitted to certain congressional committees. Congress did not pass, however, any overall funding prohibition regarding the Iraq Agreements, nor did it enact legislation requiring the Agreements to be submitted to Congress for approval as a treaty or a congressional-executive agreement. Section 612 of the Emergency Supplemental Appropriations Act for Defense, 2008, provides that no funds may be made available for implementing a U.S.-Iraq agreement that subjects U.S. forces to the jurisdiction of Iraqi courts or punishment under Iraqi law. Section 1212(a) of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 requires a report from the President to the House Foreign Affairs and Armed Services Committees, and the Senate Foreign Relations and Armed Services Committees, on any U.S.-Iraq agreement that is completed relating to the legal status of U.S. military personnel, civilian personnel, and contractor personnel; establishment of or access to military bases; rules of engagement for U.S. armed forces; and any security commitment, arrangement, or assurance that obligates the United States to respond to internal or external threats against Iraq. The section requires a report to be transmitted not later than 90 days after enactment of the act (October 14, 2008). Updates are required whenever an agreement related to the matters in the report is substantially revised. Section 1212(b) provides a list of 13 areas to be covered: description of any conditions placed on U.S. combat operations by the government of Iraq, including coordination requirements; description of constraints placed on U.S. military, civilian, and contractor personnel as a result of such conditions; description of legal immunities and protections for U.S. personnel; assessment of authority of U.S. and Coalition forces to detain and interrogate prisoners, and to collect intelligence generally; description of any U.S. security commitment, arrangement, or assurance to respond to internal or external threats against Iraq, including manner of such commitment's implementation; assessment of any requirements for payments to the government of Iraq for use of bases or facilities; assessment of any requirements for payments for claims of death or damages caused by U.S. personnel; description of arrangements for resolving disputes arising under the agreement; discussion of application of the agreement to Coalition partners; and description of termination of the agreement by either party. The requirement to provide reports and updates terminates on December 31, 2009, and such requirement will terminate earlier if the President transmits the text of any agreement (and any amendments thereto) described in subsection (a) of the section to the House Foreign Affairs and Armed Services Committees, and the Senate Foreign Relations and Armed Services Committees, and if the President makes available the appropriate senior officials to brief those committees on the matters covered by any such agreement within 30 days of transmission. Several bills concerning the Iraq Agreements, introduced but not enacted during the 110 th Congress, nevertheless illustrated the concerns of many Members of Congress. Many of the provisions contained in these bills were directly related to the oversight conducted by Congress through the hearings concerning the Iraq Agreements that are discussed later in this report. Many bills contained provisions that defined the types of agreements that should be subject to congressional approval and required such approval; reflected frustration with Congress's exclusion from the Agreements in general and demanded a formal consultative role for Congress in negotiations and execution of the Agreements; and asserted that the Agreements should not have been finalized as a presidential transition is occurring, possibly hamstringing a new Administration as it implements a new Iraq policy. Members included provisions that evidenced their concerns over the legal status and protections of U.S. troops under U.S. and international law. Certain bills highlighted the war powers of Congress, stating that the Iraq Agreements must be congressionally approved if they granted the authority of U.S. troops to fight in Iraq. Several bills stated that the Iraq Agreements would not be valid without congressional approval, and one bill provided for the termination of the effectiveness the Iraq Agreements if Congress did not approve such Agreements within a certain time period after their execution by the executive branch. A detailed discussion of the pertinent provisions of each of these bills is included in Appendix A . Despite previous opposition to the conclusion of the Iraq Agreements as sole executive agreements by President Obama, Vice President Biden, and Secretary of State Clinton, the Obama Administration seems to be implementing the provisions of the Iraq Agreements, and the Obama Administration has announced no plans to abrogate the Agreements. Hearings with Obama Administration officials conducted during the 111 th Congress thus far, summarized below, seem to illustrate the Obama Administration's intentions on meeting the obligations of the Iraq Agreements. This hearing took place on January 13, 2009. When asked about President-Elect Barack Obama's goals for withdrawal of U.S. troops, Senator Clinton explained that withdrawal activities and preparations would continue to be executed under the provisions of the Security Agreement. Senator Clinton asserted that it was her intention to put together teams and activities to fulfill the Security Agreement. She referenced the requirement in Article 5 of the Security Agreement that U.S. troops withdraw from Iraqi cities and towns by June 2009, and confirmed the new Administration's intention to adhere to that provision. She also stated that the State Department would be active in pursuing the cooperative action contemplated by the Strategic Framework, mentioning by name activities regarding the rule of law, education and health care, and technical assistance for the energy industry. At this hearing, held on March 25, 2009, Senator Jim Webb asked Ambassador Christopher Hill to comment on certain provisions of the Security Agreement, specifically with regard to the Obama Administration's commitment to withdrawing troops from Iraq. Senator Webb stated that although the Security Agreement states that U.S. forces shall withdraw from Iraq by December 31, 2011, it also states that the United States will take some appropriate steps if Iraq is faced with external or internal threats, and that there will be close cooperation between the United States and Iraq in areas such as military training and equipping of forces. He also mentioned that Article 30 contains language requiring that each party complete all applicable constitutional processes. Because Congress did not approve the Security Agreement, Senator Webb suggested, the Obama Administration may have an argument that the Security Agreement is not effective under U.S. constitutional law, and therefore the requirement to withdraw U.S. forces is not effective. Ambassador Hill confirmed that the Obama Administration's position is that the United States will withdraw all forces by December 31, 2011. Congress conducted hearings during the 110 th Congress concerning the Iraq Agreements and considered the issue in several other hearings as well. (Hearings held during the 110 th Congress are listed with detailed summaries in Appendix B .) Certain Members made their concerns known, and various committees and subcommittees heard testimony from a number of experts, as well as Bush Administration officials. During many of these hearings, Members of Congress expressed a number of opinions and concerns regarding the Iraq Agreements and the related decisions and actions of the executive branch. Members made several assertions, including the following: Congress should have been involved more in the planning and negotiation of the Iraq Agreements. The Iraq Agreements, because they are critical to U.S. foreign policy and national security, as well as because they authorize the presence of U.S. forces and their ability to fight, should have been submitted to Congress for formal approval. The Bush Administration should not have finalized these Agreements so close to the presidential transition, as the Agreements would bind the hands of the next President with regard to Iraq policy; instead, the U.N. mandate for the Multinational Force–Iraq should have been extended. The Bush Administration's refusal to fully consult Congress with regard to the Agreements could force Congress to use the power of the purse to ensure that Congress's point of view is considered. The provisions of the Security Agreement are vague, and leave open the possibility of amendments to the Agreements and follow-on U.S.-Iraq sole executive agreements that would again preclude congressional oversight and approval processes. Expert witnesses testified at numerous hearings concerning the Iraq Agreements as well, giving opinions on various aspects of the Iraq Agreements and their implications for the congressional-executive relationship. Many of the expert witnesses generally asserted that Congress should have played a greater role in conclusion of the Iraq Agreements, giving opinions on several issues including the following: To the extent the Iraq Agreements provide a U.S. commitment to Iraq's security, or provide the authority of U.S. forces to fight in Iraq, they must be submitted to Congress for formal approval. The State Department's own Circular 175 regulations concerning the execution of international agreements require meaningful consultation with Congress before agreements such as the Iraq Agreements are signed. Because the U.N. mandate and Iraq's threat to the national security of the United States, the two bases for the 2002 authorization for the use of force in Iraq, have both ended, there is no authorization under U.S. law for U.S. troops to conduct military operations in Iraq. Extension of the U.N. mandate past December 31, 2008 would have obviated the need to quickly conclude the Iraq Agreements, but a U.N. mandate would not have best served U.S. interests, and would weaken Iraq's overall position as a sovereign nation. Creation pursuant to the Security Agreement of the Joint Military Operations Coordination Committee (JMOCC), which grants some decision-making authority over U.S. military operations to Iraqi officials, requires formal approval by Congress. Under questioning from some Members of Congress, several Bush Administration officials, including Secretary of Defense Robert Gates, Secretary of State Condoleezza Rice, Ambassador David Satterfield, and Ambassador Ryan Crocker, made several assertions concerning the negotiation, contents, and intended effect of the Iraq Agreements prior to the Agreements' conclusion. Bush Administration statements included the following: The Security Agreement would not contain a U.S. commitment to defend the security of Iraq if such security is threatened. The Iraq Agreements would not bind the next Administration to a certain course concerning Iraq policy. What was to become the Security Agreement, as a document, was properly termed a status of forces agreement (SOFA) that provided the legal status of U.S. troops in Iraq, and as such did not need congressional approval. The Bush Administration would consult with Congress regarding the Iraq Agreements prior to their conclusion. The 2002 authorization of the use of force in Iraq was still effective given the continued security situation in Iraq. The President was authorized to execute the Iraq Agreements as sole executive agreements under the powers granted his office under the Constitution. For the most part, Bush Administration officials made assertions that would seem to be intended to assuage the concerns of Members of Congress, but they continued to maintain that there was no constitutional requirement for Congress to formally approve the Iraq Agreements before they could become effective. With regard to consultation, although the Bush Administration appears to have conducted limited briefings on the Agreements with congressional leadership, many Members of Congress said they had not yet seen the text of the Iraq Agreements as of November 17, 2008, when the Agreements were finalized. As to the contents of the Security Agreement, it seems that while the text contains many provisions that are usually provided in SOFAs, there are many provisions that are not usual and that are possibly outside the scope of a SOFA, especially Article 27 dealing with the authorization of U.S. military operations in Iraq. Congress has several options for further action to help shape its own involvement in the continued implementation of the Iraq Agreements. Members of Congress could, among other things, hold additional hearings on the Iraq Agreements; pass legislation already introduced; or introduce legislation that seeks to further define both the authority of the President concerning the U.S. relationship with Iraq and the role of Congress in the approval and implementation of the Iraq Agreements. Many of these options are not mutually exclusive. Certain Members may wish to take no further action as well. A possible course is for Congress to do nothing more at this point, if it is satisfied with the measures it took to shed light on the negotiating process and to send a message to both the Bush and Obama Administrations that Congress will continue to monitor these Agreements. Indeed, as illustrated above, the hearings conducted by various congressional committees and subcommittees have produced a body of evidence concerning the Agreements, including both the intentions of the Bush and Obama Administrations and the general sentiment of the Iraqi Council of Representatives (COR). Executive branch officials have given sworn testimony regarding bases, security commitments, troop levels, scope of mission, legal immunity for U.S. forces, withdrawal timelines, and other issues. The hearings may have therefore produced a useful result as an investigative device to pin down the Bush and Obama Administrations' plans regarding the Iraq Agreements. On the other hand, Congress may wish to capitalize on some of the information gathered earlier by continuing to hold hearings on such an important issue as the future of the U.S.-Iraq relationship and the ongoing U.S. presence in Iraq. Congress received numerous promises that the executive branch would keep Congress informed during the negotiation process for the Iraq Agreements, and that the Agreements would be submitted in some form to the Congress before they were finalized and implemented. The Bush Administration made several statements to Congress concerning the scope and contents of the Iraq Agreements, with many being direct responses to problems perceived by Members of Congress. It may be useful for Congress to continue its oversight activities, comparing previous assertions about the Iraq Agreements with the actual provisions of the final Agreements and their present implementation, and asking current Administration officials for their comment and explanation. Certain Members of Congress may wish to push forward with passage of one or more of the legislative approaches introduced in response to the Iraq Agreements. The operative provisions of the legislation described above fall into four main categories: executive-branch reporting, consultations with Congress, congressional approval requirements, and funding prohibitions. The consultation provisions are no longer operative, as the Iraq Agreements have entered into force. Each of the remaining provision types has perceived benefits and drawbacks. While a reporting requirement is useful for enlightening Congress concerning the Iraq agreements, it does not afford Congress the opportunity to directly shape the implementation of the Agreements. With regard to passage of legislation containing a requirement that one or more of the Iraq Agreements be submitted to Congress for approval, the Obama Administration might argue, as did the Bush Administration, that the President has the constitutional authority within Article II, apart from any need for congressional input, to conclude the Iraq Agreements as sole executive agreements. Although this position would conflict with the position President Obama took as a Senator when he co-sponsored a bill to require congressional approval for the Iraq Agreements, President Obama may argue that such a requirement may damage the U.S. relationship with Iraq as it might throw the status of the Agreements into doubt. Any such legislation may face a veto, and could precipitate a constitutional confrontation concerning the respective powers of the legislature and the executive in determining the form of international agreements under U.S. law. As an alternative to requiring congressional approval outright, provisions prohibiting the use of funds to implement the Iraq Agreements, while significant, would not present the same constitutional problems, as they fall squarely within Congress's appropriations power. Some may question, however, whether it is in the interest of Congress to cut off funds for the Iraq Agreements, as such a measure may be viewed by some to compromise U.S. interests as a whole in Iraq and create new problems for the success of U.S. foreign policy in the Middle East. As recounted above, Administration officials have at certain points cited the 2002 congressional authorization of the invasion of Iraq, and the 2001 authorization to use force in response to the September 11 terrorist attacks, as important sources of the President's authority to enter into the Iraq Agreements. The Iraq Agreements could be viewed as defining the parameters of the continued authorization for deployment of U.S. forces in Iraq, those forces' legal status, and their ability to use force. Congress might consider legislation, therefore, delineating the President's authority to implement the Iraq Agreements by adding specific Iraq-Agreement language to the existing use-of-force authorizations. Amendments to the 2002 authorization of the use of force have already been introduced; for example, legislation was proposed prior to the signing of the Declaration of Principles that would set time restrictions on the authorization to use force in Iraq. New amendatory language directly regarding the Iraq Agreements could include certain directives to the President that would redefine the authorization to use force and therefore shape the implementation of the Iraq Agreements. Such directives could include consultation and reporting requirements similar to legislation already proposed, but could also contain specific interpretations of or conditions on the implementation of provisions in the Security Agreement related to security commitments, joint operational command, scope of the mission of U.S. armed forces, withdrawal timelines, and other important issues. In addition, Congress might address issues concerning the termination of the U.N. mandate for Iraq in amendments to the 2002 authorization of force. Because the 2002 joint resolution authorizing the use of force in Iraq had as one of its two bases the enforcement of U.N. Security Council resolutions, which came to include the resolution authorizing the activities of the U.S.-led Multinational Force-Iraq (MNF-I), some Members of Congress might wish to require the executive branch to submit to Congress for approval any agreement purporting to replace the U.N. mandate as the legal basis under international law for the continued presence and military activity of U.S. armed forces in Iraq. This would require the Obama Administration to submit either the Security Agreement or both Iraq Agreements to Congress for approval. The language of such an amendment could make clear that the submission and approval is required even if such action takes place after the Agreements' entry into force, as would indeed be the case at this point in time. Such an amendment would renew the effectiveness of the 2002 authorization of the use of force and place the Iraq Agreements within an authorization framework that has already been deemed necessary by both the legislative and executive branches. Introducing and enacting legislation approving the Iraq Agreements might be a useful and relatively uncontroversial approach to asserting the role of Congress in providing legal validity to the Agreements, and encouraging a possible continuing role in the implementation of these Agreements. Through such legislation, Congress could approve the November 2008 conclusion of the Agreements with the government of Iraq, effectively transforming what are currently sole executive agreements into "ex-post congressional-executive agreements." A bill approving the Agreements could reestablish Congress's role in their execution and approval and bolster Congress's overall constitutional role in creating international agreements, while at the same time avoiding a constitutional confrontation over the international agreement powers and responsibilities of the two branches. Such legislation would likely entail little downside for the Obama Administration, as it would not require any changes to the Iraq Agreements, the relationship with Iraq overall, or the Administration's own plans for the withdrawal of U.S. forces from Iraq. That said, legislation approving the Iraq Agreements could be straightforward, but need not be. As with new legislation redefining the use of force authorization, such approval legislation would also provide an opportunity for Congress to attach conditions and interpretations to the provisions of the Iraq Agreements, and to require consultation and reporting. One of the areas of continuing concern for some Members of Congress is the broad language of both the Security Agreement and the Strategic Framework, and the provisions within each Agreement requiring creation of organs for implementation, and contemplating the possibility of amendments and the negotiation and creation of further agreements. These provisions provide Congress with similar questions and concerns regarding the ongoing congressional role in these Agreements. Legislation approving the Iraq Agreements could require that the President consult with or report to Congress on some or all amendments, new agreements, or arrangements for implementation of the Agreements, and to submit all such items to Congress for approval. Congress may wish to codify a specific role for itself in the implementation of the Iraq Agreements or the negotiation of any amendments or new agreements related to the Iraq Agreements, creating a joint congressional-executive decision-making mechanism. This may include mandating the direct inclusion of Members of Congress in the negotiation process of any amendments or new agreements regarding implementation of the Iraq Agreements. Such provisions would bear resemblance to provisions of the Trade Act of 1974 that include Congress in various aspects of trade-agreement negotiations. It may also entail creating a cross-branch monitoring body tasked with reviewing the implementation of the Iraq Agreements. An example of this sort of implementation-review mechanism is the Commission on Security and Cooperation in Europe, created by Congress to monitor the implementation of the Final Act of the Conference on Security and Cooperation in Europe ("Helsinki Final Act"). Instead of strictly approving or disapproving the President's actions concerning the proposed Iraq Agreements, legislative provisions such as these would position Congress as a partner in the agreement process, either in negotiations or implementation. Codifying a role for Congress in this manner, however, would raise issues related to Congress's constitutional powers in foreign policy. Article I, Section 8 of the Constitution describes the scope of congressional powers. In addition to the power to declare war, this section also lists the powers, among others, to raise and support armies; to provide and maintain a navy; to make rules to regulate such forces; to provide for organizing, arming, and disciplining the militia, and governing such militia employed in the service of the United States; and to make rules concerning captures on land and water. These powers have been noted in some of the proposed legislation reacting to the Iraq Agreements. Some of these powers, it might be argued, are implicated in the terms and provisions of the Agreements, and therefore a legislated congressional role in the Iraq Agreements could create conflict between the two branches concerning the proper apportionment of constitutional power regarding war and foreign policy. Appendix A. Proposed Legislation in the 110 th Congress Provision Requiring President to Direct Secretary of State to Initiate Negotiations on a Status of Forces Agreement with Iraq ( S.Amdt. 2208 to H.R. 1585 (110 th Congress)) On July 13, 2007, Senator John Warner, on behalf of himself and Senator Richard Lugar, submitted S.Amdt. 2208 , which was intended to be proposed for consideration. The amendment included adding several provisions to H.R. 1585 (110 th Congress), a version of the National Defense Authorization Act for Fiscal Year 2008. One of these provisions was a proposed section 1544, which would have required the President to direct the Secretary of State, in conjunction with the Secretary of Defense, to initiate negotiations with the Government of Iraq on a status of forces agreement, with a goal of completing such an agreement within 120 days of the enactment of the act. Although Senator Warner submitted the amendment, it was not formally proposed for consideration. Congress passed H.R. 1585 on December 14, 2007, but President Bush vetoed the bill on December 28 of that year. H.R. 4986 instead became the National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 ), without language similar to the Warner-Lugar amendment. Congressional Oversight of Iraq Agreements Act of 2007 ( S. 2426 ) On December 6, 2007, Senator Hillary Clinton introduced the Congressional Oversight of Iraq Agreements Act of 2007. The bill states several findings concerning the possible contents of a U.S.-Iraq security agreement and the constitutional role of Congress in approving international agreements. Section 3 contains the substance of the bill, with three main parts: First, section 3(a) requires the "Legal Advisor to the Secretary of State" to submit an unclassified report to Congress explaining the justification, with legal analysis of the constitutional powers asserted by the President, for concluding the anticipated Iraq SOFA and Strategic Framework as executive agreements. Second, section 3(b) states that it is the sense of the Senate that any U.S.-Iraq agreement including a SOFA that involves "commitments or risks affecting the nation as a whole" and that is not approved as a treaty by the Senate or through legislation by the Congress does not have the force of law. Third, section 3(c) bars funding for any such agreement between the United States and Iraq if such Senate or congressional approval is not obtained. The bill was referred to the Senate Foreign Relations Committee on December 6, 2007, and no further action was taken. Iraq Strategic Agreement Review Act of 2008 ( H.R. 4959 ) Representative Rosa L. DeLauro introduced this bill on January 15, 2008. Section 2 of the bill defines the term "long-term security, economic, or political agreement with the Government of Iraq," which is used elsewhere in the legislation, as an agreement that has a term of more than one year, and that includes provisions concerning (1) U.S. bases in Iraq; (2) defense of Iraq's government from internal and external threats; (3) security commitments and assurances to deter foreign aggression against Iraq; (4) the training or equipping of Iraq's security forces; (5) economic, monetary, material and technical commerce and arrangements; or (6) diplomatic and political understandings. Section 3 contains proposed findings, including certain constitutional powers of the President and the Congress concerning the armed forces and international agreements; past examples of security agreements submitted to the Senate as treaties; and recent Administration comments concerning the Declaration of Principles and the execution of new U.S.-Iraq agreements as executive agreements. Sections 4, 5, and 6 of the bill contain the substantive provisions: Section 4 contains a consultation requirement that instructs the Secretaries of State and Defense as well as other "necessary" executive officers to commence consultations with certain "congressional committees and leadership" related to "any potential long-term security, economic, or political agreement" with Iraq. Such consultation would require "full and complete transparency" and would continue throughout the negotiation period. Section 5 is a non-binding sense-of-Congress provision, which asserts that any U.S.-Iraq agreement falling within the definition provided in the bill must receive advice and consent from the Senate to have the force and effect of law. Section 6 prohibits funding the implementation of any such agreement with Iraq unless it is submitted to the Senate for advice and consent as a treaty. The bill was referred to the House Foreign Affairs and Armed Service Committees on January 15, 2008, and no further action was taken. Bill Disapproving Any Agreement Based on the Declaration of Principles Without an Act of Congress ( H.R. 5128 ) Representative Barbara Lee introduced this legislation on January 23, 2008. The bill provides findings concerning congressional opposition to permanent U.S. bases and the Administration's apparent intent to maintain the presence of U.S. forces in Iraq. Section 3 asserts the sense of Congress that any U.S.-Iraq agreement emerging from the Declaration of Principles must be approved by an act of the Iraqi legislature. The two salient provisions for congressional involvement are stated in sections 2 and 4: Section 2 states that any formal agreement emerging from the Declaration of Principles will not have the effect and force of law unless it is approved by an Act of Congress. Section 4 prohibits the use of funds appropriated or otherwise authorized to the Department of Defense or any other agency to enforce or implement such an agreement without approval through an Act of Congress. The bill was referred to the House Foreign Affairs and Armed Service Committees on January 23, 2008, and no further action was taken. Protect Our Troops and Our Constitution Act of 2008 ( H.R. 5626 ) Representative Bill Delahunt introduced this bill on March 13, 2008. Section 2 of the bill presents proposed findings that seek to show inconsistencies between the far-reaching provisions of the Declaration of Principles and early statements by Bush Administration officials on the one hand, and on the other, later Administration statements that describe a much more limited scope for the Iraq agreements. Section 2(9) states in conclusion, "The inconsistencies between the various statements and pledges ... raise significant questions about the Administration's objectives in seeking new agreements with Iraq." Section 3 denies the use of any funds appropriated or otherwise authorized to any U.S. agency for the purpose of establishing or maintaining any permanent or long-term U.S. military base or facility in Iraq; or implementing any agreement consistent with the security commitments contained in the Declaration of Principles, or any agreement that provides U.S. forces with "authority to fight," unless the Senate has provided advice and consent for such agreement as a treaty, or Congress has authorized such agreement through legislation. Section 4 provides the sense of Congress that long-term U.S.-Iraq relations should be decided by the next U.S. administration; the next administration should consult fully with Congress, the government of Iraq, Coalition partners, and Iraq's neighbors in determining policy toward Iraq; and the Bush Administration should encourage the government of Iraq to request the renewal of the U.N. mandate for Iraq beyond December 31, 2008, in order to ensure the international legal authority for the U.S. presence in Iraq, and the legal immunity for U.S. armed forces. This bill was referred to the House Foreign Affairs and Armed Services Committees on March 13, 2008, and no further action was taken. Sections 1212 and 1220 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 ( H.R. 5658 ) Introduced on March 31, 2008, and passed by the House on May 22, 2008, this bill contains certain provisions concerning the Iraq Agreements. Section 1212 requires a report from the President to the House Foreign Affairs and Armed Services Committees, and the Senate Foreign Relations and Armed Services Committees, on each U.S.-Iraq agreement relating to the legal status of U.S. military personnel, civilian personnel, and contractor personnel; establishment of or access to military bases; rules of engagement for U.S. armed forces; and any security commitment, arrangement, or assurance that obligates the United States to respond to internal or external threats against Iraq. Updates are required whenever further agreements are executed or when an agreement is substantially revised. Section 1212(b) provides a list of 13 matters to be included in such reports: limits placed on U.S. combat operations by the government of Iraq, including coordination requirements; assessment of whether conditions placed on U.S. combat operations in such agreements are greater than conditions prior to such agreement; discussion of legal immunities of U.S. personnel; assessment of legal protection of third-country nationals; assessment of authority of U.S. and Coalition forces to detain and interrogate prisoners; description of any security commitment, arrangement, or assurance to respond to internal or external threats against Iraq, including manner of such commitment's implementation; assessment of any requirements for payments to the government of Iraq for use of bases; assessment of any requirements for payments for claims of death or damages caused by U.S. personnel; assessment of any other provisions that would restrict the performance of U.S. personnel; discussion of how the agreement or modification thereof was approved by the government of Iraq, and whether the process was consistent with the Iraq constitution; description of arrangements for resolving disputes arising under the agreement; discussion of application of the agreement to Coalition partners; and description of termination of the agreement by either party. Section 1220 of the H.R. 5658 states that no provision of an agreement containing a security commitment, arrangement, or assurance that obligates the United States to respond to internal or external threats against Iraq will be in force with respect to the United States unless it is given Senate advice and consent as a treaty or is specifically authorized by an act of Congress. H.R. 5658 was placed on the Senate Legislative Calendar on June 3, 2008, and no further action was taken. Iraq Security Agreement Act of 2008 ( S. 3433 / H.R. 6846 (110 th Congress)) Senator Joseph Biden introduced S. 3433 in the Senate on August 1, 2008, and Representative Barbara Lee introduced an identical companion bill in the House, H.R. 6846 , on September 9, 2008. Section 2 sets out findings concerning U.S.-Iraq negotiations for agreements based on the Declaration of Principles, as well as the definitions of "security commitment" and "security arrangement," based on a 1992 Department of Defense report to Congress: A "security commitment" is described as an "obligation binding under international law, of the United States to act in the common defense in the event of an armed attack on that country," such obligation being embodied in treaty form. A "security arrangement" is a "pledge by the United States to take some action in the event of a threat to [another] country's security," located in treaties or executive agreements, or in political documents, such as policy declarations. Section 3 provides the sense of Congress that any U.S.-Iraq security commitment or arrangement would result in serious obligations and should involve joint executive-legislative decision-making; and a short-term extension of the U.N. mandate for the Multi-National Force in Iraq (MNF-I), along with Iraqi law, would provide U.S. forces with the authorities, privileges, and immunities necessary for their mission. Section 4 requires a annual report on agreements containing security commitments or security arrangements, with the first report due not later than 180 days after enactment of the act, and then each February 1 thereafter. The report would include: text and a description of each agreement, whether such agreement is based on a formal document or a policy expressed orally or in writing; and an assessment of the need to continue, modify, or discontinue each agreement based on national security grounds. Section 5 requires the Secretaries of State and Defense to consult with the Senate Armed Services and Foreign Relations Committees, and the House Armed Services and Foreign Relations Committees, on the negotiations pursuant to the Declaration of Principles, not later than 30 days after enactment of the act. The section also requires these officials to keep such committees fully and currently informed of the negotiations, and states that the Secretary of State "should" provide the text of any agreement with Iraq containing a security commitment or arrangement to these committees prior to finalizing any such agreement. Section 6 contains two prohibitions concerning any security commitment or arrangement with Iraq, each with prominent exceptions: No U.S.-Iraq agreement containing a security commitment or arrangement may enter into force except pursuant to Article II, section 2, clause 2 (treaty making) or Article I, section 7, clause 2 (enactment of laws) of the U.S. Constitution; and No funds may be obligated or expended to implement such an agreement unless it enters into force by the same constitutional treaty-making or law-making powers. Section 6 also states that it shall not be in order for either house of Congress to consider any bill, resolution, amendment, or conference report that provides budget authority for implementation of any such agreement. S. 3433 was referred to the Senate Foreign Relations Committee on August 1, 2008, and no further action was taken. H.R. 6846 was referred to the House Foreign Affairs, Armed Services, and Rules Committees on September 9, 2008, and no further action was taken. Sense of Congress Provision Concerning Extension of the Mandate of the Multinational Force in Iraq and Congressional Role in a U.S.-Iraq Strategic Framework Agreement and Status of Forces Agreement ( S.Amdt. 5499 to S. 3001 (110 th Congress)) On September 12, 2008, Senator Jim Webb submitted S.Amdt. 5499 , which was intended to be proposed for consideration. This amendment would have added a new section 1222 to S. 3001 (110 th Congress), the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, stating the sense of Congress that the U.S. Special Representative to the United Nations should seek an extension of the mandate for the MNF-I past December 31, 2008; the extension should expire upon the earlier of a period of one year, or the entry into force of a U.S.-Iraq strategic framework agreement and status of forces agreement; the two agreements being negotiated pose significant long-term national security implications for the United States; the Bush Administration should provide full texts of the two agreements prior to their entry into force to the Senate Armed Services and Foreign Relations Committees, and the House Armed Services and Foreign Affairs Committees; and any finalized strategic framework agreement should cease to have effect unless approved by Congress within 180 days of the entry into force of such agreement. The amendment was not considered prior to enactment of S. 3001 into law (Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, P.L. 110-417 ; 122 Stat. 4356). Resolution Reasserting Congressional Prerogatives in Foreign Policy ( H.Res. 1028 ) On March 6, 2008, Representative Barbara Lee introduced H.Res. 1028 , which encourages development of a convention of legislative approval over certain types of international agreements. Preambulary clauses regard the constitutional roles of the President and the Congress in U.S. foreign policy, the nature and scope of status of forces agreements, and the Bush Administration's actions surrounding the Declaration of Principles and the negotiation of the Iraq Agreements. The resolution, framed as the sense of the House, states that three types of international agreements should be approved by an act of Congress: any agreement, other than a treaty, entered into by the executive branch which purports to bind the United States to use the armed forces to assist another country, government, or people, either immediately or upon the occurrence of future events; any international agreement, other than a treaty, that requires the use of U.S. financial resources; or any agreement, other than a treaty, between Iraq and the United States that imposes burdens in excess of those customarily included in status of forces agreements. The last provision of the resolution explicitly states that, without legislative approval, a status of forces agreement signed by the Administration and the government of Iraq would have no legal effect. The bill was referred to the House Foreign Affairs Committee on March 6, 2008, and no further action was taken. Resolution Calling for Iraq to Agree to Pay Costs of Continued U.S. Presence in Provisions of Any Bilateral Agreement with Iraq ( H.Res. 1123 ) H.Res. 1123 , introduced by Representative Dana Rohrabacher on April 17, 2008, concerns the costs of the continued U.S. presence in Iraq. The language preceding the resolution notes several figures related to past and future costs of maintaining U.S. forces in Iraq, as well as Iraq's oil reserves and the rising global price for oil. The resolution itself calls on the President to refrain from entering any agreement with Iraq that involves the presence of the U.S. armed forces in Iraq unless the agreement includes a provision under which the Republic of Iraq agrees to reimburse the United States for all costs incurred by the United States related to the presence of United States Armed Forces in Iraq after the effective date of the agreement, including the costs of pay and allowances for members of the United States Armed Forces serving in Iraq. The bill was referred to the House Committee on Foreign Affairs on April 17, 2008, and no further action was taken. Appendix B. Hearings Concerning the Iraq Agreements in the 110 th Congress Hearings pertinent to the Iraq Agreements are listed chronologically below. For each hearing, the summary includes information pertinent to Congress's role in the agreement-making process for the Strategic Framework and SOFA, as well as information that may inform further congressional action regarding the Iraq Agreements. Concerns of Members and opinions of expert witnesses included in these summaries represent all salient issues identified that concern the Iraq Agreements and congressional involvement in their creation. These concerns and opinions are not included as representations of positions held by all or a group of Members and/or witnesses participating in the hearings, nor as indications of any consensus reached by Members or experts during the hearings or otherwise. The summaries also do not purport to include all policy positions of Members concerning the Iraq Agreements, as many Members did not choose to participate actively. The Extension of the United Nations Mandate for Iraq: Is the Iraqi Parliament Being Ignored? The House Subcommittee on International Organizations, Human Rights, and Oversight held this hearing on December 19, 2007. The hearing dealt primarily with the U.N. Security Council's adoption of Resolution 1790 on December 18, 2007, which extended the U.N. mandate authorizing coalition forces in Iraq for one year from December 31, 2007, until December 31, 2008. Witnesses testified on the ramifications of this extension on political relations and disputes between Prime Minister Nouri al Maliki and the Iraqi Council of Representatives (COR). The hearing also afforded the chance to introduce issues concerning the Declaration of Principles signed by President Bush and Prime Minister al Maliki that set the stage for negotiating the Iraq Agreements. [author name scrubbed] of the Congressional Research Service testified at the hearing, setting out the main issues for negotiation of these Agreements, based on the Declaration and the comments of General Lute: in the SOFA, provisions for legal jurisdiction over U.S. personnel (including security contractors) and facilities where they are based, as well as administrative issues such as tax liabilities and postal services; freedom of action for U.S. forces in Iraq, including rules of engagement and authority to detain prisoners; troop strength, duration, and scope of mission; permanent U.S. bases; and political, diplomatic, economic, and cultural issues. Some committee members expressed concern that statements by General Lute indicated no requirement for congressional approval of the proposed Agreements. The Proposed U.S. Security Commitment to Iraq: What Will Be in It and Should It Be a Treaty? The House Subcommittee on International Organizations, Human Rights and Oversight and the House Subcommittee on the Middle East and South Asia held this joint hearing on January 23, 2008. At this hearing, some Members questioned the contents of the Declaration of Principles, and the Bush Administration's decision to negotiate agreements pursuant to the Declaration without seeking consultation or approval from Congress. Legal scholars testified concerning possible legal requirements for congressional approval of the Iraq Agreements and opportunities for Congress to increase its role in the negotiation and execution of such Agreements. Committee members voiced the following concerns and assertions, among others: the Bush Administration is violating the State Department's Circular 175 regulations concerning congressional consultation on important international agreements, as well as constitutional requirements to involve Congress in the making of such agreements; the new agreements will bind a future president to a certain course in Iraq, practically if not legally; the decision to negotiate the Iraq Agreements at this time is politically unwise, as a new president may wish to abrogate or alter such Agreements, which could result in weakening of the reputation of the United States as a trustworthy partner in international agreements; Congress is left with the power of the purse as its only recourse if it seeks to stop implementation of the Agreements or challenge the President's power to make executive agreements, perhaps precipitating a constitutional crisis; and Congress must make clear to the Iraqi government that without congressional support, especially on funding, these Agreements with the Bush Administration will not be implemented. Although most comments from committee members supported some form of congressional involvement in the agreement-making process with Iraq, certain Members made it clear that they believe the President has the authority to enter into the Iraq Agreements as sole executive agreements and that congressional attempts to limit that power may be unconstitutional. The legal scholars who participated provided certain separate opinions with regard to the need for congressional approval of the Iraq Agreements, including the following: while a "security assurance," such as an agreement to consult with Iraq on its defense in an emergency, could be executed by the President without congressional approval, a "security commitment" obligating the United States to defend Iraq would require a treaty that would need Senate approval; an agreement for U.S. bases in Iraq may be executed as an executive agreement, but only if it does not conflict with earlier legislation passed by Congress; the Administration should adhere to the State Department's Circular 175 regulations requiring congressional consultations, as the Iraq Agreements represent significant new international agreements; and implementation of the Iraq Agreements, even if executed as executive agreements, would still have to work within the parameters of congressional authorizations and appropriations. Hearings on the FY2009 Defense Budget The House and Senate Armed Services Committees convened separate hearings concerning the FY2009 budget request of the Department of Defense on February 6, 2008. During the hearings, several Members took the opportunity to ask Secretary Gates about the proposed Iraq Agreements. Under questioning, Secretary Gates did not rule out submitting an agreement with Iraq to the Senate for advice and consent as a treaty, but stated that the decision would be based on the contents of the agreement. He explained that it has been practice to execute status of forces agreements as executive agreements without seeking congressional approval. In his testimony during both hearings, Secretary Gates made several important statements concerning the Iraq agreements and the ongoing negotiations, including the following: the Iraq Agreements will not contain a U.S. commitment to defend Iraq and the SOFA will not contain a "security component"; the Declaration of Principles in itself also does not constitute a U.S. security commitment to Iraq; the Administration does not want permanent bases in Iraq; the SOFA will contain "rules of the road" on how U.S. forces are able to operate after expiration of the U.N. Security Council resolution, including rules on U.S. authority to detain individuals, and legal immunity for U.S. contractors; nothing in any agreement being negotiated with Iraq would bind a future administration; and there should be openness and transparency in the negotiation process so that Congress can make informed decisions concerning the Iraq Agreements, and the Senate will be afforded a chance to review the SOFA before it is implemented. The November 26 Declaration of Principles: Implications for U.N. Resolutions on Iraq and for Congressional Oversight This hearing took place on February 8, 2008, before the House Subcommittee on International Organizations, Human Rights, and Oversight. Four questions were to be considered: (1) whether a status of forces agreement can authorize U.S. forces to engage in combat in or on behalf of another country; (2) whether an agreement containing a U.S. commitment to defend another country must be submitted for some form of congressional approval; (3) what consultation with Congress is required on the form of the Iraq Agreements and the issues to be negotiated; and (4) what procedures must be followed within the executive to determine the form of the Iraq Agreements and the organization of negotiations. Building on the sentiments of the subcommittee's January 23 hearing, Members made the following statements, among others: the authority for U.S. forces to remain in Iraq past the end of the U.N. mandate on December 31, 2008, must be approved by both the Congress and the Iraqi COR; and the Declaration of Principles has been used by the Administration to send misleading political signals to both Congress and Iraq. The expert panel provided extensive testimony on the four questions posed by the subcommittee, including these assertions: a commitment to defend another country cannot be included in a status of forces agreement as that term is commonly used; the type of security commitment spelled out in the Declaration of Principles would contain a greater obligation for the United States than U.S. mutual defense treaties include, as the commitment involves defending against internal threats and an automatic requirement to use force in Iraq's defense; the Declaration itself, however, may not be intended as binding, and likely represents only a statement of shared interests, not a preview of the contents of the actual Iraq Agreements; any provisions in the proposed SOFA concerning immunity for security contractors from Iraq's legal process might represent an expansion of recognized presidential prerogatives regarding these types of agreements, although providing for such immunity may be within the President's constitutionally granted powers; and because the conditions of the specific 2002 authorization of the use of force against Iraq no longer adhere, the proposed Iraq Agreements represent a new national commitment of the U.S. armed forces and as such require congressional approval. Hearings on the FY2009 Foreign Affairs Budget The Senate Foreign Relations Committee and House Foreign Affairs Committee held separate hearings concerning the FY2009 foreign affairs budget on February 13, 2008. During Secretary of State Condoleezza Rice's testimony in the two hearings, she was questioned about the provisions of the proposed Iraq Agreements. She stated the following on the issue: the Administration is not seeking permanent bases in Iraq; the United States is not taking on an obligation to defend Iraq against its neighbors, or provide any security guarantees; the agreements do not contain a "commitment to combat forces" or required U.S. troop levels; the SOFA is intended to allow U.S. forces to operate there in a legal fashion after the U.N. mandate; the Administration will consult with Congress as the negotiations progress; and the SOFA will not bind the hands of the next president. Secretary Rice maintained the Administration's position that the proposed SOFA, while tailored to the specific situation in Iraq, still fell under the customary form of a SOFA and therefore could be concluded without congressional approval. Status of Forces Agreements and U.N. Mandates: What Authorities and Protections Do They Provide to U.S. Personnel? Continuing its series on the future of the U.S. relationship with Iraq, the House Subcommittee on International Organizations, Human Rights, and Oversight held this hearing on February 28, 2008. Focusing on the purpose and scope of SOFAs in general, the hearing produced statements from committee members that Congress needs to play a significant role in reviewing and approving the Iraq SOFA, even if it does not include a commitment to defend Iraq, due to the importance of Iraq to U.S. foreign policy overall. Professor Michael J. Matheson, one of the experts on the hearing panel, suggested that Congress should engage in defining the scope of authority for military operations in Iraq going forward. Declaration and Principles: Future U.S. Commitments to Iraq This hearing took place before a joint session of the House Subcommittee on International Organizations, Human Rights, and Oversight and the Subcommittee on the Middle East and South Asia on March 4, 2008. The fourth hearing in a series, it was the first that collected testimony from Administration officials. Ambassador David Satterfield, who leads the negotiations with Iraq, answered numerous questions from Members concerning the Iraq Agreements, making the following statements, among others: the Iraq Agreements will not include a binding commitment to defend Iraq or any other security commitment that would warrant Senate advice and consent; the Iraq Agreements will not create permanent U.S. bases in Iraq, and will not specify numbers of U.S. troops to be stationed there; any arrangement fulfilling the pledges of the Declaration of Principles between the Administration and Iraq will be made public and will not remain secret; the Administration does not contemplate the Strategic Framework as a legally binding agreement; the Administration has made clear to Prime Minister al Maliki and other Iraqi officials that the Agreements will not include an obligation to enter into combat if Iraq is attacked; the Iraq Agreements will not contain a commitment for U.S. forces to remain present in Iraq; and the Administration relies on the congressional authority in the 2002 authorization to invade Iraq as the basis for maintaining U.S. forces in Iraq past the end of the U.N. mandate. When asked whether the Administration would present the Iraq Agreements to Congress for approval, Ambassador Satterfield held to the Administration's position that the Agreements did not need congressional approval, but stated that the Administration would comply with all constitutional requirements. He stated that background briefings had already taken place between the Administration and Members of Congress, and that they would continue, but that the Administration would not publicly disclose its negotiating positions. International Affairs Budget for Fiscal Year 2009 The House Appropriations Subcommittee on State, Foreign Operations and Related Programs held this hearing on March 12, 2008. Secretary Rice appeared before the subcommittee during this hearing and was asked several questions concerning the Iraq Agreements. She reiterated her comments from earlier hearings, stating that the Administration was not seeking permanent bases, and that the SOFA being negotiated does not set troop levels, and does not make commitments to specific kinds of operations. Answering a question concerning the submission of the Iraq SOFA to Congress for approval, Secretary Rice responded that SOFAs are not submitted to Congress. When pressed on the source of the President's authority to continue the U.S. presence in Iraq, Secretary Rice did not cite the 2002 authorization to invade Iraq or the 2001 authorization to use military force in response to the September 11 terrorist attacks, instead stating, "the President has the authority, we believe, to continue the operations," without reference to the basis for that authority. Hearings on the Iraq Report Regarding the U.S. Troop Surge The Senate Foreign Relations Committee, on April 8, 2008, and the House Foreign Affairs Committee, on April 9, 2008, each held a hearing to discuss the results of the U.S. troop surge in Iraq. Ambassador Ryan Crocker testified before both committees, making several statements and answering questions concerning the Iraq Agreements. While much of his testimony was similar to that of other Administration officials in previous hearings, he did explain the motivation for the Agreements, stating that the principal leaders of Iraq requested a long-term bilateral relationship with the United States in August 2007, and that the Agreements represent to the Iraqis an affirmation of their sovereignty. He also explained that the Agreements do not contain provisions for permanent U.S. bases in Iraq, and that he anticipated the United States would explicitly forswear such bases in the Agreements. As other Administration officials had done, Ambassador Crocker stated the Administration's intention was to conclude the SOFA as a sole executive agreement. He also made comments that indicated the Strategic Framework would not be a legally enforceable international agreement, but merely a political agreement between the Administration and the al Maliki government. Negotiating a Long-Term Relationship with Iraq This hearing was held before the Senate Foreign Relations Committee on April 10, 2008. Ambassador David Satterfield appeared before the committee and gave testimony concerning the two proposed Iraq Agreements that was similar to his earlier testimony on March 4, outlined above: no permanent U.S. bases, no requirement for troop levels or the nature of the U.S. mission, no binding commitment to defend Iraq, and no provisions that will limit the policy options of the next president. He repeated the Administration's position that the SOFA would be concluded as an executive agreement rather than a treaty, but that the Administration intended to consult with Congress throughout the process. He explained that the Strategic Framework would not contain legally binding commitments that would trigger Senate advice-and-consent procedures. When questioned about the authority for the U.S. presence in Iraq after the expiration of the U.N. mandate on December 31, 2008, Ambassador Satterfield cited the President's authorities as commander-in-chief as well as the 2002 authorization to invade Iraq and the 2001 authorization to use force after the September 11 terrorist attacks. The Future of U.S.-Iraqi Relations: The Perspective of the Iraqi Parliament The House Subcommittee on International Organizations, Human Rights, and Oversight held this hearing on June 4, 2008. The subcommittee took testimony from two members of the Iraqi COR, Sheikh Khalaf Al-Ulayyan and Professor Nadeem Al-Jaberi, concerning the continuing U.S. presence in Iraq and the two proposed Iraq Agreements. They asserted that as a whole the COR had several ongoing concerns: the Agreements should not be concluded at this time, because Iraq does not enjoy full sovereignty and as such cannot enter any agreement with the United States as an equal party; Iraq should not enter into the Agreements until the new U.S. president comes into office; any agreement between the al Maliki government and the United States will not be implemented without approval by the COR; no provision for permanent U.S. bases in the Iraq Agreements will be acceptable to the Iraqi populace; and the presence of U.S. forces in Iraq is no longer needed, and a timetable for withdrawal of U.S. forces is desired. At the hearing, Chairman Delahunt announced a plan to create a formalized interparliamentary dialogue mechanism between the legislatures of the United States and Iraq that would "allow us to continue these conversations and better inform ourselves, because legislative bodies in a democracy are absolutely essential and particularly in terms of oversight of the executive branches." Professor Al-Jaberi indicated that the COR will pursue this idea. Hearing to receive a briefing on the status of negotiations with Iraq on a Strategic Framework Agreement and a Status of Forces Agreement This hearing was held on July 16, 2008 in a closed session of the Senate Armed Services Committee. Possible Extension of the U.N. Mandate for Iraq: Options The House Subcommittee on International Organizations, Human Rights, and Oversight held this hearing on July 23, 2008. The hearing focused on the continued negotiation of the Iraq Agreements and the possible need for extension of the U.N. mandate if the Agreements were not finalized by December 31, 2008. At the hearing, Members of Congress expressed their continued concerns over whether the Bush Administration and the al Maliki government could execute the Iraq Agreements before expiration of the U.N. mandate. Several continued to argue that the Bush Administration must consult with Congress on the negotiation of the Agreements and must submit the Agreements to Congress for approval. Some stressed their view as well that review and approval of the Iraq Agreements by the Iraqi COR was legally required. Several witnesses gave their testimony on these and other issues concerning the Iraq Agreements, and made statements demonstrating a number of points of view: Execution of the Security Agreement and Strategic Framework will better ensure U.S. national security interests than an extension of the U.N. mandate. Continuation of the U.N. mandate will harm Iraq's sovereignty in the eyes of the international community and of the Iraqis themselves. Extension of the U.N. mandate under Chapter VI, which would allow Iraq to voluntarily allow the presence of U.S. troops, may be a middle way between the contemplated Iraq Agreements and the extension of the Chapter VII mandate. A majority of the Iraqi COR and the Iraqi population welcome non-military U.S. assistance, but desire a timetable for withdrawal of U.S. troops in any bilateral agreement for a continued U.S. military presence. Given the reported difficulties in the negotiations over the Iraq Agreements and the short time frame for finalizing the agreements, an extension of the U.N. mandate is the only avenue to ensuring the legality of the U.S. mission in Iraq under domestic and international law, and the legal protections and immunities of U.S. troops in Iraq. Going forward, Congress can strengthen its role in the execution of the Iraq Agreements by working directly with the Iraqi COR and coordinating efforts for including the two legislatures in the process, making its oversight activities as visible as possible to both the U.S. and Iraqi populations, and to continue to conduct oversight through hearings and other means as the negotiations continue. The last witness at the hearing was Dr. Ayad Allawi, the former prime minister of Iraq, and current member of the COR. Dr. Allawi expressed his opinion that the Iraq Agreements should be transparent, and that the Prime Minister al Maliki's government should consult with the COR about these Agreements and submit them to the COR for formal approval, in compliance with the requirements of the Iraqi constitution. He stated that the general opposition of a majority of COR members to the Iraq Agreement stemmed from the fact that the COR had not been kept apprised of the contents of the Agreements and the status of the negotiations. The Agreements may receive the two-thirds majority vote for ratification, he explained, if the COR had an opportunity to review the agreements beforehand. With regard to an extension of the U.N. mandate, Dr. Allawi stated that a Chapter VI mandate would be more appropriate to the current state of Iraq's status as a sovereign nation. Hearing on the Iraq Progress Report The House Armed Services Committee held this hearing on July 23, 2008. The Committee received testimony from Mr. Gene Dodaro, Acting Comptroller General of the United States. During his testimony, Mr. Dodaro made several statements and answered questions concerning the Iraq Agreements and the termination of the U.N. mandate as it pertained to the benchmarks set out in the Iraq Progress Report. Mr. Dodaro stated that the Iraq Agreements should address the issues of continued development of various capacities in Iraq, and that the continuing framework for Iraq's progress must take into account issues of the imminent U.S. presidential transition. The Situation in Iraq and Afghanistan During this hearing held by the Senate Armed Services Committee on September 23, 2008, Senator John Warner questioned Secretary of Defense Robert Gates on the status of negotiations over the Iraq Agreements, and the Bush Administration's intentions to involve Congress in the overall process of executing the Agreements. Secretary Gates explained that the negotiations had been difficult, and that the Iraqi government had strong views about the country's sovereignty. He stated that it was his understanding that all relevant committees had been briefed on the negotiations, and that the Agreements would not be signed before consultation with Members of Congress. Senator Warner expressed his belief that full and open consultation with Congress was required, not briefings for "just one or two chairmen here or a ranking [member] there.... " Secretary Gates stated that if the Agreements reach final form during a recess the Administration would make significant effort to "reach out to members." Chairman Carl Levin then asked Secretary Gates to confirm his understanding, stating, "There's a commitment from this administration that before the agreements are finalized that there be consultation with the leadership of the Congress." (Emphasis added.) Secretary Gates answered, "Yes, sir." Renewing the United Nations Mandate for Iraq (and Analysis of Finalized Iraq Agreements) This hearing took place before the House Subcommittee on International Organizations, Human Rights, and Oversight on November 19, 2008. The topic for the hearing was to center on renewing the U.N. mandate for Iraq, but the participants focused extensively on the bilateral U.S.-Iraq Agreements signed on November 17. The COR had not yet voted to approve the Agreements, however, making the extension of the UN mandate a possibility if the Iraqi COR disapproved the Security Agreement. Chairman Delahunt commented that he hoped the series of hearings conducted by the subcommittee had a role in shaping the discussion and formation of the Iraq Agreements, especially the inclusion of withdrawal deadlines in the Security Agreement. He expressed continued frustration with the Bush Administration's unwillingness to conduct open consultation with Congress and to submit the Iraq Agreements to Congress for formal approval. In addition, he noted his surprise at the opposition of the Administration to an extension of the UN mandate and insistence on finalizing the bilateral Security Agreement before December 31, 2008. Members participating in the hearing also stated a number of concerns about the provisions of the Security Agreement itself, including the lack of provision in the Agreements for Iraqi reimbursement of U.S. costs incurred as a result of a continued U.S. presence in Iraq through 2011; the Agreements' inattention to the role of multilateral cooperation in the continuing reconstruction of Iraq; the lack of legal immunity from prosecution in Iraqi courts for private security contractors not employed under DOD contract; and the vagueness of several of the provisions. The Iraq Agreements in the Context of U.S. Interests and the Mission in Iraq Thomas Donnelly of the American Enterprise Institute gave testimony concerning the Security Agreement's relationship to U.S. interests in Iraq. He stated that the Congress should approve the Security Agreement if possible, because it would aid the President by removing doubts about the legal status of U.S. troops, and because the Security Agreement would bolster the developing stability of Iraq. He claimed that passage of the Security Agreement would weaken the supporters of Moqtada al Sadr, represent a rejection of Iran's influence in Iraq, and improve Iraq's self-image as a sovereign nation. He also expressed his concerns about the requirement for U.S. forces to withdraw from Iraqi cities and towns by June 30, 2009, citing the possibility of a return to ethnic cleansing, and the lack of certainty about U.S. operations in Iraq that may be necessary past the December 31, 2011 termination of the Security Agreement. He stated that while the Security Agreement did not require Iraq to reimburse the United States for its expenditures in Iraq, the United States should ensure that Iraq budgetary process and execution be strengthened in order to increase Iraq's ability to take over security and other activities from the United States. The members of the subcommittee and the witnesses also engaged in a discussion concerning the Iraqi courts' jurisdiction over U.S. forces, DOD contractors, and non-DOD contractors. U.S. Constitutional Issues Concerning the Iraq Agreements Professor Oona Hathaway provided testimony to the subcommittee concerning U.S. constitutional issues and the Security Agreement, making the argument that the Security Agreement contained provisions that fell outside the President's independent constitutional powers. First, she considered the provision requiring U.S. commanders in Iraq to receive approval from the Iraqi government through the JMOCC before engaging in military activities. Professor Hathaway stated that the executive branch's partial ceding of operational decisional control without prior congressional approval was unprecedented. Second, she argued that the Security Agreement contained many provisions that had never been included in a U.S. SOFA, including the provision granting U.S. forces the ability to fight in Iraq, the JMOCC provision requiring Iraqi approval of U.S. military operations, and the timetables for withdrawal of U.S. troops from Iraqi cities and from Iraq itself. Professor Hathaway explained that such agreements have in the past been concluded as treaties requiring Senate approval. Last, Professor Hathaway argued that the war in Iraq would become illegal under U.S. law because Congress authorized the use of force against Iraq for two purposes: (1) to defend U.S. national security against the continuing threat posed by Iraq; and (2) to enforce all relevant U.N. Security Council resolutions regarding Iraq. Because Iraq is no longer a threat, as stated in the Security Agreement itself, and because the UN mandate expires on December 31, 2008, she asserted that there would be no congressional approval for the war as of January 1, 2009. Professor Hathaway argued that only an extension of the UN mandate, or congressional approval of the Security Agreement, would give legal authority for the continuation of the war in Iraq. When asked by Members of the Subcommittee about the legality of the Security Agreement if Congress does not approve it, Professor Hathaway stated that it would be unconstitutional in her view. She stated that a challenge in the courts is possible but unlikely to be effective, but legislation from Congress stating that the Security Agreement must be approved by Congress to be legal might be effective in protecting congressional powers against a harmful precedent. She also explained that the President may wish to submit the Security Agreement to Congress for approval, making it a so-called "ex post congressional-executive agreement." In response to questions concerning Congress's ability to pass legislation that changes, reinterprets, or rejects provisions of the Security Agreement, Professor Hathaway stated that the President must agree to any changes to the Security Agreement before they could be effective. Iraqi Constitutional Requirements for Ratification of the Iraq Agreements Testimony entered into the record from Issam M. Saliba of the Law Library of Congress explained the requirements in the Iraq constitution for ratification of international agreements: Article 80, Section 6 authorizes the Council of Ministers or its designee to negotiate and sign international treaties and agreements. Article 73, Section 2 requires international treaties and agreements to be ratified by the COR and confirmed by the President. Article 61, Section 4 authorizes passage of a law by a two-thirds majority regulating ratification of international treaties and agreements. Mr. Saliba stated that the ratification law required by Article 64 could contain different requirements for different types of agreements. He stated, however, that the COR has not yet passed the ratification law, and therefore there is no legal basis for asserting that the Iraq Agreements may be ratified by a simple majority of the COR. He argued that a two-thirds majority vote of the COR approving either of the Iraq Agreements would be legally valid under the constitution, as the number of COR members approving the individual Agreements would equal the number required to pass the law of ratification. Chairman Delahunt stated that the Speaker of the COR at the time, Dr. Mahmoud al-Mashhadani, agreed with this legal assessment. Raed Jarrar, Iraq consultant to the American Friends Service Committee, testified that many political factions within the COR oppose entering into the Iraq Agreements at this time, arguing that the COR has not been adequately involved in the negotiation of the Iraq Agreements, and that it needed more than a few days to consider the agreement. Members of the COR had also expressed concerns about Article 29 of the Security Agreement, Mr. Jarrar stated, as that article permits the parties to enter into additional implementation agreements, presumably without additional parliamentary approval. Recently, Mr. Jarrar explained, political parties aligned with the Prime Minister began to assert that the agreement could be passed by a simple majority in the COR. He expressed his opinion that this argument was politically motivated, because (1) the proposed law on ratifications would call for a two-thirds vote on the Agreements, support the government did not have, and (2) Ayatollah Ali al-Sistani insisted that the Agreements be presented to the COR for approval at this time. He was of the opinion that a bare-majority vote in the COR on the Iraq Agreements may be cause for renewed splits among different groups in Iraq. Mr. Jarrar also mentioned that the Iraqi constitutional court, which would rule on constitutional issues such as these, has not yet been created. He stated it is possible that the court, once in operation, would judge the Security Agreement invalid due to the COR's possible circumvention of constitutional requirements for ratification. International Law Issues Concerning the Iraq Agreements and Extension of the UN Mandate Professor Michael Matheson testified on the U.N. Security Council's resolution procedures and their possible use to extend the U.N. mandate for Iraq. He stated that a new Security Council resolution could be passed as it exists now, as a Chapter VII mandate requiring a threat to international peace and security, or as a Chapter VI mandate, which requires the invitation of foreign troops into the host country. A Chapter VI mandate, he explained, would not have any derogatory effect on Iraqi sovereignty, and would allow U.S. forces to continue to operate in Iraq with the same legal status and protections. Professor Matheson stated that certain Chapter VII resolutions would remain in effect, however, including those concerning protection of Iraqi oil assets and the U.N. regime on compensation of Kuwaiti victims of the first Gulf War.
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On November 26, 2007, President Bush and Iraqi Prime Minister Nouri al Maliki co-signed the Declaration of Principles for a Long-Term Relationship of Cooperation and Friendship Between the Republic of Iraq and the United States of America, which set out a number of issues concerning, among other things, a security agreement between the United States and Iraq. On November 17, 2008, the Bush Administration concluded a security agreement providing the legal basis for the continued presence, operation, and eventual withdrawal of U.S. armed forces in Iraq once the U.N. Security Council mandate expired on December 31, 2008, and a strategic framework agreement to cover the overall bilateral relationship between the two countries. After the Bush Administration announced its intention to enter into these agreements, several Members of Congress demanded that Congress be involved in creating the planned agreements, from negotiation to implementation, and took action to ensure such involvement. Members proposed numerous pieces of legislation that would increase Congress's role in creating these agreements, and, after the agreements were finalized, their implementation, from calling for executive-branch consultation and reporting to requiring formal congressional approval. Congress has also conducted multiple hearings that have concerned the agreements, receiving clarification on many important issues from Bush and Obama Administration officials, and subject-matter experts. This has equipped Congress with information pertinent to deciding what further action can be taken to involve Congress more in the implementation and continued oversight of the agreements. Several options remain available to Congress to pursue a significant role in the agreements. The purpose of this report is to provide detailed information and analysis on the specific oversight activities of Congress concerning the U.S.-Iraq agreements signed on November 17, 2008. This report is divided into three main parts: the first provides context both in the United States and Iraq concerning the negotiation, execution, and early implementation of the agreements; the second describes in detail the actions taken by Congress thus far in response to the announcement, negotiation, and execution of the Iraq Agreements, consisting of legislative initiatives and congressional hearings; and the third provides options for further congressional action concerning Congress's role in (1) the implementation of the Iraq Agreements, and (2) the possible negotiation and execution of amendments to the Iraq Agreement and new agreements directly related to the implementation of the Iraq Agreements. For analysis of the U.S.-Iraq agreements within the context of U.S. constitutional law of international agreements, and the law of congressional oversight over international agreements, see CRS Report RL34362, Congressional Oversight and Related Issues Concerning the Prospective Security Agreement Between the United States and Iraq, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. This report will be updated when events warrant.
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This report provides current and historical labor force information about young people ages 16 to 24. In general, youth have a lower rate of labor force participation, and those who are in the labor force are less likely to gain employment than older workers. Both labor supply and demand factors drive this pattern. On the labor supply side, young people are making greater investments in education by enrolling in and completing high school and college in greater numbers. They are less likely to be attached to the labor force due to their limited availability (e.g., only able to work full-time during the summer if they attend school) and their relatively weaker connections to employers. Labor demand also plays a role. Youth are less desirable in some ways than adult workers because they are less experienced; have fewer skills and education; and are potentially short-term hires, which can be costly to employers. The report focuses on trends from 2000 to 2018. This period has included two recessions (March to November 2001 and December 2007 to June 2009) and a decline in jobs requiring only a high school diploma. Many workers were still struggling to find work in the years immediately following the more recent recession. The recession exacerbated challenges that workers have faced in securing and retaining employment since 2000. Against this backdrop, young people ages 16 to 24 experienced their steepest decreases in labor force participation and employment; however, in recent years employment levels have steadily been recovering. Some studies have found that early labor market experiences and outcomes have lasting impacts on employability and wages. Given the current and future challenges that young people can experience in the labor market, this report may be of interest to Congress in the contexts of workforce development, education, unemployment insurance, youth policy, or macroeconomic policy; however, the report does not discuss specific programs or policy implications. The report begins with a brief discussion of current employment and education pathways that young people can pursue. Following this is a description of the labor market data used in the report, which includes the labor force participation rate, employment-population ratio, and unemployment rate. The report then discusses these data for the post-World War II period, with a focus on trends since 2000, comparing labor force outcomes based on age, sex, and race/ethnicity. The report concludes by exploring the factors that influence the extent to which youth participate in the labor force and their prospects for employment. The last section also discusses the potential short- and long-term effects of young people's labor market experiences. The Appendix includes supplemental tables and figures on youth employment trends. Declines in the shares of young people participating and working in the labor force is probably due, in part, to growing enrollment in high school and postsecondary education, which is likely a result of a growing need for higher levels of educational attainment to secure employment. The Department of Labor's (DOL's) Bureau of Labor Statistics (BLS), which measures labor market activity, predicts that the fastest growing occupations between 2016 and 2026 will require some postsecondary education. For the purposes of this report , youth refers to young people ages 16 through 24. Individuals as young as 16 are included because BLS counts workers beginning at this age. Although traditional definitions of youth have considered adolescence to be a period ending at age 18, cultural and economic shifts have protracted the time for youth to transition to adulthood. The current move from adolescence to adulthood has become longer and more complex, and policymakers and others are recognizing that adolescence is no longer a finite period that ends at the age of majority. Older youth, up to age 24, are included because they are often still in school and/or living with their parents. Young people ages 16 through 24 may pursue a variety of education and employment pathways. Those of high school age may attend high school and/or work. Youth with a high school diploma can attend a two- or four-year college, enlist in the armed services, or secure part-time or full-time employment. Some youth work and attend school simultaneously, while others alternate between work and school (e.g., summer jobs). Young people who drop out of high school can do some of these same things, but their opportunities are more limited. They cannot enroll in a four-year college or, in most cases, enlist in the military. They may also face challenges securing employment. Even young people who are attending high school or an institution of higher education (or those on a break from school) may still want to work, or feel that they have to work, for a variety of reasons—to have spending cash, contribute to their household income, gain work experience, and save for the future, among other possibilities. A nationally representative survey in 2015 found that the majority (61%) of young adults ages 18 to 30 in the labor market are optimistic about future job opportunities. This optimism had increased since the previous survey in 2013 (45%). Further, the 2015 survey found that young adults have a strong preference for steady employment over higher pay, though this has declined somewhat since 2013 (62% in 2015 versus 67% in 2013 for steady employment; and 36% in 2015 versus 30% in 2013 for higher pay). This section describes data on participation in the labor force, including how it applies to youth. The data are reported by BLS based on a household survey conducted by the Census Bureau. This survey, known as the Current Population Survey (CPS), collects labor force and other data from a nationally representative sample of 60,000 households on a monthly basis. The survey includes households with civilian non-institutionalized individuals and excludes individuals residing in correctional facilities, residential nursing and mental health facilities, college dorms, military facilities, and other institutions. Employed and unemployed youth (beginning at age 16) and adults (no upper age limit) are counted by BLS as part of the labor force. The labor force participation rate is the percentage of individuals in the population who are employed and who are unemployed ( Labor Force Participa tion Rate = Employed + Unemployed Individuals/Civilian Population Age 16+ ) . BLS considers individuals to be employed if they work at all for pay or profit during the week that they are surveyed. This includes all part-time and temporary work, as well as regular full-time, year-round employment. It does not include unpaid internships. Individuals are considered unemployed if they are jobless, actively looking for jobs, and available for work. Job search activities include sending out resumes or filling out applications, among certain other activities. The employment-population r atio is the proportion of individuals in the non-institutionalized U.S. population who are employed ( Employment to Population Ratio = Employed Individuals/Civilian Non-institutionalized Population ). The unemployment rate is the share of individuals in the labor force who are unemployed ( Unemployment Rate = Unemployed Individuals/Labor Force ). Labor force participation measures the extent to which individuals are engaged in or actively seeking work, and for this reason has been used as a proxy indicator of interest in working. Generally, increasing labor force participation indicates greater interest in working, while decreasing labor force participation indicates declining or noninterest in working. Changes in labor force participation rates, however, are not perfect indicators of individual or collective preference about work. For example, labor force participation may decline because individuals become discouraged about job prospects and give up looking for work. Individuals may also decide to pursue education instead of work to improve future job prospects. The employment-population ratio and the unemployment rate can help to gauge market conditions. When the employment-population ratio rises, it means that a larger percentage of the working-age population is employed. The unemployment rate is also an indicator of whether individuals are able to be employed in the labor force. This rate should be interpreted with caution: changes in the unemployment rate can mask the extent to which individuals want to work. The unemployment rate can fall without a corresponding rise in employment if unemployed workers leave the labor force. The figures and tables in this section and the Appendix display labor force data over the period following World War II (starting in 1948, when the data first became available) based on age, sex, and race/ethnicity. The figures also plot the 11 periods when the country was in recession. Table A-1 , Table A-2 , Figure A-1 , and Figure A-2 in the Appendix show broader labor force trend data for teens and young adults, respectively, from 1948 through 2017. The labor market experiences of youth are different based on their age. Figure 1 charts the employment-population ratio from 1948 through 2017 for teens (ages 16 to 19), young adults (ages 20 to 24), and "prime-age" individuals (ages 25 to 54). Over that time, teens had the lowest employment-population ratios, followed by young adults. From the 1950s through the 1970s, the prime-age adults' and young adults' employment-population ratios moved in the same direction, declining in the 1950s and then increasing in the 1960s and 1970s. The difference in their employment-population ratios began to grow beyond that period, reaching nearly 13 percentage points in 2017. Figure 1 also illustrates the cyclical nature of the employment-population ratio, particularly for teens. The teen employment-population ratio had a greater decline soon after the start of a recession compared to the ratios for young adults and prime-age adults. Further, the employment-population ratio for young adults generally exhibited a more upward trajectory. This is due, in part, to young adult females entering the labor market in greater numbers starting in the 1960s. The employment-population ratios for both teens and young adults dipped from 2000 to 2010 (capturing the effects of two recessions), but more dramatically for teens (a 33% versus 9% decline). The indicators for both age groups began recovering following the 2007 to 2009 recession, with greater gains in the labor force participation rate and employment-population ratio for teens (see Table A-1 and Table A-2 in the Appendix ). Figure A-1 and Figure A-2 show that the labor force participation rate trend lines for teens and young adults were generally parallel, and were higher than the employment-population ratio trend lines. The trend lines for the unemployment rates for both groups generally mirrored changes in the employment-population ratios. The post-2000 declines in the employment-population ratios and labor force participation rates, particularly for teens, can likely be viewed as partially a consequence of a positive social trend—the increase in high school and college enrollment. In addition, as discussed later in the report, students are increasingly pursuing unpaid internships to meet high school graduation requirements and improve their prospects for attending college. So although they are gaining experience that will likely benefit them when they work, they are not included in the labor force. Nonetheless, these indicators do not necessarily reflect a tendency toward voluntary withdrawal from the workforce to complete schooling. Some young people may have dropped out of the labor market because of dimmed employment prospects in light of the need for more schooling to obtain a job. Figure 2 plots the employment-population ratios for female and male teens and young adults for 1948 through 2017, revealing different levels and patterns of change. For many years, the employment-population ratios for females were much lower than they were for their male counterparts. The difference in the employment-population ratios for males and females in both age groups began to narrow in the 1990s, but likely for different reasons. For teens, the male employment-population ratios started to drop while the female employment-population ratios began to rise, so that by 1996 the rates were nearly identical. This may be attributable to the changing employment prospects of individuals with lower levels of education, as discussed in a subsequent section. Young males ages 16 through 24 are somewhat less likely to be enrolled in high school or college than their female counterparts, and a smaller share of males ages 25 through 29 have obtained a college degree. With regard to young adults, females made significant inroads into the labor market. The employment-population ratios for young adult women generally began to trend upward in the 1960s through the 1980s. This corresponds with an upward trend in college completion among women, which likely influenced the extent to which they pursued and secured employment. In addition, other factors—lower fertility, declines in marriage rates, and increased likelihood of divorce—have played a role in women's increased participation in the labor force, among other factors that are not easy to quantify (e.g., shifts in expectations about roles based on sex). From approximately 2000 onward, the employment-population ratios for females and males became more similar; however, the employment-population ratios for young adult males have been higher in each year. Figure 3 and Figure 4 compare the employment-population ratios of teens and young adults by race and Hispanic ethnicity from 1972 to 2017. The Congressional Research Service (CRS) applies Census definitions in this section, which divide race into black, white, or Asian and ethnic origin into Hispanic or non-Hispanic. People of Hispanic origin may be of any race. BLS began recording employment data for black individuals in 1972, for Hispanic individuals in 1994, and for Asian individuals in 2000. Both figures indicate that employment-population ratios were highest over time for white youth, followed by Hispanic youth. Black and Asian youth had similarly low employment-population ratios relative to their white and Hispanic counterparts. As shown in Figure 3 , the employment trends for white, black, and Hispanic teens generally reflected the cyclical effects of the economy until the late 1990s. The employment-population ratios for all groups subsequently decreased in most years through 2012 (give or take a year, depending on the racial/ethnic group). The employment gap between white teens and black teens narrowed, from about 20 percentage points in 2000 to 10 percentage points in 2017, due primarily to decreases in the employment-population ratio for white teens. Figure 4 indicates that employment for white young adults steadily increased, even following most recessions, over the period examined. Hispanic and black young adults made inroads in the labor market since the most recent recession (2007-2009), such that Hispanic youth had similar employment-population ratios to white youth and the employment-population ratio for black young adults reached an all-time high of 61% in 2017 (similar, but still higher, to levels in the late 1990s). The employment-population ratio for Asian young adults has generally been in decline over time, and hovered near 50% during the most recent post-recession period. Despite recent improvements in employment among minority youth, they have had lower employment-population ratios relative to white youth. These lower rates may be due, in part, to the reduced employment prospects of individuals with less education and other factors that are more difficult to measure, such as poverty and neighborhood characteristics (see discussion at the end of the report). Black and Hispanic youth ages 16 to 24 are less likely to have completed high school and college (see Table A-3 ). Schooling may also explain the relatively low employment-population ratios for Asian youth, but for a different reason. Asian youth are delaying entry into the labor market and may be foregoing work for school while in the labor force. Asian youth have had the highest rates of college completion among any racial or ethnic group (and rates of high school completion that are comparable to that of white youth). The role of education for Hispanic youth is less clear. While their employment-population ratio has been closer to that of white youth in recent years, Hispanic youth had relatively lower rates of high school completion and slightly higher rates of college completion than white youth. Table 1 provides labor force data for individuals ages 16 and older by age groups—16 to 19 (teens), 20 to 24 (young adults), and older working-age groups—in 2017. The table shows that for these workers generally, the labor force participation rate was 62.9% and the unemployment rate was 4.4%. In addition, 60.1% of individuals in the working population overall were employed. Though not shown in the table, these figures represent improvements from 2014, which were included in the last update to this report. Except for the oldest workers, teens are less likely than other age groups to participate in the labor force. Teens that do participate are less likely than other groups to find work (i.e., they have higher unemployment). In 2017, teens had the second lowest rate of labor force participation, after the oldest workers (ages 65 to 69); the lowest employment-population ratio; and the highest rate of unemployment. While young adults participated at a high rate in the labor force and about two out of three were working, they also had a higher rate of unemployment relative to the overall unemployment rate. As discussed in a subsequent section, these trends are consistent with factors that influence labor force outcomes. In general, firms are more likely to hire workers with more experience and availability. Young people tend to have less experience and also may be less likely to be in the labor force because of their participation in school. Table 2 displays youth labor force data for young people ages 16 to 24 by sex, race, and Hispanic ethnicity in four years: 2000, 2007, 2014, and 2017. These four years are notable because they include the start of a period with long-term changes in labor market outcomes for youth (2000), a period just before the start of the December 2007 to June 2009 recession (2007), and two recent full years after the recession ended (2014 and 2017). Labor force trends for these youth were on a downward trajectory before the onset of the recession. The table shows that youth labor force participation rates and the youth employment-population ratio in 2017 were generally lower than in 2000 and 2007; however, the youth unemployment rate was about the same, at 9%, in both 2000 and 2017, suggesting that young people gained some footing in the labor market following the recession. The table also shows the following trends: Both females and males ages 16 to 24 experienced sharp decreases in their labor force participation rate and employment-population ratios from 2000 to 2017. A slightly greater share of males had withdrawn from the labor market over the period, such that labor force participation rates were somewhat comparable for both females (54.3%) and males (56.6%) by 2017. Employment-population ratios were about the same in 2017 for males and females (50%), but males experienced a greater decline since 2000. The unemployment rate ticked up from 2000 to 2017 for male youth, and declined slightly for female youth. Labor force participation and employment-population ratios for all racial and Hispanic ethnic groups decreased from 2000 to 2017. Black and Asian youth were less likely than white and Hispanic youth to be employed, but their relatively low employment rates had different drivers. Black youth were more likely to participate in the labor force but were less successful at finding jobs, as shown in their higher rates of unemployment. Asian youth were somewhat less likely to participate but had greater success in finding employment, as shown in their lower rates of unemployment (which were comparable to white youth). The changes in youth labor force participation rates and labor force outcomes from 2014 to 2017 reflected overall improvements in the economy. There was a slight increase in labor force participation for all subgroups except white and Hispanic youth, whose participation rates remained constant. The employment-population ratio increased for all subgroups, and jumped by nearly 16% for black youth. Unemployment rates declined for all subgroups. Black youth unemployment dropped most significantly, but was still higher than other groups at 14.6%. The first two tables in the Appendix display this same labor force data for youth, as breakouts for teens ages 16 to 19 ( Table A-1 ) and young adults ages 20 to 24 ( Table A-2 ). From 2000 to 2017, teens saw striking declines in their labor force participation (-17%) and employment-population ratios (-15%) compared to young adults (-7% and -6%, respectively). However, the unemployment rates for teens were similar in 2000 (13.1%) and 2017 (14%), and about the same for young adults (around 7%) in these two years. Still, the unemployment rates for both groups declined by about 30% since 2014. The labor force situation has generally been improving for youth since the last recession ended in June 2009. Nonetheless, their employment-population ratios have only recently recovered to pre-recession levels. Multiple variables likely affect labor market outcomes for youth. This section provides a brief summary of some of these factors. One major factor is that youth have less education and experience relative to older workers. In general, firms are more likely to hire workers with greater experience. Youth may also face increased competition for jobs that require less education. Further, a growing number of young people are enrolled in school, particularly post-secondary education, and therefore may be out of the labor force. Teens are especially likely to report that they are not in the labor force because they are attending school. As with experience, firms are more likely to hire workers with greater availability. Labor is a "derived demand," meaning firms hire and retain workers to produce goods and deliver services sought by consumers. The overall health of the economy is a predictor of whether individuals seeking jobs or who have jobs, including youth, are able to secure and maintain employment. In other words, when demand is greater for goods and services, employers generally have a greater demand for workers. In the latest recession, the decline in economic activity (as measured by gross domestic product, or GDP) bottomed out in the second half of 2009. Since this time, the labor market has been recovering, albeit at a relatively slow pace. The Congressional Budget Office (CBO) projected that increases in GDP from 2017 through 2027 are expected to remain modest, primarily because of a slow increase in the size of the labor force. As noted, firms are generally more likely to hire workers with greater experience and availability, which puts young workers at a disadvantage. Young workers may especially face challenges in landing a job during difficult economic times. Some analyses have found that the rising premium on education could be linked to a decrease in demand for some adult workers with less education. In turn, this decrease can lead to greater competition between adults and young people looking for work. In addition, adult immigrants with lower levels of education may contribute to this increased competition. How immigration affects labor markets is a large and complex area of economic research, and economic theory produces a range of possible outcomes that depend on multiple factors. Education likely also plays a role in whether youth seek and are able to find work. Youth may decide not to pursue employment and to attend school instead; or they may want to do both, but may not have as many job options without adequate levels of education. A growing share of young people is attending school. A Federal Reserve Bank analysis shows that school attendance for 16-to-24 year olds without a high school diploma increased from 38% in 1998 to 60% in 2014, and that this upward trend has been driven by youth ages 16 to 19. Figure 5 shows the rates of enrollment in higher education among youth ages 18 to 19 and 20 to 24. The figure indicates that these rates steadily increased over time, reaching an all-time high in 2010 (51%) for teens and in 2012 (40%) for young adults. From 1970 to 2015, the rate of teen attendance in higher education increased by about 30%. The slight decline in attendance in higher education for teens, from the 2010 peak to about 50% in 2015, may be due to improved prospects in the labor market and other factors, such as the rising cost of public higher education. About 40% of young adults were enrolled in higher education in 2015, compared to about 20% in 1970. School attendance and the intensity of educational activities likely plays a role in the downward trend in the labor market participation rate for teens and young adults. A BLS analysis indicates that 9 out of 10 teens ages 16 to 19 cited school attendance as the main reason for not being in the workforce in 2014. Teens attending school were also much less likely to work than in previous years. The BLS study further indicated that teens appear to face greater academic demands and pressure, which may influence their education and labor force choices. The study noted that participation in educational activities takes up a larger amount of time in a young person's day than ever before. Further, more high school students are satisfying the requirements needed for attending a four-year college, and a growing share of students are taking coursework to prepare them for college: about 10% of students took such coursework in 1982, compared to nearly 50% in 2000 and almost 62% in 2009. Increases in school attendance and related school activities suggest that young people are foregoing work to instead pursue education because of the gains they can make in the labor market at a later time—although the extent to which this occurs is uncertain because of data and survey limitations. However, a large body of research documents favorable labor force outcomes for individuals with a bachelor's degree or higher, which likely accounts for such decisionmaking. Success in the workforce is related to education, with the payoff being lower unemployment and higher wages as educational attainment increases. Figure 6 shows the unemployment rates and median weekly earnings for full-time workers ages 25 and older in 2017. Generally, as the level of education rises, the unemployment rate decreases and median weekly earnings increase. Among adults with a high school degree, for example, 4.6% were unemployed and earnings were $712 per week. This is compared to an unemployment rate of 2.5% and nearly $1,200 in weekly earnings for college graduates. Workers with higher levels of education are more likely to weather hard economic times. According to a 2010 analysis, in the past two recessions "the typical job loser was a high school-educated male in a blue collar job, such as manufacturing or construction, working in the middle of the country. In the past two recoveries, the typical job gainer was a female with a postsecondary education who lived on either coast and worked in a service occupation—particularly healthcare, education, or business services." A growing number of young people have obtained a college degree, which is likely attributable to the widely held belief that higher education leads to favorable returns in employment. Table A-3 in the Appendix shows the share of young people ages 25 to 29 who have completed high school or college in three selected years: 2000, when the economy was expanding but youth employment was beginning a long-term decline; 2007, immediately before the start of the December 2007 to June 2009 recession; and 2016, the most recent full year after the recession for which data are available. Data are also shown for racial and ethnic groups, except Asian youth in 2000. From 2000 to 2016, females and males made the same gains in high school completion but females were much more likely to have attained a college degree. In 2016, males and females were likely to complete high school at almost the same rate (93% for females and 91% for males); however, about 40% of females had completed at least a bachelor's degree before age 30, compared to about 33% of males. In almost every racial and ethnic category, females were more likely than males to graduate from high school and college in both 2000 and 2016 (about the same share of black males and black females completed high school). College completion rates generally rose over time across racial and ethnic groups, especially for Hispanic male and female young adults. Their rates of college completion nearly tripled from 2000 to 2016. Black female young adults also saw a sizable increase of nearly 50% over the period. In short, females and some minority youth, notably Hispanic youth and black female youth, have made educational gains since 2000. This may be one reason that labor market outcomes of females have been relatively better than those of their male counterparts. Over the 2000 to 2017 period (see Table 2 ), the employment-population ratio for females declined by nearly 8% compared to 11% for males. Additionally, the unemployment rate for females decreased while the unemployment rate for males increased. Minority youth also had smaller losses in labor force participation over this same period relative to white youth. The factors discussed thus far affect the labor market experiences of both youth and adults, although the effects tend to be more significant for youth. There are additional factors that may particularly influence youth outcomes in the labor market. Youth tend to have frequent movements in and out of the labor force. The educational calendar exacerbates the probability of unemployment for young labor force (re)entrants. They typically come into the labor market in May and June either searching for summer jobs after the school year has ended or seeking initial jobs upon graduating (or dropping out). While the regularly occurring swell in the labor supply of youth coincides with increased demand for workers in some seasonal industries, this is not the case for most firms in the economy. Characteristics of the neighborhoods in which youth live, such as area employment and poverty rates, and proximity of those neighborhoods to jobs, can also affect their labor status. Findings in this research area have been somewhat mixed. For example, an analysis found that certain neighborhood characteristics (higher rates of property crime, child abuse, and older housing stock) in one major metropolitan area were associated with higher rates of employment and more hours worked for low-income teens who lived in public housing; however, this association varied by sex, race, and ethnicity. Other research has found an association between better communities (e.g., less concentrated poverty, less income inequality, better schools) and better outcomes for children from poor families, including higher earnings as young adults. Further, the study found that the income gap between white and black young adults can be explained in some part by the differences in where they grow up. In addition, geographic isolation from fast-growing, job-rich areas (i.e., spatial mismatch) has been shown to affect youth employment outcomes. Some analyses estimated that limited proximity of jobs has a more adverse impact than access to transportation, and the proximity of jobs was found to affect the labor market involvement of youth independent of other factors. Geographic proximity to schools appears to influence decisions to attend college, and therefore may also lead to disparities in later job opportunities. Studies have shown a relationship between proximity to college and college attendance even when controlling for the characteristics of individuals and families who live near colleges versus those who live farther away. The effects of decreasing labor force participation and employment among youth have not been fully explored in the research literature. Some studies addressing these trends have focused on the individual outcomes for youth and not, for example, on societal or economic outcomes such as reduced GDP. The studies found that on average, early youth unemployment has serious negative effects on income but not as strong of effects on future unemployment. Other studies show that youth entering the labor force during a downturn in the economy have poorer labor market outcomes in the long run. These studies are discussed briefly below. Using data from the National Longitudinal Survey of Youth (NLSY), researchers estimated the long-term effects of youth unemployment on labor market outcomes. They examined the employment status of young men in the sample when they were in their 20s and nearly 10 years later. The study found that their average level of education and training increased over time, but also that early unemployment affected both wages and future unemployment. It projected that a six-month spell of unemployment at age 22 would result in a 2% to 3% lower wage rate in their early 30s. Other research has examined how young workers fare when entering the labor market during a weak economy. One study pooled data from the NLSY and other sources to estimate short- and medium-term effects of graduating from college during a recession at some point between 1974 and 2011. The study found that graduating during a recession reduced earnings, on average, by 10%. The loss of earnings persisted, with average earnings loss of 1.8% per year over the first 10 years. This decrease is driven in part by an inability to obtain hours of work and a loss in earning power. Other research has found that young people's experiences in the job market since 2000 have been less favorable than in prior years. An analysis by the Federal Reserve examined unemployment from 1990 through early 2013 for 22 to 27 year olds with at least a bachelor's degree. Its analysis found that securing employment tended to be more difficult for those just out of college at any point over this period. The study also found that unlike their earlier counterparts, a greater share of young people graduating from college since the early 2000s were working in low-wage jobs (e.g., bartender, food server) as opposed to other non-college jobs with higher wages (e.g., electrician, hygienist). This report provides an overview of the youth labor force situation. It shows that teens and young adults were withdrawing from the labor force over the time periods discussed, and those in the labor force were less likely to be employed than older workers. Several factors influence these trends. For example, school enrollment means less supply of young workers. The characteristics of young workers—their relative lack of work experience, lower levels of education, and frequent movement in and out of the labor force—also play a role. Perhaps most striking is that the employment-population ratio for youth, especially for teens, has eroded over the past decade—even in years when the economy was growing. The teen employment-population ratio has been below 40% in each year since 2002. This illustrates a decline in long-term employment ratios that began in the early 2000s, likely due, in part, to youth withdrawing from the labor force to pursue educational opportunities. While the employment-population ratio trend line for 20 to 24 year olds has been higher and more stable, the employment gains for this population have dipped since the early 2000s. Nonetheless, the employment-population ratio for young adults was higher in 2017 (about 66%) than it was in 1948 (about 60%). Additional research is needed on the effects of recent long-term youth unemployment. Such research could focus on how the current generation of young workers compares in terms of employment and wages to past generations of young workers who entered the labor force during downturns in the economy.
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Congress has indicated a strong interest in ensuring that today's young people (ages 16 to 24) attain the education and employment experience necessary to make the transition to adulthood as skilled workers and taxpayers. This report provides context for Congress on trends in the labor force for youth. It discusses youth labor force data since 1948, with a focus on the period from 2000 to the present. The labor market experiences of youth ages 16 to 24 have varied based on their age and other factors. Over the post-World War II period, teens ages 16 to 19 generally have had a lower labor force participation rate and employment-population ratio than young adults ages 20 to 24. These two indicators for teens fluctuated from the 1950s through the 1990s, and then began a steady decline before stabilizing in recent years. The labor force participation rate and employment-population ratio for young adults was on an upward trajectory in most years following World War II. This was the result of increases in labor force participation and employment among young women. Both labor force measures declined for young adults in the 2000s. They have ticked back up in recent years, but remain below 2000 levels. Beginning in the early 2000s, young people ages 16 to 24 began to experience a more pronounced decline in their labor force participation rate and employment, along with a corresponding increase in unemployment. In 2000, they had a participation rate of nearly 66%, an employment-population ratio of about 60%, and an unemployment rate of 9%. These measures eroded even as the economy grew in the mid-2000s, and then declined further immediately following the recession. Although the labor force situation improved for young people in recent years, their labor force participation rate (56%) and employment-population ratio (50%) in 2017 were lower than in 2000, and their rate of unemployment was about the same (9%). Labor force indicators have trended differently for males and females ages 16 to 24. Beginning in the 1970s, the labor force participation rate and employment-population ratio for females increased as they entered the workforce in greater numbers. Labor force trends have also been distinct across racial and ethnic groups. Generally, the labor force participation rate and employment-population ratio have been highest for white youth, followed by Hispanic youth. Black and Asian youth have been the least likely to participate in the labor market or to be employed. The 2017 employment-population ratios for youth ages 16 to 24, by race and ethnicity, were as follows: white, 57%; Hispanic, 53%; black, 52%; and Asian, 42%. Black youth have experienced labor force gains in recent years. Education and other factors likely play a role in these labor market outcomes. Decreases in labor force participation and the employment-population ratios for young people appear to be due to a confluence of demand and supply factors. On the demand side, youth have less education and experience relative to older workers. Youth may also face increased competition for jobs that require less education. On the supply side, a growing number of young people are enrolled in school, particularly post-secondary education, and thus have competing demands on their time. Overall, firms are more likely to hire workers with greater experience and availability. The changes in the labor market landscape for youth have not been fully explored. Research in this area has hypothesized that reductions in human capital, such as deterioration of skills and foregone work experience, may have lasting impacts on the employability and wages of youth.
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Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018 ( H.R. 1625 ). Both the House and Senate Appropriations Committees had reported Agriculture appropriations bills for FY2018 ( H.R. 3268 , S. 1603 ). The House also had passed a consolidated bill that included agriculture ( H.R. 3354 ). The full Senate did not consider the Agriculture appropriations bill on the floor. New, higher budget caps in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) facilitated the final appropriation. Specifically, the House Appropriations Committee passed H.R. 3268 on July 12, 2017, and the Senate Appropriations C ommittee passed S. 1603 on July 20, 2017. On September 14, the House passed an eight-bill consolidated appropriation, H.R. 3354 , with the Agriculture bill as Division B that included amendments to the House-reported version ( Table 1 , Figure 1 , Appendix B ). The discretionary total of the enacted Agriculture appropriation is $23.3 billion, which is $2.1 billion more than enacted in FY2017 (+10%), on a comparable basis that includes the Commodity Futures Trading Commission (CFTC; Table 2 ). The Administration had proposed a $15.8 billion discretionary total (a reduction of 25%), the House-passed bill $20 billion, and the Senate-reported bill $20.53 billion. The appropriations also carry mandatory spending—though that is largely determined in separate authorizing laws—that total nearly $123 billion. Thus, the overall total of the enacted FY2018 Agriculture appropriation is $146 billion. The Trump Administration released its full FY2018 budget request on May 23, 2017, along with the detailed justification from the U.S. Department of Agriculture (USDA). The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—funds all of USDA, excluding the U.S. Forest Service. It also funds the Food and Drug Administration (FDA) in the Department of Health and Human Services. In even-numbered fiscal years, the act carries CFTC funding under a practice started in FY2008 for handling House-Senate jurisdictional differences. Jurisdiction is with the House and Senate Committees on Appropriations and their respective Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. The bill includes mandatory and discretionary spending, but the discretionary amounts are the primary focus during the bill's development. The scope of the bill is shown in Figure 2 . The federal budget process treats discretionary and mandatory spending differently. Discretionary spending is controlled by annual appropriations acts and receives most of the attention during the appropriations process. The annual budget resolution process sets spending limits for discretionary appropriations. Agency operations (salaries and expenses) and many grant programs are discretionary. Mandatory spending —though carried in the appropriation and usually advanced unchanged—is controlled by budget rules (e.g., PAYGO) during the authorization process. Spending for so-called entitlement programs is set in laws such as the 2014 farm bill and 2010 child nutrition reauthorizations. In FY2018 Agriculture appropriations, discretionary appropriations were 16% ($23.3 billion) of the total. Mandatory spending carried in the act comprised $123 billion, about 84% of the $146 billion total. About $99 billion of the $123 billion mandatory amount could be attributed to programs in the 2014 farm bill ( Figure 2 ). Other programs are not in the authorizing jurisdiction of the Agriculture Committees. Within the discretionary total, the largest discretionary spending items are for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); rural development; agricultural research; FDA; foreign food aid and trade; farm assistance program salaries and loans; food safety inspection; conservation; and animal and plant health programs ( Figure 2 ). The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP, and other food and nutrition act programs), child nutrition (school lunch and related programs), crop insurance, and farm commodity and conservation programs paid through USDA's Commodity Credit Corporation (CCC). SNAP is referred to as an "appropriated entitlement" and requires an annual appropriation. Amounts for the nutrition program are based on projected spending needs. In contrast, the CCC operates on a line of credit. The annual appropriation provides funding to reimburse the Treasury for using this line of credit. Over time, changes by title of the Agriculture appropriations bill have generally been proportionate to changes in the bill's total discretionary limit, though some activities have sustained relative increases and decreases. Agriculture appropriations peaked in FY2010, declined through FY2013, and since then have increased ( Figure 3 ). Comparisons to historical benchmarks, though, may depend on adjustments for inflation and other factors ( Figure 4 ). The stacked bars in Figure 3 represent the discretionary spending that was authorized for each appropriations title since FY2008. Prior to FY2018 enactment, the total of the positive stacked bars is the budget authority contained in Titles I-VI. It was higher than the official discretionary spending allocation for the subcommittee (the line) because of the budgetary offset from negative amounts in Title VII general provisions and other scorekeeping adjustments. General provisions were net negative mostly because of rescissions and limits placed on mandatory programs. Like most new Administrations, the Trump Administration released its FY2018 budget request in 2017 later than the usually expected first week of February. It released an outline (sometimes called a "skinny budget") on March 16, 2017, that expressed intentions primarily at the Cabinet level. For USDA, it proposed a 21% reduction, including eliminating funding for some programs. The Administration's budget outline overlapped with Congress finishing FY2017 appropriations. On May 5, 2017, the explanatory statement for the FY2017 appropriation ( P.L. 115-31 ) addressed the direction of the new request for FY2018 by reminding the Administration of Congress's role: USDA and FDA should be mindful of Congressional authority to determine and set final funding levels for fiscal year 2018. Therefore, the agencies should not presuppose program funding outcomes and prematurely initiate action to redirect staffing prior to knowing final outcomes on fiscal year 2018 program funding. On May 23, 2017, the Administration released its full FY2018 budget request. USDA concurrently released its full budget summary and justification, as did the FDA. Some OMB proposals were not consistent with the USDA request. As an independent agency, CFTC requested a different amount in its budget justification than the Administration requested. For Agriculture appropriations (including CFTC), the Trump Administration requested $15.82 billion of discretionary spending, $5.3 billion less than in FY2017 (-25%; Table 2 , Figure 3 ). From these documents, the congressional appropriations committees evaluated the request and began to consider their own bills in the summer of 2017. At the time the House appropriations subcommittees began marking up their FY2018 bills, an FY2018 budget resolution had not yet been adopted. Therefore, the House Appropriations Committee incrementally made "302(b)" allocations to its subcommittees to facilitate markups beginning in June 2017. The Agriculture Subcommittee was allowed nearly $20 billion of discretionary budget authority for FY2018. The House Agriculture Appropriations Subcommittee marked up its FY2018 bill on June 28, 2017, by voice vote. On July 12, 2017, the full Appropriations Committee passed and reported an amended bill ( H.R. 3268 , H.Rept. 115-232 ) by voice vote ( Table 1 , Figure 1 ). As the beginning of the fiscal year neared without many floor-passed appropriations bills, the House passed on September 14, 2017, an eight-bill consolidated appropriation ( H.R. 3354 ) with Agriculture as Division B. It included several budget-neutral amendments to the reported version. The $20 billion discretionary total in the House-passed FY2018 Agriculture appropriation ( Table 2 , Figure 3 ) was officially $1.13 billion less than enacted in FY2017 (-5.3%, on a comparable basis that adds CFTC back to the FY2017 Agriculture appropriation's total). Compared to FY2017, the House-passed bill would have achieved this reduction primarily by reducing rural development by $262 million, nutrition assistance by $220 million, farm and conservation programs by $199 million, department administration by $123 million, and research by $98 million, among other changes. Table 3 provides details at the agency level. In the absence of an adopted FY2018 budget resolution, the Senate Appropriations Committee made 302(b) allocations to its subcommittees in July 2017, similar to the House approach. The Agriculture Subcommittee was allowed $20.53 billion of discretionary authority for FY2018. The Senate Agriculture Appropriations Subcommittee marked up its FY2018 bill on July 18, 2017, by voice vote. Two days later, the full Appropriations Committee passed and reported its amended bill ( S. 1603 , S.Rept. 115-131 ) on July 20, 2017, by a vote of 31-0 ( Table 1 , Figure 1 ). The discretionary total of the Senate-reported bill was $20.53 billion ( Table 2 , Figure 3 ), which was $352 million less than enacted in FY2017 without CFTC (-1.7%). The Senate-reported bill would have provided $776 million more than the House-passed bill on a comparable basis without the CFTC. The Senate-reported bill would have made fewer and smaller reductions compared to FY2017 than the House-passed bill. Compared to FY2017, it would have reduced rural development by $119 million and agricultural research by $57 million and increased foreign food aid by $140 million, providing more for each of these program areas than the House-passed bill ( Table 3 ). It would also have made $220 million more in reductions—through rescissions and changing mandatory programs—than the House-passed bill. FY2018 began on October 1, 2017, without an enacted appropriation. As a result, Congress has passed CRs to continue to fund the government. In general, a CR continues the funding rate and other provisions of the previous year's appropriation. However, the Office of Management and Budget (OMB) prorates funding to the agencies on an annualized basis for the duration of the CR through a process known as apportionment. CRs may also provide a different amount through anomalies or make specific administrative changes. 1. The first CR for FY2018 (Division D of P.L. 115-56 ) lasted until December 8, 2017. It continued FY2017 funding levels and provisions with two general exceptions and two anomalies for the agriculture appropriation: A 0.6791% across-the-board reduction (Section 101(b)). Sufficient funding to maintain mandatory program levels, including for nutrition programs (Section 111). An increase of about $2 million for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Rather than the FY2017 funding level of $236 million, the CR provides about $238 million for this program. This anomaly is typically included to maintain caseload and participation based on food costs (Section 116). A technical correction for the computation of a rescission to Section 32 funds in light of the availability that is allowed for carryover funds, especially for disaster payments that are at the discretion of the USDA (Section 117). 2. A second CR ( P.L. 115-90 ) extended the provisions and anomalies of the first CR to December 22, 2017. 3. A third CR ( P.L. 115-96 ) extended the CR to January 19, 2018. It also waived PAYGO rules (Section 5002) for the Tax Cuts and Jobs Act ( P.L. 115-97 ) that could have caused a sequestration of mandatory spending as an automatic budgetary offset, which could have affected the farm bill budget. 4. In the absence of a further CR or appropriation by January 19, a three-day government shutdown occurred through January 22, when a fourth CR ( P.L. 115-120 ) extended the CR to February 8, 2018. 5. In the absence of a further CR or appropriation by February 8, an overnight government shutdown occurred during the early morning of February 9, when a fifth CR ( P.L. 115-123 ) extended the CR to March 23, 2018. This CR was part of the Bipartisan Budget Act of 2018 that raised the budget caps for discretionary spending in FY2018 and FY2019, provided disaster assistance for agriculture, amended several farm bill provisions, and extended sequestration effects. On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (BBA; P.L. 115-123 ), which broadly authorized supplemental appropriations, including for crop and livestock losses from 2017 hurricanes and wildfires (Division B, Subdivision 1, Title I). The act also included a six-week CR through March 23, 2018 (Division B, Subdivision 3). Importantly for the anticipated farm bill reauthorization, the BBA revised several agriculture programs, which had long-term policy implications because it changed farm bill statutes (Division B, Section 20101; and Division F) and added mandatory spending authority. Perhaps most importantly for completing the FY2018 appropriation, it raised the discretionary spending caps (Division C, Title I) that are in statute from the Budget Control Act of 2011 (BCA; P.L. 112-25 ). In supplemental appropriations, the BBA added $3.6 billion of disaster assistance in FY2018. Specifically, it provided $2.36 billion of block grants to the states for losses from 2017 hurricanes and wildfires. It added $941 million for conservation and watershed recovery, $165 million for rural water and wastewater recovery, and $89 million for disasters in six other USDA accounts. For the expected successor to the current farm bill, the BBA added $1.4 billion of mandatory funding to the 10-year baseline. Specifically, it added $1.1 billion for dairy programs, $240 million for permanent disaster assistance programs, and a $62 million net addition for cotton. The cotton addition is nearly $3 billion from adding seed cotton to the farm commodity programs, offset by about $2.9 billion in reductions from reallocating base acres and crop insurance. A version of these changes was in the Senate appropriations markup, Section 728 of S. 1603 . The BBA offsets some of these additions by extending sequestration on mandatory accounts under the BCA ( Appendix A ) for two more years, for FY2026 and FY2027, at an estimated future effect on agriculture accounts of $2.6 billion. Raising the budget caps for overall discretionary spending—that were set by the BCA—facilitated the development of a final full-year appropriation for FY2018. A majority in Congress desired greater spending for at least some of the appropriations subcommittees. For FY2018, the BBA raised the nondefense discretionary cap by $63 billion from $516 billion to $579 billion and for defense by $80 billion from $549 billion to $629 billion. For FY2019, it raised the nondefense discretionary cap by $68 billion and the defense cap by $85 billion. On March 23, 2018, Congress passed the FY2018 Consolidated Appropriations Act ( H.R. 1625 ). The discretionary total of the Agriculture portion (Division A) is $23.3 billion, an increase of $2.1 billion above the enacted amount in FY2017 (+10%, on a comparable basis that includes CFTC; Table 2 ). The discretionary total is higher than in either the House-passed or Senate-reported bills, as became possible under the BBA, and is nearly as high as the peak in Agriculture appropriations in FY2010 ( Figure 3 ). The appropriations also carry nearly $123 billion of mandatory spending, though that total is largely determined in separate authorizing laws. Thus, the overall total of the enacted FY2018 Agriculture appropriation is about $146 billion ( Figure 2 ). Compared to FY2017, the enacted appropriation increases spending primarily through an extra $1.38 billion in General Provisions, for programs that receive funding elsewhere in the appropriation. Amounts in General Provisions may not be as likely to become part of the annual base for those programs. For example, in addition to amounts for the Rural Utilities Service elsewhere in the Act, the General Provisions provide an additional $500 million for rural water programs, and $600 million for expanding rural broadband. The General Provisions also provide an extra $116 million for Food for Peace foreign food aid, and $94 million for opioid enforcement and surveillance at FDA ( Table 3 ). In the regular portion of the appropriations for agencies, the Consolidated Appropriations Act increases agricultural research spending by $138 million over four agencies (including increasing the Agriculture and Food Research Initiative by $25 million to $400 million, and increasing buildings and facilities funding by $41 million for the Agricultural Research Service). It also increases the base amount for Food for Peace by $134 million to $1.6 billion. Unlike the practice from more than the past decade, the FY2018 Agriculture appropriation does not impose as many changes to mandatory program spending (CHIMPS), such as to the Environmental Quality Incentives Program (EQIP), Fresh Fruit and Vegetable program, or rescissions to the Rural Development cushion of credit account or to Section 32. The absence of these usual CHIMPS in the FY2018 Agriculture appropriation costs about $740 million against the discretionary limit of the bill compared to FY2017. Table 3 presents the amounts in the FY2018 Consolidated Appropriations Act by agency and many programs, compared to the House-passed, Senate-reported, and Administration proposals. It also compares the FY2018 appropriation to three prior years, FY2015-FY2017. Appendix A. Budget Sequestration Sequestration is a process of automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority. Sequestration is triggered as a budget enforcement mechanism when federal spending would exceed statutory budget goals. Sequestration is currently authorized in the BCA ( P.L. 112-25 ) for discretionary spending through FY2021 and for mandatory spending through FY2027, as amended by subsequent acts and explained below. Besides FY2013—when the timing of appropriations and the first year of sequestration resulted in triggering sequestration on discretionary spending—Bipartisan Budget Acts in 2013, 2015, and 2018 ( P.L. 113-67 , P.L. 114-74 , and P.L. 115-123 , respectively) have avoided sequestration on discretionary spending. These acts raised the discretionary budget caps that were placed in statute by the BCA and allowed Congress to enact larger appropriations than were allowed under the BCA. Sequestration, however, continues to apply to certain accounts of mandatory spending and is not avoided by the Bipartisan Budget Acts ( Table A-1 ). The original FY2021 sunset on the sequestration of mandatory accounts has been extended four times to pay for avoiding sequestration of discretionary spending in the near term or as a general budgetary offset for other bills: 1. Congress extended the duration of mandatory sequestration by two years (until FY2023) as an offset in the Bipartisan Budget Act of 2013. 2. Congress extended it by another year (until FY2024) to maintain retirement benefits for certain military personnel ( P.L. 113-82 ). 3. Congress extended sequestration on nonexempt mandatory accounts another year (until FY2025) as an offset in the Bipartisan Budget Act of 2015. 4. Congress extended sequestration on nonexempt mandatory accounts by another two years (until FY2027) as an offset in the Bipartisan Budget Act of 2018 ( P.L. 115-123 Division C, Section 30101(c)). Some farm bill mandatory programs are exempt from sequestration. The nutrition programs and the Conservation Reserve Program are statutorily exempt, and some prior legal obligations in crop insurance and the farm commodity programs may be exempt as determined by OMB. Generally speaking, the experience since FY2013 is that OMB has ruled that most of crop insurance is exempt from sequestration, while the farm commodity programs, disaster assistance, and most conservation programs have been subject to it. For example, under the 2014 farm bill, the first farm commodity program payments began to be paid in October 2015, and USDA indicated that they would be subject to the 6.8% reduction that was applicable to FY2016. Thus, sequestration on nonexempt mandatory accounts continues in FY2018. Nonexempt mandatory spending in agriculture accounts are reduced by a 6.6% sequestration rate and thus are paid at 93.4% of what they would have otherwise provided. This results in a reduction of about $1.3 billion less than what would have been authorized from mandatory agriculture accounts in FY2018. Table A-1 shows the rates of sequestration that have been announced so far and the total amounts of budget authority that have been cancelled from accounts in the Agriculture appropriations bill. Table A-2 provides additional detail at the account level for sequestration on mandatory accounts within the jurisdiction of Agriculture appropriations. Appendix B. Action on Agriculture Appropriations
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The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. It also funds the Food and Drug Administration (FDA) and—in even-numbered fiscal years—the Commodity Futures Trading Commission (CFTC). Agriculture appropriations include both mandatory and discretionary spending. Discretionary amounts, though, are the primary focus during the bill's development, since mandatory amounts are generally set by authorizing laws such as the farm bill. The largest discretionary spending items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); agricultural research; FDA; rural development; foreign food aid and trade; farm assistance programs; food safety inspection; conservation; and animal and plant health programs. The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP), child nutrition, crop insurance, and the farm commodity and conservation programs paid by the Commodity Credit Corporation. Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018 (H.R. 1625). The discretionary total of the FY2018 Agriculture appropriation (Division A) is $23.3 billion. This is an increase of $2.1 billion above the amount enacted in FY2017 (+10%). The appropriations also carry nearly $123 billion of mandatory spending, though that amount is largely determined in separate authorizing laws. Thus, the overall total of the enacted FY2018 Agriculture appropriation is about $146 billion. Compared to FY2017, the enacted appropriation increases spending primarily through an extra $1.38 billion in General Provisions, including an additional $500 million for rural water programs, $600 million for rural broadband, $116 million for Food for Peace foreign food aid, and $94 million for opioid enforcement and surveillance. The Consolidated Appropriations Act also increases regular funding for agricultural research by $138 million, and Food for Peace by $134 million. Unlike the past decade, the FY2018 Agriculture appropriation does not include as many changes to mandatory program spending (CHIMPS), such as to the Environmental Quality Incentives Program (EQIP). Both the House and Senate Appropriations Committees reported Agriculture appropriations bills in July 2017 (H.R. 3268, S. 1603). As the beginning of the fiscal year approached, the House passed a consolidated bill in September 2017 that included an agriculture appropriation (Division B of H.R. 3354). The full Senate did not consider an agriculture appropriations bill on the floor. The government continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). The last CR, the Bipartisan Budget Act of 2018 (P.L. 115-123), also enacted supplemental appropriations that included agricultural assistance, amended certain farm bill statutes, and passed new, higher budget caps that facilitated the final appropriation.
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By the end of the 1970s, Congress had enacted several environmental laws to regulate sources of pollution in the United States, but had not yet addressed responsibility for contamination resulting from releases of pollutants into the environment. In the late 1970s, the discovery of severely contaminated sites, such as "Love Canal" in New York and Times Beach in Missouri, raised questions as to whether there should be a federal role in cleaning up environmental contamination to protect the public from potential harm. Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA; P.L. 96-510 ) to authorize the federal government to clean up contaminated sites in the United States and to make the "potentially responsible parties" connected to those sites financially liable for the cleanup costs. CERCLA created the Superfund program to carry out these authorities. The Environmental Protection Agency (EPA) administers the program. Subsequent amendments to CERCLA also authorized EPA to administer a separate grant program to support the cleanup of abandoned or idled "brownfields" properties to encourage their redevelopment. CERCLA established a broad liability scheme that holds both past and current owners and operators of contaminated facilities financially responsible for the costs of cleanup. At waste disposal sites, generators of the waste sent to the site for disposal, and transporters of the waste who selected the site for disposal, also are responsible for the cleanup costs. If these potentially responsible parties cannot be found or cannot pay for the cleanup, CERCLA authorizes the federal government to finance the cleanup to ensure the protection of human health and the environment. These costs borne by the federal government are referred to as "orphan shares." The broad liability scheme of CERCLA is intended to capture all parties that may have had some involvement in the actions that resulted in contamination of the environment, in order to minimize the burden of the costs of cleanup on the general taxpayer who had no involvement. This approach to liability is based on the principle that polluters should be required to pay for the environmental damage that they cause, often referred to as the "polluter pays principle." CERCLA established the Hazardous Substance Superfund Trust Fund to finance cleanup actions taken by the federal government at contaminated sites where the potentially responsible parties cannot pay or cannot be found. A combination of special taxes on industry and revenues from the General Fund of the U.S. Treasury initially financed the Superfund Trust Fund, but the authority to collect the industry taxes expired at the end of 1995. As the remaining revenues were expended over time, Congress increased the contribution of general Treasury revenues in an effort to make up for the shortfall from the expired industry taxes. The availability of Superfund Trust Fund monies to finance the cleanup of contaminated sites is subject to appropriations by Congress. Considering the liability of the federal government as a potentially responsible party at its own facilities, the cleanup of federal facilities is not funded with Superfund Trust Fund monies under the Superfund program, but with other federal monies appropriated for other programs administered by the agencies responsible for these facilities. The Department of Defense (DOD) and the Department of Energy (DOE) administer the cleanup of most contaminated federal facilities. EPA and the states are responsible for overseeing and enforcing the implementation of CERCLA at federal facilities to ensure that applicable requirements are met. To prioritize cleanup actions, CERCLA directed EPA to establish and maintain a National Priorities List (NPL) of the most contaminated sites in the United States which present the greatest risks to human health and the environment. The NPL includes both non-federal sites and federal facilities that are deemed to present a sufficient level of risk to warrant listing. EPA may require the potentially responsible parties to directly perform or pay for cleanup actions themselves. Alternatively, EPA may clean up a contaminated site up-front with appropriated Superfund monies and later recover those funds from the potentially responsible parties (with the exception of the cleanup of federal facilities which must be funded up-front by the administering agencies). In the event that the potentially responsible parties cannot pay or cannot be found, appropriated Superfund monies may be used to pay the orphan shares of cleanup costs at a site, under a cost-sharing agreement with the state in which the site is located. The following sections of this report summarize the major cleanup authorities of CERCLA and other relevant provisions of the act. The topics discussed herein include the overall scope and reach of these statutory authorities, the process under which cleanup actions are selected and carried out at individual sites, the financial liability of potentially responsible parties for the costs of cleanup actions, the Superfund Trust Fund that may pay for cleanup actions when the potentially responsible parties cannot pay or cannot be found, enforcement of cleanup liability against the potentially responsible parties to minimize the need for federal tax revenues to finance the cleanup of contaminated sites, the applicability of CERCLA to federal facilities, and federal assistance for the cleanup of brownfields properties. A briefer summary of these topics is presented in CRS Report RL30798, Environmental Laws: Summaries of Major Statutes Administered by the Environmental Protection Agency . It should be emphasized that how and to what degree a specific contaminant at an individual site must be cleaned up under CERCLA are not specified in the law itself. The specific actions that are required to clean up contaminants at individual sites are determined on a site-by-site basis. Although CERCLA established a general process for making cleanup decisions, more specific direction is provided in EPA regulation and agency guidance. Other federal agencies that administer the cleanup of federal facilities under CERCLA have developed additional guidance documents that apply to their own respective facilities. Although the statutory authorities upon which federal agencies have based their cleanup regulations and guidance are discussed in this report, the content of these regulations and guidance is not examined here. As such, this report summarizes selected statutory provisions of CERLCA, but does not discuss agency regulations and guidance that may provide more detailed direction for carrying out cleanup actions at individual sites. Congress has amended CERCLA on numerous occasions to clarify the applicability of the cleanup authorities of the statute, and to provide relief from liability for certain categories of parties who may not have been involved in actions that led to contamination, or who may have contributed only certain quantities or types of waste to a site. Congress also has amended the statute to authorize federal assistance for the cleanup of abandoned or idled "brownfields" properties to encourage their redevelopment. Further, certain amendments have addressed unique cleanup challenges at federal facilities, such as the cleanup of unexploded ordnance on decommissioned military training ranges in the United States, and responsibility for the cleanup of contaminated federal property when it is transferred out of federal ownership. The Superfund Amendments and Reauthorization Act of 1986 (SARA; P.L. 99-499 ) clarified that federal facilities are subject to the cleanup requirements of CERCLA to the same extent as non-federal entities, and amended various response, liability, and enforcement provisions of the law. The 1986 amendments also renewed the authorization of appropriations for EPA's Superfund program through FY1991, and established a separate Defense Environmental Restoration Program within the Department of Defense (DOD) to address contamination at active and decommissioned military facilities in the United States. Title VI of the Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) extended the authorization of appropriations for EPA's Superfund program through FY1994, and Title XI of that statute extended the authority to collect the special Superfund taxes on industry through December 31, 1995. Although reauthorizing legislation has been introduced in various Congresses, the taxing authority for the Superfund Trust Fund has not been renewed to date, nor has the authorization of appropriations for EPA's Superfund program been extended. Instead, Congress has continued to fund the Superfund program primarily with general Treasury revenues through the annual appropriations process. Congress has annually authorized and appropriated funding for the Defense Environmental Restoration Program each year since its establishment. Most of this funding is supported with general Treasury revenues, with the exception of some revenues generated from the sale or lease of closed military bases which help fund their cleanup. In 1992, the Community Environmental Response Facilitation Act ( P.L. 102-426 ) amended the federal facility provisions of CERCLA to facilitate the transfer of uncontaminated parcels of surplus federal property on which hazardous substances or petroleum products were not released. Section 334 of the National Defense Authorization Act for FY1997 ( P.L. 104-201 ) further amended CERCLA to allow the transfer of contaminated surplus federal property before cleanup is complete, if assurances are provided to guarantee that the property will be cleaned up to a level that would be suitable for its intended use after transfer. Other amendments have attempted to address the fairness of the liability scheme of CERCLA, either by limiting or eliminating the liability of certain categories of parties. In 1996, the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act (Subtitle E, Title II, Division A of P.L. 104-208 ) amended CERCLA to protect certain fiduciaries and financial lenders from liability. In 1999, the Superfund Recycling Equity Act (Title VI, Appendix I of P.L. 106-113 ) exempted generators and transporters of recyclable scrap materials from cleanup liability under CERCLA, if the person who received the materials disposed of them instead and the disposal resulted in contamination. There had been some concern that the potential liability of generators and transporters under CERCLA could be a deterrent to recycling. In 2002, the Small Business Liability Relief and Brownfields Revitalization Act ( P.L. 107-118 ) provided relief from cleanup liability for (1) persons who contributed very small quantities of waste or only municipal solid (i.e. non-hazardous) waste to a site, (2) owners of property that became contaminated merely as a result of migration from a contiguous property owned by another person, and (3) "bona fide" prospective purchasers who otherwise may be hesitant to acquire a contaminated property because of potential cleanup liability once acquiring ownership. The 2002 act also established more specific criteria for exempting "innocent" owners of contaminated property from cleanup liability, if they purchased the property without knowledge of the existing contamination and they had no involvement in actions that led to contamination. As required by the statute, persons seeking an exemption from liability as a "bona fide" prospective purchaser, contiguous property owner, or "innocent" landowner must have performed "all appropriate inquiry" into the prior uses of the property before acquiring ownership, and must take "reasonable steps" after acquiring ownership to prevent potentially harmful exposure to environmental contamination. Because of these requirements, such persons still may bear some responsibility for managing contamination on their properties, even though they may be exempt from liability for more extensive cleanup actions that may be taken under CERCLA. In addition to providing relief from liability for certain categories of parties, P.L. 107-118 authorized federal grants to assist in the cleanup of "brownfields" properties. Brownfields properties typically are abandoned, underutilized, or idled sites where the known or suspected presence of contamination, and the potential for cleanup liability, could be viewed as a deterrent to purchase the property for redevelopment. Brownfields properties tend to be less contaminated than sites listed on the NPL, but may need some cleanup to make them suitable for reuse. EPA originally had established a program in 1993 to provide federal assistance for the cleanup of brownfields properties using the general cleanup authorities of CERCLA as the legal basis for this assistance. P.L. 107-118 provided explicit statutory authority for this purpose, and established a separate Brownfields grant program within EPA, apart from the Superfund program. Table 1 lists CERCLA as enacted in 1980 and the major amendments to the law noted above. Section 104(a) of CERCLA specifically authorizes the President to respond to a release (or substantial threat of a release) of a hazardous substance into the environment, or of a pollutant or contaminant which may present an "imminent and substantial danger to the public health or welfare." As authorized by Section 115 of CERCLA, the President delegated the response authorities of CERCLA to EPA and other federal agencies by executive order. EPA may respond to releases on the land, and the U.S. Coast Guard may respond to releases into inland river ports and harbors, the Great Lakes, and U.S. coastal waters. If a release were to occur at a federal facility, the agency that administers that facility is authorized to take response actions, subject to oversight and enforcement by EPA and the states in which those facilities are located. Federal funding to carry out response actions under CERCLA is subject to appropriations by Congress. Notification of a release of a hazardous substance is the action that may trigger a federal response under CERCLA. Section 103(a) requires the party responsible for a release to notify the National Response Center if the quantity of the release exceeds the regulatory limit established for that particular substance. These limits are referred to as "reportable quantities," which are specified in federal regulation. State or local officials, or members of the public, who observe or suspect a release of a hazardous substance also may report the incident. Once a release is reported, the National Response Center is to notify the appropriate federal agency that would be responsible for carrying out the President's response authorities under Section 104(a), and for taking any federal enforcement actions that may be necessary against the parties responsible for the release. Response actions taken under CERCLA most often entail cleanup activities involving the containment, removal, or treatment of environmental contamination to prevent potentially harmful exposure, but may include the temporary or permanent relocation of potentially exposed individuals if warranted. Congress has excluded certain types of environmental contamination from the response authorities of CERCLA, which may be addressed under other federal environmental laws. These exclusions are provided within the statutory definitions of key terms upon which the response authorities of CERCLA hinge, including the terms "hazardous substance," "pollutant or contaminant," and "release." In addition to these exclusions, Congress has placed general limitations on the extent to which response actions may be taken under CERCLA to address releases of hazardous substances, pollutants, or contaminants in certain situations. In effect, these exclusions and limitations may restrict the applicability or scope of the response authorities of CERCLA at a particular contaminated site. The response authorities of CERCLA do not extend to releases of petroleum. Section 101(14) of CERCLA generally excludes releases of petroleum, including crude oil and any fraction thereof, from the definition of a "hazardous substance" for the purposes of the statute. Section 101(33) does the same for the definition of "pollutant or contaminant." Petroleum releases are covered instead by other statutes. The Oil Pollution Act of 1990 ( P.L. 101-380 ) is the primary federal law that addresses releases of petroleum. Other federal laws also provide authorities to respond to petroleum releases in specific situations. For example, Section 311(c) of the Clean Water Act authorizes the federal actions to respond to releases of petroleum into or on the navigable waters of the United States and adjoining shorelines. Section 9003(h) of the Solid Waste Disposal Act provides federal response authorities for petroleum leaked from underground tanks. In practice, CERCLA has been applied to the cleanup of some wastes containing petroleum only if the wastes also contained hazardous substances that were not part of the petroleum product itself. Section 101(22) of CERCLA also excludes certain types of releases from the definition of the term "release," thereby removing such releases from the statute's reach. A specific category of nuclear materials is excluded from the definition of release, including "source, byproduct, or special nuclear material" released from a nuclear incident or at certain processing sites. The disposal and cleanup of these materials are subject to the Atomic Energy Act. With the exception of these specific nuclear materials, CERCLA generally applies to the release of radionuclides. In federal regulation, EPA has designated several hundred radionuclides as hazardous substances that are subject to the authorities of CERCLA. Section 101(22) also excludes three other types of releases from the response authorities of CERCLA: (1) a release that would result in exposure solely within the workplace; (2) emissions from engine exhaust of a motor vehicle, train, aircraft, vessel, or power pumping station; and (3) the "normal" application of fertilizer. There also are certain situations identified in CERCLA in which a party would not be subject to liability, such as the proper application of a registered pesticide product or a federally permitted release of a hazardous substance. However, response authority under the statute generally would remain available to EPA in these two instances, just not the enforcement of liability. Section 104(a)(3) limits the extent to which actions may be taken under CERCLA to respond to releases of hazardous substances, pollutants, or contaminants in certain situations. Response actions generally may not be taken in situations involving (1) releases of naturally occurring substances in their unaltered form; (2) releases from products (such as asbestos) that are part of a residential, business, or community structure or building; or (3) releases into public or private drinking water supplies due to deterioration of supply systems through ordinary use. However, in the event of a public health or environmental emergency declared by the President, CERCLA authorizes response actions to be taken under the statute in any of these three situations, if no other person has the authority and capability to respond in a timely manner. Section 105(a) of CERCLA required the President to develop a National Hazardous Substance Response Plan to establish procedures and standards for prioritizing and responding to releases of hazardous substances, pollutants, and contaminants into the environment. The law directed the President to incorporate these procedures and standards into the National Oil and Hazardous Substances Pollution Contingency Plan (referred to as the National Contingency Plan for short, or NCP). As delegated by the President, EPA promulgated the National Hazardous Substance Response Plan in federal regulation as part of the NCP. These regulations govern any response actions taken under CERCLA. Consistent with the purpose of the NCP, Section 105(a) of CERCLA also required the President to develop a National Priorities List (NPL) of the most hazardous sites in the United States as an administrative mechanism to prioritize response actions. The President has delegated this task to EPA. The NPL must be updated at least once annually. Section 105(c) primarily requires the use of a Hazard Ranking System (HRS) to determine which sites warrant placement on the NPL. The system scores each site based on certain factors, such as the quantity and nature of hazardous substances; the likelihood of the migration of contamination in groundwater, surface water, and air; and the proximity to human populations and sensitive environments. Because of this range of factors, the severity of contamination alone may not necessarily be sufficient cause to list a site on the NPL. For example, a geographically isolated site with substantial contamination still may not score highly enough on the HRS to warrant placement on the NPL, if the distance from human populations prevents the likelihood of exposure. In addition to the use of the HRS to evaluate eligibility for listing a site on the NPL, there are two other mechanisms under which EPA also may list a site. First, Section 105(a) allowed each state the one-time opportunity to designate a single site within its borders as the state's highest priority for listing on the NPL. Second, EPA may list a site for which the Agency for Toxic Substances and Disease Registry (ATSDR) has issued a public health advisory, if EPA also determines that the contamination presents a significant public health threat and that its use of "remedial" authority will be more cost-effective than its sole use of "removal" authority without listing the site. As discussed below in the " Scope of Response Actions " section, a site must be listed on the NPL as a condition for the availability of Superfund appropriations to perform remedial actions, but removal actions are not subject to such condition. EPA has listed over 1,600 sites on the NPL over time, including federal facilities. EPA has deleted over 300 of these sites once EPA determined, in concurrence with the states, that the long-term cleanup objectives had been met. The vast majority of the sites were listed based on EPA's evaluation of the potential risks using the HRS, but some sites have been listed as a result of states designating them as their top priority and as a result of an ATSDR public health advisory. CERCLA authorizes two types of response actions: "removal" and "remedial" actions. These terms are defined in Sections 101(23) and 101(24) of CERCLA respectively. Removal does not necessarily mean the physical removal of contamination from the soil, surface water, or groundwater, and remedial actions do not necessarily involve treatment of contamination. Rather, both actions may involve various methods to prevent exposure to contamination, including the relocation of potentially exposed individuals if warranted. It should be noted that the NCP allows remedial actions to be financed with Superfund monies only at sites listed on the NPL, whereas removal actions may be financed with Superfund monies at non-NPL sites to address emergency situations. This restriction is intended to reserve Superfund monies for costlier remedial actions at NPL sites that are thought to present the greatest risks. This funding restriction in the regulations is based on the statutory requirement of Section 105(a) of CERCLA for EPA to prioritize contaminated sites for the purpose of taking remedial actions. Removal actions tend to be shorter term actions that address more immediate risks, whereas remedial actions tend to be longer term actions that offer a more permanent solution. As such, remedial actions often entail more extensive and costly measures. Because of the typically greater extent and cost of remedial actions, they are subject to more in-depth review in the form of a Remedial Investigation and Feasibility Study (RI/FS). An RI/FS involves an investigation of the contamination to assess potential risks of exposure and a study of the feasibility of remedial alternatives to address those risks. Remedial actions also are subject to public participation requirements under Section 117 of CERCLA. (See the " Public Participation " section of this report.) Removal actions are not subject to a similar degree of review or public comment because of the perceived need for swifter response to address more immediate risks. Section 104(c)(1) generally restricts the timing of removal actions funded with Superfund monies to one year and the cost to $2 million, with exceptions provided in certain situations. For example, a remedial action may exceed these limitations if the continuance of the removal action would contribute to the remedial action planned at the site. These general timing and cost limitations on removal actions are intended to ensure that removal actions are not pursued on a broader scale as a way to avoid the more in-depth review required of remedial actions. However, CERCLA does not impose these limitations on a removal action funded by a responsible party with its own funds, nor by a federal agency at a federal facility with dedicated monies appropriated to that agency for that purpose apart from Superfund. From a practical standpoint, imposing the above timing and cost limitations on removal actions at many federal facilities administered by the Department of Defense and Department of Energy could constrain the needed scope of removal actions, as cleanup challenges are often greater at these federal facilities in comparison to non-federal sites. Section 104(c)(3) of CERCLA requires the state in which a non-federal NPL site is located to agree to share the costs of remedial actions at that site, as a condition of obligating federal Superfund monies to finance those actions. States are not responsible for sharing the costs of cleanup at sites where the potentially responsible parties pay for the cleanup, including federal facilities that are funded by the federal agencies that administer them. Rather, the federal government and the states are to share the costs of assuming the responsibility for the orphan shares of the cleanup costs, for which there are no viable parties to pursue. This cost-sharing requirement in Section 104(c)(3) is intended to reduce the financial burden on the federal taxpayer presented by the often long-term financial commitment involved in carrying out a remedial action. Notably, CERCLA does not require states to agree to share the costs of removal actions, which typically are less costly as a result of their smaller scope. Consequently, federal Superfund monies may be used to finance the entire costs of removal actions. At a site where the state must agree to share the costs of remedial actions as a condition of the obligation of federal Superfund monies, the state first must provide certain assurances of its financial commitments, specified in a binding contract or cooperative agreement with the federal government. Absent such contract or agreement, federal Superfund monies are not available to finance remedial actions at that site. To allow the obligation of federal Superfund monies to commence the remedial actions, the state must agree to pay 10% of the costs of those actions. If the site was owned or operated by the state, or a political subdivision of the state, at the time of disposal, the state must agree to pay at least 50% of the costs of the remedial actions. In addition to the above conditions, the state must agree to perform future maintenance of the remedial actions for their expected operational life. The point of maintenance usually occurs after any necessary construction is complete and the remedial action is operating as intended. CERCLA authorizes a delay in the state's responsibility for the maintenance of groundwater or surface water remedies. Section 104(c)(6) allows a state to delay its maintenance responsibilities for the first 10 years of the operation of such remedial actions. The statute allows a delay in the state's maintenance responsibility specifically for these types of actions to reduce the burden of those costs on the state, as the cleanup of groundwater or surface water tends to be more costly than other types of remediation. During the initial 10-year period, federal Superfund monies instead can be used to pay the maintenance costs of groundwater or surface water remedies. Section 121(a) of CERCLA generally requires response actions at contaminated sites to achieve acceptable levels of exposure that would be protective of human health and the environment. Response actions also are to be cost-effective over both the short term and long term, including the operation and maintenance of the action. Section 121(b) states a preference for the selection of remedial actions that involve treatment to "permanently and significantly" reduce the "volume, toxicity or mobility" of contamination, as opposed to actions that do not involve such treatment. Actions not involving treatment often entail the containment of wastes on-site, or the removal and disposal of wastes off-site. The containment of wastes on-site could present lingering health and environmental risks if the containment method were to fail over time. If the remedial action would result in wastes being left on-site, Section 121(c) requires the President to review the performance of the remedial action every five years to determine whether that action continues to be protective of human health and the environment. If the action is not functioning as intended, the President may take additional remedial actions at the site to achieve the cleanup goal. Although Section 121 includes certain requirements to govern the selection of remedial actions, it does not specify how clean an individual site must be to protect human health and the environment. Section 121 also does not identify the specific nature of the remedial actions that would be required to attain a cleanup goal at an individual site. Instead, these cleanup decisions are made on a site-by-site basis taking many factors into consideration, including the potential for human exposure based on the anticipated land use, and the technical and economic feasibility of cleanup alternatives to prevent exposure. The level of cleanup that is required can vary widely from site to site depending on the contaminants present, the cleanup standards or criteria that apply to those contaminants, and the response actions selected to attain those standards or criteria. Rather than specify standards or criteria for individual hazardous substances, Section 121(d) of CERCLA broadly requires that cleanup comply with applicable, relevant, and appropriate requirements (ARARs) to protect human health and the environment. ARARs can include a host of federal or state standards, requirements, or other criteria. In this sense, CERCLA functions as an "umbrella" statute under which other statutes or regulations also may be applied to the cleanup of a contaminated site. Section 121(d)(4) authorizes the waiver of a particular standard, if the contemplated response action would be part of a larger remedial action that would meet the standard once the larger action is completed; compliance with the standard would result in a greater risk than the alternatives; compliance with the standard would be technically impracticable from an engineering perspective; an equivalent standard of performance would be attained; in the case of a state standard, the state has not consistently applied that standard elsewhere within its jurisdiction; or meeting the standard would not provide a balance between the need for protection of public health and welfare and the environment at the site under consideration, and the availability of monies in the Superfund Trust Fund to respond to more immediate risks at other sites. Although CERCLA generally does not list specific standards that may apply to the cleanup of an individual site, there are two sets of standards cited in Section 121(d) that broadly apply to the selection of remedial actions at any site. First, the law requires remedial actions to achieve a level of cleanup that would attain Maximum Contaminant Levels (MCLs) established for current or potential sources of drinking water under the Safe Drinking Water Act. Second, remedial actions must be consistent with other water quality criteria established under Sections 303 or 304 of the Clean Water Act. However, the applicability of these sets of standards to an individual site remains limited to circumstances in which the standards still are deemed "relevant and appropriate," consistent with the underlying premise of an ARAR. CERCLA authorizes a broad role for states to participate in the cleanup process. States must agree to share in the costs of remedial actions at non-federal NPL sites as a condition of the obligation of federal Superfund monies. In acknowledgment of their sharing of the costs of cleanup, Section 121(f) of CERCLA requires that states be afforded opportunities for "substantial and meaningful involvement" in initiating, developing, and selecting remedial actions. However, there are certain limitations on the involvement of states in cleanup decisions at federal facilities, as states do not share in the costs of cleanup at these facilities. If a state wishes to challenge a remedial decision of a federal agency at a facility which that agency administers, Section 121(f)(3) requires that the state show that the decision of the agency is not supported by "substantial evidence." CERCLA also provides a role for the general public in commenting on the selection of remedial actions at individual sites. This role is similar to that under many other federal laws that require the opportunity for the public to comment on certain types of federal decisions. Section 117 of CERCLA requires EPA, or other federal agency responsible for administering and funding the cleanup of a contaminated site, to provide the public an opportunity to comment on proposals for the selection of remedial actions. Once a final decision is made, public notice of the decision must be provided, with an explanation of any "significant" differences from the proposed action and a response to each "significant" public comment on the proposed action. The opportunity for public comment required by Section 117 of CERCLA applies only to decisions on remedial actions. Decisions on removal actions are not subject to these requirements because of the presumed need for expedited action to address more immediate risks. In practice, EPA and other federal agencies typically notify the public of the selection of removal actions to inform communities of the nature and timing of such actions. To assist the public in understanding technical information presented in cleanup decision documents, Section 117(e) of CERCLA authorizes technical assistance grants of up to $50,000 for community groups. These grants are available only to affected communities at sites listed on the NPL. Section 104(i) of CERCLA established the Agency for Toxic Substances and Disease Registry (ATSDR) primarily to assess potential health risks at NPL sites. The ATSDR assesses individual sites based on the likelihood of human exposure to contamination through the air, soil, surface water, groundwater, and other pathways such as consumption of contaminated food sources. The purpose of these assessments is two-fold: to inform the public of potential health hazards at a contaminated site, and to aid decision-makers in evaluating what cleanup actions may be warranted to prevent potentially harmful exposure. Although the findings of the ATSDR may be used to inform the selection of cleanup actions, the agency does not have any authority to dictate cleanup decisions. In addition to site-specific assessments, Section 104(i) directs the ATSDR to prepare toxicological profiles of hazardous substances commonly found at NPL sites to identify potential health effects that can result from exposure. Section 104(i) of CERCLA also authorizes the ATSDR to carry out several other functions intended to protect public health. For example, the agency is authorized to provide medical care and testing to individuals in the event of a public health emergency caused by, or believed to be caused by, exposure to toxic substances. CERCLA does not provide any criteria as to what constitutes a public health emergency for this purpose, presumably leaving the declaration of such an emergency to the discretion of the ATSDR. As with other roles, the resources of the agency to fulfill this role are subject to appropriations by Congress. To date, the ATSDR has not used its authority under CERCLA to declare a public health emergency. In practice, the agency's role has focused on educating the public about known health risks from exposure to hazardous substances, and assessing potential risks at individual sites to aid in informing cleanup decisions. Section 107 of CERCLA identifies the categories of potentially responsible parties connected with a contaminated site who are liable for the costs of response actions that EPA deems necessary to protect human health and the environment. Such parties also are liable for damages for injury to, destruction of, or loss of natural resources resulting from a release of a hazardous substance, including the costs of assessing such injury, destruction, or loss; and the costs of public health assessments carried out by the ATSDR under Section 104(i) of CERCLA. The following sections discuss the categories of parties who are liable under Section 107 of CERCLA, the reach of liability, defenses to liability, and limitations on the liability of certain categories of parties. Section 107(a) identifies four categories of potentially responsible parties who are liable for the costs of response actions, natural resource damages, and public health assessments associated with the release or threatened release of a hazardous substance: any person who currently owns or operates a facility or vessel from which a hazardous substance was released; any person who at the time of disposal of a hazardous substance owned or operated the facility at which such disposal occurred; any person who arranged for the disposal or treatment of a hazardous substance (often referred to as a generator of waste), and any person who arranged for the transport of a hazardous substance for disposal or treatment; and any person who accepts or accepted a hazardous substance for transport to a disposal or treatment facility, incineration vessel, or site selected by such person. In the context of liability, it should be noted that financial responsibility for cleanup costs may extend to actions beyond a facility boundary, if a hazardous substance were to migrate (i.e., move or spread) through the environment. Section 101(8) of CERCLA defines the term "environment" to include not only the land, but also surface water, groundwater, or ambient air. Consequently, cleanup actions may be necessary not only on the facility where the initial release occurred, but anywhere the hazardous substance may migrate through the environment. For example, hazardous substances that migrate into groundwater or surface water can travel some distance, even miles, and can necessitate cleanup actions across a larger area than where the release first occurred. Over time, the courts have interpreted liability under Section 107 of CERCLA to be strict, joint and several, and retroactive. This judicial interpretation is rooted in case law, legislative history, and the definition of liability in Section 101(32) of CERCLA that applies the same standards of liability as in Section 311 of the Clean Water Act. Strict liability means that a party can be held liable regardless of whether the conduct of that party was negligent. Joint and several liability means that one or more of the liable parties can be held responsible for the full cost of the cleanup at a site, regardless of the degree of involvement in the contamination. However, Section 113(f)(1) of CERCLA allows a party to seek recovery of some of its cleanup costs from other parties at a site through contribution claims in court. In deciding such claims, a court is to base the allocation of cleanup costs on "equitable factors." In the event that a party can show that the waste it sent to the site could not have contributed to the contamination, joint and several liability is not to apply to that party. Retroactive liability means that parties are liable for the cleanup of hazardous substances released prior to the enactment of CERCLA on December 11, 1980. However, Section 107(f)(1) extends liability for natural resource damages only to releases that occurred on or after the enactment of CERCLA, which resulted in injury to, destruction of, or loss of the natural resources. It should be emphasized that the above description of the basic liability standards of CERCLA merely offers a brief summary of the broad reach of the statute, as generally interpreted by the courts over time. As such, this description does not examine the complexities of individual court decisions on these matters. Since the enactment of CERCLA in 1980, well over 1,000 court decisions have interpreted these basic liability standards under the statute to determine the financial responsibility of potentially responsible parties for the costs of cleanup. How a court may view the cleanup liability of an individual party at any one site would depend on numerous legal issues that are beyond the scope of the summary of CERCLA offered in this report. Section 107(b) of CERCLA provides defenses to liability under certain circumstances. A party cannot be held liable for the release or threatened release of a hazardous substance, and resulting injury to, destruction of, or loss of natural resources, if that party can provide evidence that the release or threatened release was caused solely by an act of God; an act of war; an act or omission of a third party with whom the defendant has no contractual relationship, if the defendant exercised due care with respect to the hazardous substance and took precautions against foreseeable acts or omissions of that third party and against the foreseeable consequences of such acts or omissions; or any combination of these three circumstances. The third party defense sometimes is characterized as the "innocent" landowner defense, in the sense that it typically pertains to property owners who had no involvement in the actions that led to the contamination. Section 101(35) of CERCLA defines the term contractual relationship for the purpose of the third party defense, and specifies the conditions that a landowner must satisfy to claim the lack of a contractual relationship connecting the owner to the contamination. See the " Bona Fide Prospective Purchasers and Innocent Landowners " section of this report below. To address the fairness of the liability scheme of CERCLA, Congress has amended the statute at various times to limit, or in some cases eliminate, the liability of certain categories of parties who may not have been involved in actions that resulted in contamination, who may have contributed only very small quantities or less toxic wastes to a contaminated site, or whose conduct Congress did not wish to discourage. These categories of parties include response action contractors who merely perform the work to clean up a contaminated site, but who did not cause or otherwise contribute to the contamination; state and local governments that acquired contaminated property involuntarily through bankruptcy, tax delinquency, abandonment, or other circumstances, and did not cause or otherwise contribute to the contamination; persons who only hold a contaminated property in a fiduciary capacity; financial lenders who acquire financial interests or ownership of a contaminated property through foreclosure; generators and transporters of scrap materials intended for recycling, but instead may have been disposed of by other persons; persons who contributed only very small quantities of waste or only municipal solid (i.e. non-hazardous) waste to a site; service station dealers who only disposed of recycled oil that was not contaminated with hazardous substances, and who fully complied with federal regulations for managing the recycled oil; "innocent" landowners who purchased a property without knowledge of existing contamination, with respect to the third party defense noted above; other "innocent" owners of property that became contaminated merely through migration from a contiguous property where the initial release occurred; and "bona fide" prospective purchasers who otherwise may be hesitant to acquire a property on which contamination is known or suspected to be present, because of the potential liability for cleanup upon acquiring ownership. Amendments to CERCLA that provided such limitations on cleanup liability for specific categories of parties are examined further below. As discussed in the " Other Exclusions " section of this report, there also are certain situations identified in CERCLA in which a party would not be subject to liability, such as the proper application of a registered pesticide product or a federally permitted release of a hazardous substance. Soon after the enactment of CERCLA in 1980, it was realized that a private contractor hired to clean up a contaminated site may be exposed to potential liability as an operator of that site, or as a person who arranged for disposal or transport of waste in instances in which the contractor removed waste as part of the cleanup. This exposure to potential liability was viewed as a deterrent to private contractors being willing to clean up contaminated sites. In response to this concern, Section 119 of the Superfund Amendments and Reauthorization Act of 1986 added Section 119 to CERCLA to limit the liability of "response action" contractors who are hired to perform cleanup actions. Section 119(a)(1) states that cleanup contractors shall not be liable under CERCLA, or any other federal law, to any person for "injuries, costs, damages, expenses, or other liability" resulting from the release or threatened release of a hazardous substance, pollutant, or contaminant. (However, no immunity from liability under state law is conferred under CERCLA.) Section 119(a)(2) states that a cleanup contractor shall not be exempt from federal liability for a release caused by that contractor as a result of conduct that is "negligent, grossly negligent, or which constitutes intentional misconduct." Under certain circumstances, Section 119(c) authorizes the President the discretion to indemnify a cleanup contractor for negligent conduct, but not grossly negligent conduct or intentional misconduct. Such indemnification is intended to cover a contractor's liability that cannot be covered by insurance at a "fair and reasonable" price. Enacted in the 104 th Congress, the Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996 ( P.L. 104-208 , Division A, Title II, Subtitle E of the Omnibus Consolidated Appropriations Act for FY1997) added Section 107(n) to CERCLA to limit the liability of persons who hold a facility or vessel only in a fiduciary capacity for another person to the value of the assets held on behalf of that person. This limitation on liability is provided if the fiduciary did not cause or contribute to a release or threatened release of a hazardous substance from such facility or vessel. Fiduciaries who held an interest in a contaminated property had been concerned that joint and several liability under CERCLA could result in their financial liability exceeding the value of the assets held. P.L. 104-208 also amended the definition of "owner or operator" in Section 101(20) of CERCLA to exclude financial lenders that did not participate in the management of a facility or vessel from which there was a release or threatened release of a hazardous substance, but who held indicia of ownership primarily to protect security interests. Lenders also were exempted from liability as owners or operators of foreclosed properties, but only if they did not participate in the management of the facility or vessel prior to foreclosure. Lenders especially had been concerned about becoming liable for the cleanup of contaminated properties following foreclosure, when they become owners of the property, and hence could become liable for cleanup under Section 107. Enacted in the 106 th Congress, Title VI—Superfund Recycling Equity—of Appendix I of the Consolidated Appropriations Act for FY2000 ( P.L. 106-113 ) added Section 127 to CERCLA to exempt certain parties involved in the recycling of scrap materials from cleanup liability as generators and transporters of wastes. The exemption is available to persons who "arranged" for the recycling of scrap materials (by selling the materials or otherwise arranging for their recycling). Recyclers involved in these activities had been concerned about becoming liable as generators or transporters of wastes if they sold or transported scrap materials to a facility that disposed of the materials instead of recycling them as intended. Some had perceived this potential liability as a deterrent to recycling. The exemption is available to the above persons only for materials that fall within the statutory definition of recyclable materials in CERCLA. Section 127(b) defines recyclable materials to include the following scrap materials: plastic, glass, textiles, rubber (other than whole tires), metal, or spent lead-acid, spent nickel-cadmium, and other spent batteries, and minor amounts of material incident to or adhering to the scrap material as a result of its normal and customary use prior to becoming scrap. Two items are expressly excluded: (1) shipping containers of a certain capacity that contained a hazardous substance or onto which a hazardous substance adhered, and (2) materials containing polychlorinated biphenyls (PCBs) in excess of federal standards. Even if a material can be considered recyclable within the above statutory definition, the exemption is not automatic. Section 127(c) requires the person who arranged for the recycling of the materials to demonstrate that certain criteria were met. For example, the material must have been of commercial specification grade; a market must have existed for the material; a substantial portion of that type of material must have been made available for the manufacture of a new saleable product; and the material could have been used to replace, or to substitute for, virgin raw material. The person also must demonstrate that he or she exercised "reasonable care" to determine that the receiving facility where the materials were intended to be recycled was in compliance with federal, state, and local environmental laws. Section 127(f) makes the exemption unavailable if the person claiming the exemption had reason to believe the scrap material would not be recycled by the receiving facility; that the material would be burned as fuel or for energy recovery or incineration; that the receiving facility was not in compliance with federal, state, and local environmental laws; or that hazardous substances had been added to the material; or if the person failed to exercise "reasonable care" in managing and handling the material. Enacted in the 107 th Congress, Section 102(a) of the Small Business Liability Relief and Brownfields Revitalization Act ( P.L. 107-118 ) amended Section 107 of CERLA to limit the liability of parties who contributed only certain quantities or types of wastes to sites listed on the NPL. The amendment did not extend these exemptions to such parties at sites not listed on the NPL. Section 102(a) of P.L. 107-118 added Section 107(o) to CERCLA to exempt from cleanup liability parties who generated or transported waste to a site listed on the NPL, if they contributed only "de micromis" amounts of hazardous substances to that site. To qualify for this exemption, a party must demonstrate that it contributed less than 110 gallons of liquid materials or less than 200 pounds of solid materials containing hazardous substances. The exemption is not available to persons who contributed such quantities of wastes to a site on or after April 1, 2001. Section 102(a) of P.L. 107-118 also added Section 107(p) to CERCLA to exempt from cleanup liability residential property owners, small businesses, and small non-profit organizations that contributed only municipal solid waste to a site listed on the NPL. The exemption is limited to municipal solid waste generated by a household or that possesses characteristics typical of household waste. The exemption is available only to the generators of the waste and persons who arranged for the transport of the waste. The exemption is not available to the owner or operator of the disposal site where the waste was sent, such as a landfill, nor to transporters of the waste who selected the disposal site. Subtitle B of Title II of P.L. 107-118 authorized exemptions from cleanup liability for two categories of parties: (1) "bona fide" prospective purchasers and (2) owners whose properties became contaminated only as a result of migration from a contiguous property owned by another person. Subtitle B also established more specific criteria for the availability of the third party defense to "innocent" landowners who had no knowledge of existing contamination at the time of acquiring a property and had no involvement in the actions that led to the contamination. These exemptions are available to site owners who meet the requisite statutory criteria, regardless of whether the site is listed on the NPL. In contrast, the above exemptions from cleanup liability for contributors of de micromis amounts of wastes and municipal solid wastes are available only at sites listed on the NPL. Prior to the enactment of P.L. 107-118 , EPA had used its existing authorities under Section 122 of CERCLA to enter into voluntary settlement agreements with prospective purchasers who had no involvement in the contamination, as a mechanism to limit their cleanup liability upon acquiring ownership of a contaminated property. EPA commonly referred to these agreements as "Prospective Purchaser Agreements." This type of settlement usually capped a purchaser's financial responsibility for the cleanup, or required less extensive cleanup work by the purchaser. These agreements also typically included a covenant promising that the federal government would not sue for further liability, and offered protection from contribution claims by other liable parties. (See the " Voluntary Settlement Agreements " section of this report for additional discussion.) After the enactment of P.L. 107-118 , a "bona fide" prospective purchaser who met the requisite statutory criteria could become eligible for an exemption from cleanup liability without entering into a formal settlement agreement with EPA. Section 222 of P.L. 107-118 added Section 107(r) to CERCLA, exempting "bona fide" prospective purchasers of contaminated property acquired after the date of the enactment of P.L. 107-118 (January 11, 2002). This exemption is not available to persons who purchased a contaminated property on or before January 11, 2002, and therefore is not retroactive. A person who knowingly purchased a contaminated property on or before that date must have entered into a Prospective Purchaser Agreement with EPA under Section 122 of CERCLA to limit his or her cleanup liability upon acquiring ownership. Section 222 of P.L. 107-118 also added Section 101(40) to CERCLA, defining the term "bona fide prospective purchaser" and specifying the criteria of eligibility for the exemption provided in Section 107(r) of the statute. In addition to "bona fide" prospective purchasers, Section 221 of P.L. 107-118 added Section 107(q) to CERCLA, exempting owners of contaminated property from cleanup liability if the contamination occurred only as a result of the migration of a hazardous substance from a contiguous property owned by another person. To obtain the exemption, an owner of a contiguous property must have had no knowledge of the presence of the hazardous substance, nor the possibility of its migration, when acquiring ownership. Section 223 of P.L. 107-118 amended the definition of the term "contractual relationship" in Section 101(35) of CERCLA to establish more specific criteria for "innocent" landowners to claim the third party defense against liability under Section 107(b)(3) of CERCLA. Of importance, the exemptions for "bona fide" prospective purchasers and contiguous property owners reference these criteria in the definition of contractual relationship, making the criteria applicable to all three exemptions. Under these criteria, an owner claiming an exemption as a "bona fide" prospective purchaser, "innocent" landowner, or contiguous property owner must have had no association with the activities that led to the contamination, and must have had no relationship with the persons who caused or contributed to the contamination (aside from a contractual relationship only involving the conveyance of the property). The key difference among these exemptions is that a "bona fide" prospective purchaser may know that a property is contaminated at the time of acquisition, and still be exempt from liability under CERCLA for the cleanup costs. A person claiming an exemption as an "innocent" landowner or a contiguous property owner must prove that he or she had no knowledge, or no reason to know, of the contamination at the time of acquisition. To demonstrate that a best effort was made to know whether contamination may be present, CERCLA requires a person to have made "all appropriate inquiries" into the previous ownership and uses of the property. A person seeking to claim an exemption from liability as a "bona fide" prospective purchaser, "innocent" landowner, or contiguous property owner must satisfy this requirement before acquiring ownership. As directed by P.L. 107-118 , EPA promulgated regulations that identify specific measures a person must take to demonstrate that "all appropriate inquiries" were made satisfactorily. The process outlined in the regulations for making "all appropriate inquiries" is similar to a preliminary site assessment, and must be performed by an environmental professional hired at the person's expense. A person also must satisfy other conditions after receiving ownership of a property to maintain an exemption from liability under CERCLA as a "bona fide" prospective purchaser, "innocent" landowner, or contiguous property owner. The owner must take "reasonable steps" to (1) stop any continuing release of a hazardous substance; (2) prevent any future releases; and (3) prevent or limit exposure to any previously released hazardous substance. The owner also must provide any legally required notices of the discovery of hazardous substances on the property, and must comply with any land use restrictions and institutional controls that may be put into place by regulators to prevent potential exposure to the hazardous substances. Satisfying these criteria can have the effect of minimizing, but not eliminating, an owner's responsibility for managing the contamination, even though the owner may be exempt from cleanup liability under CERCLA. A person who discovered contamination upon conducting "all appropriate inquiries" must take "reasonable steps" to manage the contamination once becoming the owner to maintain exemption status as a "bona fide" prospective purchaser. If a person conducted "all appropriate inquiries" before acquiring a property and still did not discover the contamination, that person must take these steps once the existence of the contamination is known to maintain exemption status as an "innocent" landowner, or a contiguous property owner if the contamination resulted from migration. It should be emphasized that the burden of proof is on the person seeking an exemption from liability to demonstrate that "all appropriate inquiries" were made before acquiring ownership and that "reasonable steps" are taken after acquiring ownership to manage the contamination once its existence is known. (See CRS Report RL31911, " Innocent Landowners " and " Prospective Purchasers " Under the Superfund Act , by [author name scrubbed].) CERCLA established the Hazardous Substance Superfund Trust Fund to provide a source of funds for the federal government to finance the cleanup of contaminated sites where the potentially responsible parties cannot pay or cannot be identified. This assumption of financial responsibility for these "orphan shares" of cleanup costs is intended to ensure that the actions necessary to protect human health and the environment are carried out. The availability of Superfund Trust Fund monies to pay for the cleanup of orphaned sites is subject to appropriations by Congress. Once appropriated, the availability of Superfund monies under EPA's Superfund program to pay for remedial actions is further subject to cost-sharing agreements with the states in which the sites are located, as discussed in the " State Participation " section of this report. The special taxing authority to finance the Superfund Trust Fund expired at the end of 1995. Before this authority lapsed, three dedicated taxes on petroleum, chemical feedstocks (and imported chemical derivatives), and corporate income provided most of the revenues for the Superfund Trust Fund. Revenues from the General Fund of the U.S. Treasury also contributed to the trust fund to augment the dedicated taxes, but these general tax revenues were a relatively small portion of the total revenues to the trust fund during the time that the dedicated taxes were collected through the end of 1995. As originally enacted in 1980, Section 211(a) of CERCLA authorized the Superfund excise taxes on petroleum and chemical feedstocks. Section 515(a) of the Superfund Amendments and Reauthorization Act of 1986 expanded the reach of the tax on domestically manufactured chemical feedstocks to include imported chemical derivatives. Taxing imported derivatives was intended to compensate for the potential loss of revenues as overseas manufacturing of chemical feedstocks increased. Prior to expiration at the end of 1995, the Superfund excise tax on petroleum was 9.7 cents per barrel. The Superfund excise tax on chemical feedstocks and imported chemical derivatives varied from $0.22 per ton to $4.87 per ton, depending on the substance (with the exception of xylene which was taxed at a higher rate of $10.13 per ton in the initial years of the tax until 1992.) Section 516(a) of the Superfund Amendments and Reauthorization Act of 1986 established the special tax on corporate income to provide an additional revenue stream for the Superfund Trust Fund. Prior to expiration in 1995, the Superfund tax on corporate income (formally referred to as the Corporate Environmental Income Tax) was 0.12% of corporate alternative minimum taxable income in excess of $2 million. Whether to reinstate Superfund taxes has been a long-standing controversy since the taxing authority lapsed at the end of 1995. Congress has considered numerous bills to reauthorize the taxes, but none have been enacted to date. The reauthorization debate has centered around numerous "fairness" issues. Supporters of the taxes maintain that dedicated tax revenues for the Superfund program are necessary to ensure that polluters pay for the cleanup of contamination they have caused or may cause in the future, often referred to as the "polluter pays principle." In this sense, some have characterized Superfund taxes as an "insurance plan" for the public that is intended to provide resources for cleanup in the event that businesses may become bankrupt and cannot be pursued for their liability. On the other hand, opponents of the taxes have observed that not all of the individual businesses subject to the tax may have been involved in activities that resulted in contamination, and that the actual polluters are paying for the cleanup of most Superfund sites through enforcement actions under the liability provisions of CERCLA. The extent to which Superfund taxes may have affected "innocent" businesses has been a principal question in the debate over the fairness of the tax structure. The Superfund tax on corporate income was intended to raise additional revenues from a wide range of businesses that may have benefitted from the use of hazardous substances in some way. However, this income tax captured all businesses that met the income threshold, regardless of whether a business may have used or disposed of any hazardous substances. Congress created the Superfund taxes on petroleum and chemical feedstocks based on the broadly held assumption that much of the environmental contamination in the United States had been caused as a result of industrial activities that involved these substances. However, not all petroleum and chemical companies may have been involved in actions that led to contamination. The appropriateness of the Superfund tax on petroleum has been especially controversial in light of the exclusion of petroleum from the cleanup authorities of CERCLA. Because of this exclusion, monies from the Superfund Trust Fund generally have paid for the cleanup of petroleum contamination, only if the contamination includes hazardous substances that are not part of the petroleum product itself. Congress has established other trust funds to address releases of petroleum. Title V of the Superfund Amendments and Reauthorization of 1986 created the Leaking Underground Storage Tank Trust Fund to pay for actions to respond to petroleum released from underground tanks. Title VIII of the Omnibus Budget Reconciliation Act of 1986 ( P.L. 99-509 ) created the Oil Spill Liability Trust Fund to pay for actions to respond to surface releases of petroleum. Since Superfund taxing authority lapsed at the end of 1995, there have continued to be varying perspectives on how to fund the cleanup of contaminated sites in the most fair manner to ensure that the responsible parties satisfy their liability, while minimizing the financial burden on taxpayers who did not cause or otherwise contribute to the contamination, or who did not benefit in some way from the actions that resulted in the contamination. The current source of revenues for the Superfund Trust Fund is discussed below. After the authority to collect the Superfund taxes expired, the remaining revenues from these taxes were expended by the end of FY2003, leaving revenues from the General Fund of the U.S. Treasury as the main source of monies for the Superfund Trust Fund. Although the Superfund taxes have expired, industry has continued to provide some of the funding for the trust fund via corporate income taxes that contribute to the General Fund. (Revenues to the General Fund consist of corporate income taxes, individual income taxes, and miscellaneous federal receipts and collections that are not dedicated to specific federal trust funds.) In addition to general Treasury revenues, others sources of monies have continued to contribute some revenues to the Superfund Trust Fund for appropriation by Congress. Cleanup costs borne by the federal government that are later recouped from the potentially responsible parties are deposited into the trust fund (referred to as cost recoveries). These recouped funds can be made available for the cleanup of other sites where the potentially responsible parties cannot pay or cannot be found. Fines and penalties assessed against potentially responsible parties for violations of CERCLA are deposited into the trust fund as well. Interest also accrues on the trust fund balance. Collectively, these monies have been relatively small compared to the amount of general Treasury revenues that now support most of the annual discretionary appropriations from the trust fund to implement EPA's Superfund program. However, these other sources of monies do continue to help finance the trust fund, and to some extent reduce the need for general Treasury revenues at sites where the potentially responsible parties cannot be found or cannot pay. Private settlement funds have been an additional source of monies for the Superfund Trust Fund. As amended in 1986, Section 122(b)(3) of CERCLA authorizes EPA to retain funds that it receives from private parties under voluntary settlement agreements to perform the cleanup of sites at which those parties may be liable. (See the " Voluntary Settlement Agreements " section below.) These private settlement funds are deposited into site-specific Special Accounts within the Superfund Trust Fund, which are dedicated to the cleanup of the sites covered under the settlements. EPA has received nearly $4 billion in private settlement funds over time and has deposited these funds into over 1,000 Superfund Special Accounts since the establishment of the first account in FY1990. These funds are available directly to EPA and are not subject to discretionary appropriations by Congress. Once all planned future work at a site is complete, EPA may "reclassify" the remaining balance of a Special Account for direct obligation to perform cleanup work at other sites, as a means to replace any appropriated funds that also may have been spent at the site covered by the Special Account. In other instances, EPA may transfer the remaining balance of a Special Account to the general portion of the Superfund Trust Fund, which would be subject to subsequent appropriation by Congress. There are three mechanisms through which the federal government can take actions to enforce cleanup liability under CERCLA, if the potentially responsible parties can be identified and have the financial capability to pay. These mechanisms include judicial or administrative orders, cost-recovery actions, and voluntary settlement agreements. Like the response authorities of CERCLA, these enforcement authorities are Presidential authorities. As discussed earlier in this report, a 1987 executive order delegated the President's response authorities under CERCLA to EPA and other federal agencies. This order also delegated the enforcement of the statute to EPA at sites on the land, and to the U.S. Coast Guard within inland river ports and harbors, the Great Lakes, and U.S. coastal waters. References in this report to the enforcement authorities of EPA apply equally to the U.S. Coast Guard within its delegated jurisdiction. CERCLA also authorizes citizen suits to enforce the cleanup requirements of CERCLA, but a cleanup action first must be completed before compliance with applicable requirements can be challenged. Each of these enforcement mechanisms is discussed below. Section 106(a) of CERCLA authorizes EPA to issue an administrative order, or to pursue a judicial order through the Department of Justice, to require a potentially responsible party to perform cleanup actions to address "an imminent and substantial endangerment to public health or welfare, or the environment" arising from an actual or threatened release of a hazardous substance. Section 106(b)(1) authorizes fines of up to $25,000 per day for failure to comply with a cleanup order. Section 107(c)(3) of CERCLA also allows a party that fails to comply with a cleanup order to be held liable for punitive damages up to three times the costs incurred by the United States out of the Superfund Trust Fund to carry out the cleanup action that the party did not perform. Monies received by the United States for such punitive damages are to be deposited into the trust fund, and can be made available to finance the cleanup of other sites, subject to appropriations by Congress. If the party who receives and complies with a Section 106 order can prove it is not liable under CERCLA, or that the cleanup actions required by EPA under the order were "arbitrary and capricious" or otherwise not in accordance with law, Section 106(b)(2) authorizes that party to be reimbursed from the Superfund Trust Fund. This provision is intended to protect an innocent party from the costs of enforcement actions that may be imposed inappropriately upon that party, or to prevent a liable party from being required to pay for a more stringent cleanup than may be warranted to protect human health and the environment. At some sites, EPA may spend Superfund Trust Fund monies upfront to initiate the cleanup if the potentially responsible parties are not yet identified, or if a cleanup order or settlement agreement with the identified parties is not yet finalized. In the event that EPA does expend Superfund monies at a site with viable parties, reimbursement may be included in the terms of any administrative settlement agreement that may be entered into with the parties. EPA also may pursue recovery of Superfund monies from the parties through judicial actions, in conjunction with the Department of Justice. Section 107(a) of CERCLA specifically authorizes EPA to recover Superfund monies from the potentially responsible parties, as long as those actions are not inconsistent with the NCP. States and Indian tribes, and any other person, who chooses to perform cleanup actions also may recover their costs from the potentially responsible parties, as long as those actions are consistent with the NCP. The costs of health effects studies carried out by the ATSDR under Section 104(i) of CERCLA, and damages for injury to, destruction of, or loss of natural resources (and the assessment of such injury, destruction, or loss), are recoverable as well. Section 113(g)(2) of CERCLA limits the time during which a cost-recovery action may be commenced against a potentially responsible party, which could reduce a party's financial liability at a site if recovery is not sought quickly enough. Cost-recovery actions must be filed within three years after the completion of a removal action, except for removal actions allowed to extend beyond the general time limit of 12 months. For these lengthier removal actions, the costs can be sought within six years after the determination was made to extend the timing beyond 12 months. Cost-recovery actions must be commenced within six years after the initiation of the physical construction of a remedial action. If the remedial action is initiated within three years after the completion of the removal action that preceded it, the costs of that removal action may be recovered as part of the recovery of the costs of the remedial action that followed. If a potentially responsible party is willing to resolve its liability voluntarily, Section 122 of CERCLA gives EPA the discretion to enter into an administrative settlement agreement with that party instead of pursuing an enforcement action through a judicial or administrative order under Section 106, or a cost-recovery action under Section 107. Avoiding an enforcement action by EPA through a voluntary settlement agreement can save a party the costs of litigation, possibly motivating a party to agree to settle its liability. Section 122(f) gives EPA the discretion to include a covenant in the agreement promising that the federal government will not sue for further liability. Such a covenant can provide an incentive for a party to agree to perform specific cleanup actions or to make a monetary payment in exchange for a cap on its liability. As discussed in the " Special Account Funds " section above, Section 122(b)(3) authorizes EPA to retain the funds received under a settlement and directly use the funds to fulfill the terms of the settlement. A party who voluntarily settles its liability at a site also is afforded protection from contribution claims by other parties at that site, under Section 113(f)(2) of CERCLA. Such protection is intended to offer yet another incentive for a party to settle, especially if a contribution claim by another party appears imminent. Whether to enter into a settlement agreement with EPA under Section 122 is entirely voluntary on the part of the potentially responsible party. However, once finalized, the terms of the agreement to perform specific cleanup actions or to make a monetary payment are binding on the party who entered into the agreement. If the party fails to perform the agreed-upon cleanup actions or to pay the agreed-upon costs of the cleanup, Section 109 of CERCLA authorizes civil penalties of up to $25,000 each day that the violation of the agreement continues to occur. In enforcing cleanup liability under CERCLA, EPA has the discretion to consider a potentially responsible party's financial capability in determining that party's share of the cleanup costs. A party with limited financial capability who desires to reduce its share of the cleanup costs may request a reduction in its share through the negotiation of a voluntary settlement agreement with EPA under Section 122 of CERCLA, discussed above. In the negotiation process, the party seeking the reduction must submit financial information to EPA for the agency's consideration to determine whether the party's ability to pay the cleanup costs may in fact be limited. In 1995, EPA issued its first guidance document on ability-to-pay considerations for use in settlement negotiations. The agency revised its guidance again in 1997. EPA formulated its guidance based on court interpretations of the reach and intent of the cleanup liability provisions of CERCLA, and the agency's policy of balancing two fundamental interests: ensuring that a potentially responsible party satisfies its liability for cleanup, while at the same time not creating an undue financial hardship on that party, or on those who may be dependent upon that party. In 2002, Congress included provisions in Section 102(b) of Title I of P.L. 107-118 that amended Section 122(g) of CERCLA to establish a new category of de minimis settlement that explicitly endorsed EPA's policy to reduce a party's share of the cleanup costs based on that party's ability to pay. Prior to this amendment, CERCLA explicitly authorized de minimis settlements only for owners of property who were not involved in the release of hazardous substances and who had no knowledge of any hazardous substances on the property; and for persons who contributed a relatively small amount of hazardous substances that were minimally toxic in comparison to other hazardous substances at the site. In determining whether a party satisfactorily demonstrates a limited ability to pay, EPA must consider the ability of the person to pay for cleanup actions and "still maintain its basic business operations, including consideration of the overall financial condition of the person and demonstrable constraints on the ability of the person to raise revenues." Consistent with earlier EPA guidance, the amendment explicitly requires a person seeking a reduced settlement to provide EPA with the financial information that would be necessary to determine the ability of that person to pay for cleanup actions at the site concerned. If EPA were to grant a reduced settlement, the person who is the subject of the settlement must waive all contribution claims against other potentially responsible parties at the site, unless EPA were to determine that requiring a waiver would be an "unjust" condition. A reduced settlement does not remove a party from the responsibility to provide information and access to the site in the future that may be necessary to carry out the cleanup. After a reduced settlement is finalized, EPA must notify any other potentially responsible parties at the site who have not resolved their liability with the federal government. Financial capability aside, EPA still may decline a potentially responsible party's request for a reduced settlement, if the agency determines that the party has failed to comply with any request for access, information, or an administrative subpoena in relation to the site, or has impeded or is impeding, through action or inaction, the performance of a cleanup action at the site. If EPA were to determine that a potentially responsible party is not eligible for a reduced settlement, EPA is required to provide the reasons for the determination in writing to the potentially responsible party who requested the reduced settlement. EPA's determination of a party's eligibility for a reduced settlement is not subject to judicial review, nor is a dispute over an ability-to-pay determination of the agency within the jurisdiction of the EPA Environmental Appeals Board. Consequently, EPA would appear to have final authority to determine a party's ability to pay its share of the cleanup costs, based on the financial information submitted by that party in the settlement negotiation process. In practice, a party only can pay to the extent of its actual financial capability, to the point of bankruptcy. The authority of EPA to reduce a party's share of the cleanup costs is intended to avoid such financial outcomes as a consequence of cleanup liability under CERCLA. CERCLA does not require EPA to use any one particular enforcement mechanism at an individual site, but allows the agency enforcement discretion to select which of the above mechanisms would be the most effective in achieving cleanup goals. EPA typically attempts to negotiate voluntary settlement agreements with the potentially responsible parties first, and usually turns to the use of Section 106 orders or Section 107 cost-recovery actions when a negotiated settlement appears unlikely. At a site where there are multiple potentially responsible parties, EPA also has the enforcement discretion to pursue the liability of all, some, or only one party. Even when enforcing against less than all parties, EPA still may recover the full amount of cleanup costs through joint and several liability. As described earlier in this report, joint and several liability means that any liable party can be held responsible for the full cost of cleanup, regardless of the degree of involvement. EPA usually pursues the liability of parties at a site who are thought to have contributed more greatly to the contamination, and to be more capable of performing or paying for the cleanup. This selective approach is intended to reduce the enforcement transactions costs to the federal government. For the purpose of fairness, Section 113(f)(1) of CERCLA authorizes the parties who are enforced against to recover some of their costs from other potentially responsible parties whom EPA did not elect to pursue. Section 113(f)(3)(B) also authorizes parties who have resolved all (or some) of their liability under settlements with EPA to seek contribution from other parties who are not participants in the settlements. Section 113(f)(2) explicitly protects parties from contribution claims who have entered into settlements with EPA to resolve their liability under Section 122 of CERCLA. Although EPA is responsible for enforcing cleanup liability, Section 206 of the Superfund Amendments and Reauthorization Act of 1986 added Section 310 to CERCLA authorizing citizens to challenge the adequacy of a cleanup action in court. The timing of a citizen suit for these purposes is limited. Section 113(h)(4) of CERCLA does not permit a citizen suit to be brought for violation of a cleanup requirement until the selected cleanup action at a site is completed. Further, a citizen suit may not be brought with regard to a removal action at a site where a remedial action is planned. This limitation on the timing of a citizen suit is intended to allow the complete implementation of cleanup actions planned at a site, prior to subjecting the adequacy of those actions to judicial review to assess their compliance with CERCLA. Once the cleanup actions are completed, Section 310(a)(1) authorizes a citizen to commence a civil action against any person who is alleged still to be in violation of a "standard, regulation, condition, requirement, or order," including any provision of a federal facility cleanup agreement issued under Section 120. Section 310(b)(1) requires such suits to be brought in the district court for the district in which the violation is alleged to have occurred. Section 310(c) authorizes the court to require actions to correct the violation and impose civil penalties. Section 310(d)(1) requires the plaintiff to notify the President, the state in which the violation is alleged to have occurred, and the alleged violator 60 days in advance of commencing a civil action, in a manner prescribed by federal regulation. Section 310(d)(2) prohibits citizen suits if the President already has commenced and is "diligently prosecuting" an enforcement action against the potentially responsible party. Section 310(a)(2) also authorizes a citizen to commence a civil action against the President or any other officer of the United States, including the Administrators of EPA and ATSDR, for alleged failure to perform any non-discretionary act or duty required under CERCLA, including such act or duty required at a federal facility. Section 310(b)(2) requires such suits to be brought in the United States District Court for the District of Columbia. Section 310(c) authorizes the court to order the President or other officer of the United States to perform the act or duty concerned. Section 310(e) requires the plaintiff to notify the Administrator of EPA, or other department or agency, 60 days in advance of commencing a civil action for the alleged failure to perform a non-discretionary act or duty, in a manner prescribed by federal regulation. Citizen suits are not available for alleged failure of the President or an officer of the United States to perform a non-discretionary act or duty under Section 311 of CERCLA. This provision states that the Secretary of Health and Human Services "shall" establish and support a research and training program to enhance understanding of the potential health risks associated with exposure to hazardous substances. The program also is to research methods and technologies that would detect hazardous substances in the environment and reduce their amount and toxicity. The program is to be carried out through the awarding of grants, cooperative agreements, and contracts, the funding for which is subject to annual appropriations by Congress. After CERCLA was enacted in 1980, questions arose as to whether Congress intended federal facilities to be subject to the cleanup authorities and liability provisions of the statute to the same extent as non-federal facilities. As originally enacted, Section 101(21) of CERCLA defined the term "person" for the purposes of the statute to include the federal government, meaning that the reference to persons who may be held liable under Section 107 may include the federal government. However, the original enactment of the law did not otherwise explicitly address the liability of federal agencies, nor the applicability of other provisions of the statute to federal agencies. Section 120 of the Superfund Amendments and Reauthorization Act of 1986 added Section 120 to CERCLA to clarify that federal departments and agencies are subject to the requirements of CERCLA to the same extent as other entities, including the liability and enforcement provisions of the law. To comply with CERCLA, the federal agency with administrative jurisdiction over a federal facility is responsible for performing and paying for the cleanup of contamination out of its own budget, subject to appropriations by Congress. Section 111(e) of CERCLA explicitly prohibits the use of Superfund Trust Fund monies to clean up federal facilities, as these monies are dedicated to paying for the cleanup of sites where the potentially responsible parties cannot be identified or cannot pay. However, Section 111(e)(3) does allow the use of Superfund Trust Fund monies at an individual federal facility to provide alternative water supplies, if groundwater contamination has migrated beyond the boundary of that facility, and there are other potentially responsible parties connected to that facility in addition to the United States. In all other instances, Superfund Trust Fund monies are not available for the cleanup of federal facilities. Congress appropriates funding to various accounts of federal agencies to pay for the performance of the cleanup of federal facilities. These funds generally are intended to fulfill the liability of the United States as the owner or operator of these facilities. However, these accounts do not constitute a cleanup liability fund in a broader sense. The funds are authorized to pay for the performance of the cleanup of the federal government's own facilities by federal agencies. However, the funds are not explicitly authorized to pay cleanup cost-recovery or contribution claims that may be submitted to the United States by other parties, either at federal facilities or at non-federal sites where a federal agency may be held liable as a generator or transporter of wastes sent to a site for disposal. The Judgment Fund of the U.S. Treasury has been the source of payments for cleanup claims submitted to the United States to satisfy the federal share of liability under CERCLA, and compromise settlements for such claims. By statute, the Judgment Fund is a permanent, indefinite appropriation that is intended to pay monetary claims against the United States, which are not otherwise provided by Congress through separate appropriations. EPA and the states play a role in overseeing and enforcing the implementation of CERCLA at federal facilities, although the agencies that administer these facilities actually fund their cleanup. Section 120(e) of the law requires EPA to take the lead in overseeing the cleanup of federal facilities listed on the NPL, but Section 120(f) allows states and local governments to participate in cleanup decisions. The states play a more prominent role in overseeing the cleanup of federal facilities not listed on the NPL. While CERCLA authorizes EPA and the states to oversee the cleanup of federal facilities, certain provisions of the law can limit their ability to direct or dictate how the cleanup process may be carried out. As discussed below, CERCLA gives EPA decision-making authority to select remedial actions at federal facilities listed on the NPL, but does not explicitly authorize EPA to direct the schedule of performing those actions, nor how those actions are to be operated and maintained over the long term to ensure their performance. Further, EPA's enforcement of cleanup requirements at federal facilities through court actions is complicated by the limited ability of one federal agency to sue another. With respect to states, CERCLA requires the opportunity to be involved in cleanup decisions, but does not give states any decision-making authority. In practice, these limitations may restrict the extent to which EPA and the states may oversee the cleanup of federal facilities, even though Section 120 of CERCLA specifically requires federal facilities to comply with the requirements of the statute to the same extent as other entities. Within 6 months of the listing of a federal facility on the NPL, Section 120(e)(1) of CERCLA requires the federal agency with administrative jurisdiction over the facility to consult with EPA and the appropriate state authorities to begin a Remedial Investigation/Feasibility Study (RI/FS). As discussed earlier in the " Scope of Response Actions " section of this report, an RI/FS involves an investigation of contamination to assess potential risks to human health and the environment, and a study of the feasibility of the remedial alternatives to address those risks. While consultation with EPA and state authorities is required, CERCLA does not give explicit decision-making authority to EPA or the states to dictate precisely how a federal agency performs this investigation and study phase of the cleanup process. Within 180 days of the completion of the RI/FS and review by EPA, Section 120(e)(2) requires the federal agency with administrative jurisdiction over the facility to enter into an interagency agreement with EPA to govern the remedial actions to be taken at that facility. This agreement provides an opportunity for EPA to formalize how the other federal agency will carry out the cleanup of the facility to satisfy the requirements of CERCLA. Section 120(e)(4) identifies four elements that are to be included in each interagency agreement: (1) a list of the remedial alternatives considered at the facility, (2) identification of the remedial actions selected from among the alternatives, (3) a schedule for completing each remedial action, and (4) arrangements for any long-term operation and maintenance activities that may be necessary to ensure the performance of the remedial actions over time. If EPA and the federal agency with administrative jurisdiction over the facility cannot agree on the selection of the remedial actions in negotiating an interagency agreement, Section 120(e)(4)(A) authorizes the Administrator of EPA to resolve the dispute and select the remedial actions he or she deems most appropriate to protect human health and the environment. Although the Administrator may delegate this dispute-resolution authority to an officer or employee of EPA, Section 120(g) prohibits the transfer of the Administrator's authorities under Section 120 to any other agency, official, or employee of the United States, by executive order of the President or otherwise, or to any other person. This prohibition primarily is intended to ensure that the role of EPA is maintained in determining the selection of remedial actions. CERCLA does not provide the Administrator of EPA decision-making authority with respect to other elements of an interagency agreement for a federal facility listed on the NPL, namely the schedule for completing the remedial actions and arrangement for any long-term operation and maintenance activities that may be necessary to ensure the performance of those actions over time. These latter elements would appear to be subject to negotiation between EPA and the federal agency with administrative jurisdiction over the facility. If consensus cannot be reached and the agreement finalized within the statutory deadline of 180 days from the completion of the RI/FS, Section 120(e)(5) requires the federal agency with administrative jurisdiction over the facility to report the delay to Congress. With respect to the timing of the cleanup, Section 120(e)(3) requires the federal agency responsible for the facility to complete the remedial actions "as expeditiously as practicable" once those actions are selected, but does not indicate a specific time frame or deadline for their completion. The timing of a remedial action ultimately depends on the technical feasibility of that action and the availability of appropriations by Congress. Accordingly, Section 120(e)(3) requires federal agencies to notify Congress of the amount of funding needed to carry out the selected remedial actions at their facilities in their annual budget requests. Notably, the lack of a final interagency agreement governing an entire facility does not preclude individual remedial actions from proceeding to address discrete contaminated sites at a facility. Further, removal actions intended to address more immediate risks are not subject to an interagency agreement. The main reason for this difference is that the time required to finalize an agreement may delay a removal action needed to address an emergency situation. Because of these reasons, some cleanup actions may proceed without an interagency agreement in place, in effect leaving EPA with less formal means to oversee the cleanup. States and local governments also may play a role in the cleanup of federal facilities listed on the NPL. Section 120(f) of CERCLA authorizes states and local governments to participate in the planning and selection of remedial actions at federal facilities. Participation by states and local governments is to include, but is not limited to, review of all applicable data as it becomes available, and the development of studies, reports, and plans. Section 120(f) specifies that the opportunity for state officials to participate in cleanup decisions at federal facilities is to be provided in accordance with Section 121(f). As discussed earlier in the " State Participation " section of this report, Section 121(f) requires states to be afforded opportunities for "substantial and meaningful involvement" in initiating, developing, and selecting remedial actions. Section 121(d) also allows state standards to be applied to a remedial action, thereby offering additional opportunity for state participation. However, Section 121(f)(3) specifies that, if a state wishes to challenge a remedial decision at a federal facility, that state must show that the decision is not supported by "substantial evidence" to compel the selection of a different remedy at that facility. Unlike Section 120(f), the participation requirements of Section 121(f) are not extended to local governments. States play a more prominent role in overseeing the cleanup of federal facilities not listed on the NPL. In acknowledgement of this role, Section 120(a)(4) of CERCLA clarifies the reach of state law at contaminated federal facilities that are not listed on the NPL. This provision stipulates that state cleanup standards or requirements shall apply to a federal facility that is not on the NPL only to the same extent as those standards or requirements would apply to a non-federal site located in that state. In practical terms, a state may not require more stringent cleanup at a federal facility than it would require at a non-federal site possessing comparable characteristics and conditions under which exposure to contamination may occur. While state cleanup laws generally can be applied to federal facilities not listed on the NPL, CERCLA does not require federal agencies to enter into formal agreements with states to govern cleanup requirements in a fashion similar to interagency agreements with EPA. However, states may have other authorities to identify and enforce cleanup requirements at federal facilities that they oversee. Most notably, federal facilities that store, treat, or dispose of hazardous waste are subject to permits issued by states with federal authority delegated under the Solid Waste Disposal Act. These permits can require "corrective action" to clean up contamination that may result from waste management or disposal practices. In contemplation of such situations, Section 120(i) of CERCLA states that nothing in CERCLA may affect or impair the obligation of federal agencies to comply with requirements of the Solid Waste Disposal Act at the facilities that they administer, specifically including corrective action requirements. A corrective action that a state may require under the Solid Waste Disposal Act can be similar in scope to a removal or remedial action under CERCLA. This similarity can result in essentially the same stringency of cleanup in practice, regardless of which statute is applied. As such, Solid Waste Disposal Act permits at federal facilities not on the NPL can function much like CERCLA interagency agreements at federal facilities on the NPL, specifying individual actions required to clean up contamination. In this sense, Solid Waste Disposal Act permits can provide a means for a state to formalize and enforce cleanup requirements at many federal facilities that are not listed on the NPL, for which an interagency agreement with EPA is not required. Section 120(h) of CERCLA generally requires the United States to clean up contaminated federal property prior to transferring the property out of federal ownership. The policy premise of this provision is that the United States should assume full responsibility for the cleanup of contamination caused by federal activities, and not shift the burden of that responsibility to the recipient merely as a consequence of acquiring the property. Section 120(h) applies to all contaminated federal property declared surplus to the needs of the federal government. The agency with administrative jurisdiction over a surplus federal property usually performs and pays for the cleanup of contamination to fulfill the financial liability of the United States. As is the case with federal facilities that remain in federal ownership, funds available for the cleanup of surplus federal properties are subject to appropriations by Congress, and are not eligible for Superfund monies. For example, the Department of Defense performs and pays for the cleanup of surplus federal property on closed military installations out of funds appropriated to the Base Realignment and Closure (BRAC) accounts. Section 120(h) does not bind the United States to cleaning up a surplus federal property for any one particular use. As a result, the reuse of a property is negotiated between the administering federal agency and the recipient of the property. Disagreements over reuse can arise if the recipient intends to use the property for a purpose that would necessitate a level of cleanup that the federal agency may consider too costly, relative to available appropriations to fund the cleanup. The capabilities of cleanup technologies also could constrain the reuse of a surplus federal property, if it would be impractical to achieve a level of cleanup that would be needed to make the property suitable for a use desired by the recipient. Consistent with the policy premise of Section 120(h) and retroactive liability under Section 107, the United States remains responsible for contamination found not to have been sufficiently remediated after the property is transferred out of federal ownership. Section 120(h)(3) requires the continuing liability of the United States to be specified through a "covenant" incorporated into the deed transferring the property out of federal ownership. The covenant must warrant that all remedial actions necessary to protect human health and the environment have been taken before the date of transfer, and that the United States shall conduct any additional remedial actions found to be necessary after the date of transfer. A clause also must be included in the deed granting the United States access to the property to perform cleanup actions for which it may be responsible. In practice, the contents of a deed can place certain limitations on the continuing responsibility of the United States. A deed to a transferred federal property typically warrants cleanup only to a level suitable for the land use negotiated prior to transfer. In some cases, a deed may include a restriction prohibiting certain uses that would be considered unsuitable relative to the level of cleanup performed by the United States. Under such deed restrictions, the United States typically assumes responsibility for additional cleanup only to the extent that more work is found to be needed to make the originally agreed-upon use suitable. If the new owner later wishes to use the property for a different purpose, the new owner typically must assume responsibility for the additional cleanup costs to make the property suitable for that purpose. In some instances, a deed may prohibit certain land uses even if the new owner is willing to pay the cleanup costs. For example, a deed to a decommissioned military training range may prohibit residential or other uses because of the limitations of cleanup technologies to detect and remove unexploded ordnance. Cleanup capabilities may be constrained especially when ordnance is located beneath the surface, or concealed on the surface by dense vegetation. Some surplus federal properties may contain a mix of contaminated and uncontaminated parcels of land. Although the clean parcels may be ready for reuse, the requirement to clean up the contaminated parcels under Section 120(h) of CERCLA prior to transfer could delay the conveyance of the property as a whole. To address such situations, the 102 nd Congress enacted the Community Environmental Response Facilitation Act (CERFA; P.L. 102-426 ) in 1992. This law amended Section 120(h) by adding a new subsection (4) that authorizes the transfer of uncontaminated parcels on a surplus federal property while cleanup continues on the contaminated parcels. This parcel-by-parcel approach is intended to avoid potential delays in the transfer of "clean" surplus federal lands for reuse, especially such lands on closed military installations where economic redevelopment is desired to replace lost jobs. In the event that previously unknown contamination is later discovered after transfer out of federal ownership, Section 120(h)(4)(D) requires that a deed to an uncontaminated parcel still include a covenant warranting that the United States shall conduct any cleanup actions that may become necessary. The cleanup of a contaminated parcel may take several years or more, depending on the type and level of contamination, technical feasibility of cleanup actions, and availability of appropriations to pay for the cleanup. In such situations, the requirement to complete cleanup prior to transfer out of federal ownership could result in delaying the transfer. Enacted in the 104 th Congress, Section 334 of the National Defense Authorization Act for FY1997 ( P.L. 104-201 ) amended Section 120(h)(3) of CERCLA to add a new subsection (C) that allows the transfer of a contaminated parcel on a surplus federal property before cleanup is complete, if certain conditions are satisfied. Although Congress enacted this amendment in annual defense authorization legislation, this authority applies to any surplus federal property administered by any federal agency, not just surplus U.S. military property. Section 120(h)(3)(C) specifically authorizes a deferral of the cleanup covenant to allow the transfer of title to a contaminated parcel on a surplus federal property before cleanup is complete. Federal agencies often refer to this deferral of the covenant as an "early" transfer, although the statute does not use this term. The deed to a contaminated property transferred out of federal ownership must contain assurances that the cleanup still will be carried out after the property leaves federal ownership. The federal agency responsible for the performance of the cleanup also must identify the funding needed to carry out the cleanup in its annual budget requests. The deed also must restrict the use of the property to purposes that would be protective of human health and environment, while the cleanup proceeds. For example, at the time of transfer, a property may be suitable for industrial use because the risks of exposure to contamination may be within an acceptable range, whereas other uses that would result in potentially harmful exposure would be restricted until the property is cleaned up sufficiently for that purpose. Once cleanup is complete, the United States remains obligated to provide a covenant at that time, warranting that all necessary actions to protect human health and the environment have been taken to make the property suitable for its intended, eventual use. The early transfer of a contaminated surplus federal property that is listed on the NPL is subject to the concurrence of the Administrator of EPA and the governor of the state in which the facility is located. The early transfer of a contaminated surplus federal property that is not listed on the NPL still requires the concurrence of the governor of the state in which the facility is located, but not EPA. Federal agencies proposing an early transfer also must provide the public at least 30 days advance notice and an opportunity to comment on the proposed transfer before it is executed. Considering that U.S. military facilities constitute a substantial portion of the inventory of contaminated federal facilities, Section 211 of the Superfund Amendments and Reauthorization Act of 1986 required the Secretary of Defense to establish the Defense Environmental Restoration Program to perform the cleanup of U.S. military facilities. This provision also authorized dedicated Defense Environmental Restoration appropriations accounts to fund the program. Section 211 requires the Secretary of Defense to perform the cleanup of U.S. military facilities under the program in accordance with Section 120 of CERCLA, which in turn specifies the applicability of all of the requirements of CERCLA and the liability and enforcement provisions of the law. Section 211 also requires the Secretary to consult with EPA in implementing the Defense Environmental Restoration Program. Notably, the provisions of Section 211 did not amend CERCLA itself, but were treated as "stand-alone" provisions that apply strictly to U.S. military facilities. The scope of the Defense Environmental Restoration Program includes the performance of the cleanup of military facilities in the United States that are or were under the jurisdiction of the Secretary and owned by, leased to, or otherwise possessed by the United States at the time the contamination occurred, and as such may include both active and decommissioned military facilities. The inclusion of decommissioned facilities within the program's scope is consistent with retroactive liability under Section 107 of CERCLA, under which the Department of Defense can be held liable for cleanup as the past owner and operator of those facilities. The scope of the program also includes the correction of other environmental damage that may present an imminent and substantial endangerment to the public health, welfare, or the environment (such as the presence of unexploded ordnance on decommissioned military training ranges), and the demolition and removal of unsafe buildings and structures for safety purposes. The scope of the program does not include the payment of cleanup cost-recovery or contribution claims that may be submitted to the United States by other parties to satisfy federal liability arising from activities of the Department of Defense. As discussed above, the Judgment Fund has been the source of federal monies for the payment of such cleanup claims. The Defense Environmental Restoration Program initially focused on the cleanup of hazardous substances without a consolidated effort in place to address the safety risks of unexploded ordnance on decommissioned military training ranges. In response to concerns among the public about these potential safety hazards, the 107 th Congress included provisions in Sections 311 and 312 of the National Defense Authorization Act for FY2002 ( P.L. 107-107 ) that expanded the scope of the Defense Environmental Restoration Program to include the cleanup of unexploded ordnance, discarded military munitions, and munitions constituents (i.e., hazardous substances leached from munitions into the environment) on decommissioned military training ranges and munitions disposal sites in the United States. The Department of Defense established the Military Munitions Response Program as a sub-element within the Defense Environmental Restoration Program to carry out these requirements. The statutory authority of the Military Munitions Response Program extends only to decommissioned military training ranges and munitions disposal sites in the United States, but not to operational ranges. Since the enactment of specific cleanup authorities for military facilities in the 1986 amendments to CERCLA, the Department of Defense has expressed long-standing concern that the carrying out of cleanup actions on an operational range could prevent or interrupt its active use for training, and thereby possibly impair military readiness. So far, operational ranges have been subject to federal waste disposal regulations promulgated under the Solid Waste Disposal Act, but not cleanup under CERCLA unless the contamination migrates off-range. EPA promulgated these disposal regulations in 1997, referred to as the Military Munitions Rule. Under this rule, munitions on an operational range are not considered hazardous waste, and therefore are not subject to hazardous waste disposal requirements under the Solid Waste Disposal Act, until they are removed from the range. Upon removal, their disposal is subject to permit requirements for hazardous waste disposal. Munitions typically are removed from an operational range only to the extent necessary to ensure safe access by military personnel for training purposes. Consequently, much of the munitions may remain on an operational range indefinitely, unless contamination from munitions were to migrate off-range and present a risk of exposure. In such situations, removal of munitions could be pursued to eliminate the source of the contamination. Absent off-range migration, munitions generally may be left on a range as long as the range remains in operational status. In such circumstances, cleanup of the munitions typically is not required until the range is closed, and the range then becomes eligible for cleanup under the Military Munitions Response Program. Although Section 120 of CERCLA clarified the applicability of the statute to federal facilities, Section 120(j) authorized the President to exempt an individual federal facility from a requirement of CERCLA on a case-by-case basis if the exemption would be necessary to protect national security. This exemption is intended to prevent situations in which a federal facility may become unavailable for purposes essential to protecting national security, if carrying out a specific cleanup action somehow may interfere with those purposes. Section 120(j) specifically authorizes the President to exempt an individual facility administered by the Department of Defense or the Department of Energy from compliance with a requirement of CERCLA, if the President deems such an exemption necessary to protect national security. The President must notify Congress within 30 days of the issuance of an exemption and explain the reason for it. The time period of an exemption initially is limited to one year, but the President may renew it annually with notification to Congress. To date, a national security exemption under CERCLA has not been invoked at any facility of the Department of Defense or the Department of Energy. Instead, contaminated facilities of both departments have been made subject to the cleanup requirements of CERCLA. In 1993, EPA established an element within the Superfund program to assist communities with the cleanup of certain lower risk sites that did not warrant placement on the NPL, but at which cleanup was desired to encourage economic redevelopment. The purpose of the program was to provide federal financial assistance for the cleanup of properties referred to as "brownfields." These properties typically are abandoned, idled, or underutilized, and on which known or suspected contamination is perceived as a deterrent to redevelopment by prospective purchasers who may be hesitant about becoming liable for cleanup once acquiring ownership. EPA initially used Superfund appropriations to provide "seed monies" to communities in the form of grants and loans to aid them in financing certain types of cleanup actions. Although there was broad support for this effort, some questioned EPA's authority under CERCLA to use Superfund monies for the cleanup of these lower risk sites that were not listed on the NPL and that did not appear to warrant emergency removal actions under the Superfund program. Still, in the annual appropriations process, Congress set aside funding for brownfields cleanup assistance within the Superfund account for several years without specifically amending CERCLA for this purpose. In the 107 th Congress, Subtitle A and Subtitle C of Title II of the Small Business Liability Relief and Brownfields Revitalization Act of 2002 ( P.L. 107-118 , hereinafter referred to as the "Brownfields Act") amended CERCLA to provide explicit statutory authority for EPA to administer a Brownfields program separately from the Superfund program. The Brownfields Act authorized appropriations for this new program apart from appropriations for the Superfund account. There had been some concern about the diversion of Superfund appropriations away from addressing the greater human health and environmental risks at NPL sites. Still, the portion of Superfund appropriations that had been spent on the cleanup of brownfields properties was relatively small compared to the total appropriation. The program explicitly authorized in the Brownfields Act is similar in scope to the program that EPA had established in 1993, with the exception that the Brownfields Act allowed federal financial assistance for the cleanup of contamination resulting from releases of petroleum. As discussed earlier in the " Federal Response Authorities " section of this report, CERCLA otherwise does not apply to the cleanup of petroleum. The Brownfields Act also created two separate types of grants within the Brownfields program. One provides more direct financial assistance for the assessment and cleanup of individual properties. The other provides financial assistance to states and Indian tribes to aid them in carrying out their own cleanup programs, which in turn may assist in the cleanup of individual properties. Specifically, Section 201 of the Brownfields Act amended Section 104 of CERCLA to add a new subsection (k) that authorized $200 million annually for grants to fund the assessment and cleanup of individual brownfields properties. Entities generally eligible for these grants include state and local governments, Indian Tribes, redevelopment agencies chartered or otherwise sanctioned by a state government, and land clearance authorities or other "quasi-governmental" entities operating under the supervision and control, or as an agent, of a local government. The grants are awarded on a competitive basis. The recipients may use the grant funds to characterize, assess, or remediate brownfields properties, or to capitalize revolving loan funds that in turn may finance the remediation of multiple brownfields properties by other entities, including loans issued to site owners or developers. Section 231 of the act also added Section 128 to CERCLA, authorizing an additional $50 million annually for other grants to assist states and Indian Tribes in establishing or enhancing their own cleanup programs. States and Tribes may use these monies to augment their own resources to assist with the cleanup of brownfields properties to prepare them for reuse. They also may use these monies to pursue the cleanup of other contaminated sites within their respective jurisdictions, which may present potential health or environmental risks but are not addressed under the federal Superfund program. The authorization of appropriations for both the Section 104(k) and Section 128 grants expired at the end of FY2006, but Congress has continued to fund these grants through the annual appropriations process without enacting reauthorizing legislation. As discussed earlier in the " Limitations on Liability " section of this report, Section 222 of the Brownfields Act exempted "bona fide" prospective purchasers of contaminated properties from liability under CERCLA, if they satisfy the prerequisite statutory criteria. This exemption is intended to work in tandem with federal grants assistance under the Brownfields program to further the purpose of stimulating the economic redevelopment of contaminated properties. Accordingly, Section 104(k)(4)(B)(iii) of CERCLA specifically authorizes the eligibility of bona fide prospective purchasers for brownfields grants. If a party cannot qualify for this exemption, or another exemption from liability, that party is not eligible to receive a brownfields grant. This statutory prohibition on awarding Brownfields grants to potentially responsible parties is consistent with the policy premise of the liability scheme of CERCLA to hold the potentially responsible parties responsible for the costs of cleanup, so as to minimize the burden of these costs on the federal taxpayer who had no connection with the site. Congress also has enacted certain tax incentives to encourage the cleanup of brownfields properties, through amendments to the Internal Revenue Code but not CERCLA itself. These incentives have constituted another form of federal financial assistance to support the cleanup of contaminated sites. Section 941(a) of the Taxpayer Relief Act of 1997 ( P.L. 105-34 ) allowed a taxpayer to fully deduct the costs of cleaning up a brownfields property in the year the costs were incurred. This type of deduction is referred to as "expensing," as opposed to "capitalizing" in which the costs would be deducted over a period of years. The tax incentive was intended to encourage property developers to rehabilitate sites where environmental contamination may be a deterrent to bringing nonproductive properties back into use. The tax deduction has no direct application for public sector entities, such as municipalities, which do not pay income taxes. Enacted in the 111 th Congress, Section 745 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 , Title VII, Subtitle C) extended this brownfields tax incentive through December 31, 2011. Congress also had authorized another federal brownfields tax incentive in Section 702 of the American Jobs Creation Act of 2004 ( P.L. 108-357 , Title VII), which expired on December 31, 2009. This incentive addressed the treatment of gain or loss on the sale or exchange of certain qualified brownfields sites, as defined in Section 101(39) of CERCLA. This provision allowed a tax-exempt entity to invest in a qualified brownfields site, and not treat the gains as taxable "unrelated business income." To be eligible for this tax incentive, the entity must have incurred cleanup costs exceeding the greater of $550,000, or 12% of the property's fair market value in a remediated condition, in addition to meeting certain other requirements. The tax incentive was not available to parties who are potentially liable for the cleanup under Section 107 of CERCLA.
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Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA; P.L. 96-510) in response to a growing desire for the federal government to ensure the cleanup of the nation's most contaminated sites to protect the public from potential harm. The Superfund Amendments and Reauthorization Act of 1986 (P.L. 99-499, SARA) clarified the applicability of the statute's requirements to federal facilities, and modified various response, liability, and enforcement provisions. Several other laws also have amended CERCLA for specific purposes, including relief from cleanup liability for certain categories of parties, and the authorization of federal assistance for the cleanup of abandoned or idled "brownfields" where the presence or perception of contamination may impede economic redevelopment. CERCLA authorizes cleanup and enforcement actions to respond to actual or threatened releases of hazardous substances into the environment, but generally excludes releases of petroleum and certain other materials covered by other federal laws. Considering the limitation of federal resources to address the many contaminated sites across the United States, CERCLA directs the Environmental Protection Agency (EPA) to maintain a National Priorities List (NPL) to identify the most hazardous sites for the purpose of prioritizing cleanup actions. The states and the public may participate in federal cleanup decisions at NPL sites. The states primarily are responsible for pursuing the cleanup of sites not listed on the NPL, with the federal role at these sites limited mainly to addressing emergency situations. CERCLA established a broad liability scheme that holds past and current owners and operators of facilities from which a release occurs financially responsible for cleanup costs, natural resource damages, and the costs of federal public health studies. At waste disposal sites, generators of the wastes and transporters of the wastes who selected the site for disposal also are liable under CERCLA. The liability of these "potentially responsible parties" (PRPs) has been interpreted by the courts to be strict, joint and several, and retroactive. At contaminated federal facilities, federal agencies are subject to liability under CERCLA as the owners and operators of those facilities on behalf of the United States. Federal agencies also may be liable in instances in which an agency generated or transported waste for disposal at a non-federal facility. CERCLA established the Hazardous Substance Superfund Trust Fund to pay for the cleanup of sites where the PRPs cannot be found or cannot pay. A combination of special taxes on industry and general taxpayer revenues originally financed the Superfund Trust Fund, but the authority to collect the industry taxes expired on December 31, 1995. Over time, Congress increased the contribution of general revenues to make up for the shortfall from the expired industry taxes. General revenues now provide most of the funding for the trust fund, but other monies continue to contribute some revenues (i.e., cost-recoveries from PRPs, fines and penalties for violations of cleanup requirements, and interest on the trust fund balance). The availability of these trust fund monies under the Superfund program is subject to appropriations by Congress. Private settlement funds deposited into site-specific Special Accounts within the Superfund Trust Fund also are available to EPA, but are not subject to discretionary appropriations. Considering the liability of the federal government at its own facilities, the cleanup of federal facilities is not funded with Superfund Trust Fund monies under the Superfund program, but with other federal monies appropriated to the agencies responsible for administering the facilities. However, EPA and the states remain responsible for overseeing and enforcing the implementation of CERCLA at federal facilities to ensure that applicable cleanup requirements are met.
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The Disaster Relief Fund (DRF), sometimes referred to as the President's Disaster Relief Fund, is managed by the Federal Emergency Management Agency (FEMA). The DRF is the main account used to fund a wide variety of disaster assistance programs that provide grants and other forms of support to assist state, local, and tribal governments, as well as certain nonprofit entities during disaster recovery. The DRF is also used to fund Mission Assignments. Mission Assignments are used by FEMA to task and reimburse other federal entities that provide direct assistance during emergency and major disaster declarations. The DRF functions as a reserve for potential, future incidents, as well as an account to pay for ongoing projects to recover from past disasters. The majority of assistance provided by the federal government in response to emergency and major disaster declarations is funded through the DRF. The DRF, however, is not used to fund the federal response to every type of incident. In general, funds from the DRF are released after the President has issued an emergency or major disaster declaration pursuant to the Robert T. Stafford Relief and Emergency Assistance Act ( P.L. 93-288 , as amended, hereinafter the Stafford Act). Incidents that are not declared under the Stafford Act are either handled by states and localities without federal assistance, or the assistance is provided by another federal entity under its own authority using its own funding mechanism. For example, the Small Business Act authorizes the Small Business Administration (SBA) to issue disaster loans to households and businesses in response to certain types of incidents. The U.S. Department of Agriculture (USDA) also offers several permanently authorized programs to help farmers recover financially from a natural disaster, including federal crop insurance, the Noninsured Crop Disaster Assistance Program (NAP), and emergency disaster loans. While not specifically authorized in statute, the DRF has been used to fund recovery projects for over four decades. Rather than an authorized account, the DRF is the product of legislation and federal policies that can be traced to the post-World War II era. Prior to that time, disaster response activities were funded primarily through local efforts and voluntary groups. In cases where the federal government did offer assistance, the needs of disaster victims and affected communities were funded on an as-needed basis through appropriations that were then allocated, pursuant to the legislation, by executive branch administrators and, ultimately, the President. There are two principal forms of presidential action that authorize federal assistance to states and localities that are paid out of the DRF: emergency declarations and major disaster declarations. Emergency declarations are issued to protect property and public health and safety, and to lessen or avert the threat of a major disaster or catastrophe. Emergency declarations are often made when a threat is recognized (for example, before a hurricane makes landfall) and are intended to supplement and aid the coordination of state and local efforts prior to the event, such as evacuations and protection of public assets. Major disaster declarations, on the other hand, are generally made as a result of a significant incident and constitute a broader authority that helps states and local communities, as well as families and individuals, recover from the damage caused by the event. As shown in Figure 1 , the declaration process used by the federal government is based on the concept of scalability. For example, suppose communities and local governments are the first to respond after an incident has occurred. Local governments must then request assistance from the state if responding to (or recovering from) the incident is beyond their capacity. Similarly, when a state is overwhelmed by an incident, the state governor may elect to request assistance from the federal government. Federal assistance is contingent on the gubernatorial request because the Stafford Act stipulates that the governor of an affected state must formally ask the President to issue an emergency or major disaster declaration. A President's declaration triggers the allocation of funds from the DRF, and the funding may be distributed from any one, or any combination, of three categories of disaster aid: 1. Individual Assistance. Individual Assistance (IA) includes disaster housing for displaced individuals, grants for needs not covered by insurance, crisis counseling, and disaster-related unemployment assistance. 2. Public Assistance. Public assistance (PA), which is FEMA's largest funded program, helps communities absorb the costs of emergency measures such as removing debris and repairing or replacing structures such as public buildings, roads, bridges, and public utilities. 3. Hazard Mitigation. FEMA funds mitigation measures to prevent or lessen the effects of a future disaster through the Hazard Mitigation Grant Program. Even if the President issues an emergency or major disaster declaration, not all persons or entities affected by a disaster are eligible for disaster assistance. FEMA officials determine the need for assistance from authorized categories after a declaration is issued and provides assistance only to those persons or entities determined to need the assistance. The DRF is also used to fund the Fire Management Assistance Grant (FMAG) program. While the President has the sole authority to issue an emergency or major disaster declaration, the determination to issue a FMAG declaration can be rendered either by the President or FEMA. In many instances they are issued by the FEMA Regional Director in coordination with FEMA headquarters. A FMAG declaration authorizes various forms of federal assistance, such as equipment, personnel, and grants to any state or local government for the control, management, and mitigation of any fire on public or private forest land or grassland that might become a major disaster. FMAG declarations are relatively modest in cost when compared to emergency declarations and major disaster declarations. A review of declarations under the Fire Management Assistance Grant Program shows the most expensive year was 1998, in which 53 declarations were made, accounting for obligations of roughly $105 million. By way of comparison, in 1998 $3.7 billion was obligated for major disaster declarations. The following section discusses how the DRF is funded including the budgeting and appropriation process. It also describes the Budget Control Act and the DRF Monthly Report. Congress funds the DRF annually through regular appropriations, but unlike most appropriations which expire after a set period of time, the DRF is a "no-year" account. The funds for no-year accounts are available until expended—any remaining funds at the end of the fiscal year are carried over to the next fiscal year. One benefit of a no-year account is that the unobligated balance in the account can be used to pay for future disasters the next fiscal year. Another potential benefit of a no-year account is that the funds remain available during a government shutdown or an appropriation funding lapse. In the past, funds in the DRF were often depleted before the end of the fiscal year due to disaster assistance needs. When the account nears depletion, Congress usually provides additional funding through one or more supplemental appropriations. The need for additional funds is generally caused by a large-scale, major disaster such as Hurricanes Katrina or Sandy. In recent years, however, the need for assistance has been increasingly tied to a string of incidents as opposed to a single, large event. Replenishing the DRF with supplemental appropriations has become common practice in the last 10 years. As shown in Table 1 , in some fiscal years Congress passed two or three additional appropriations to fund the DRF. Funding the DRF at a level that meets disaster needs has been a persistent challenge for Congress. Historically chronic shortfalls in the DRF were attributed to two main factors: the previous decision not to budget for high-cost (over $500 million) catastrophic disasters in the annual appropriations process, and the unpredictability of the distribution of disaster events over time. Figure 2 provides a list of major disasters that have cost more than $500 million from FY1996 to FY2013. Congressional concern over the number and amount of supplemental appropriations needed to fund disaster assistance has led to congressional debate concerning how the DRF should be budgeted, and whether the federal government is providing too much or too little assistance. These concerns are discussed more in depth in " The Debate over Supplemental Appropriations . " The budgetary practice used to fund the DRF generally begins with the Administration's formulation of the annual budget request for the account. Prior to P.L. 112-25 , the Budget Control Act of 2011 (hereinafter the BCA) the following data points were used to determine budget requests for the DRF: (1) the available appropriation in the DRF; (2) the monthly average of "normal," non-catastrophic disaster costs paid from the DRF; (3) the monthly average of catastrophic incident costs; and (4) the estimated monthly "recoveries" of unobligated funds. 1. Available Appropriation. The available appropriation was a combination of prior-year funds that are carried over, the current fiscal year annual appropriation, and any supplemental appropriations. 2. DRF Monthly Average. The calculation for the DRF monthly average was based on a five-year rolling average of the cost of "normal," non-catastrophic disasters. Normal, non-catastrophic disasters were, and continue to be, defined by FEMA as incidents that cost less than $500 million. The rationale of excluding large events from the calculation is discussed later in this report. 3. Monthly Cost Estimates for Catastrophic Events. Estimates obtained from the field on pending (still open) disaster projects were routinely used in calculating monthly cost estimates. 4. Estimated Recoveries. Estimated recoveries represent the recovery of obligated funds that have not been used. This could include duplication of benefit funds as well as long-term projects for PA or mitigation that either were not finished, or were completed at a lower cost. The end-of-fiscal-year projection was estimated by subtracting the cumulative DRF monthly averages and cost estimates for incidents from the available appropriation. Then, the cumulative recoveries were added back to the available balance. The DRF end-of-fiscal-year estimate was then revised on a monthly basis taking into consideration the actual obligations that were recorded in lieu of the monthly estimates, and new estimates submitted for "open" incidents. Based on the above methodology, the average annual budget request submitted for the DRF from FY2000 to FY2011 was roughly $2 billion. The average spend-out rate for the DRF over that same period was $350 million per month, or $4.2 billion a year. It could be argued that without resources beyond the request and regular appropriation, the DRF would have faced a shortfall in its budget in an average operating year. The Balanced Budget and Emergency Deficit Control Act of 1985 (hereinafter the BBEDCA), as amended by the BCA, limits—or caps—the budget authority available for discretionary programs each fiscal year through FY2021. The BBEDCA and the BCA establish discretionary spending caps but also provide adjustments—including an adjustment to disaster relief and an unlimited adjustment for emergency designations. The allowable adjustment to the discretionary cap for disaster relief is not solely for the DRF. This allowable adjustment can be changed and there are adjustments each fiscal year by no more than the average funding provided for disaster relief over the previous 10 fiscal years—excluding the highest and lowest years—plus any amount by which the prior year's appropriation was below the maximum allowable cap adjustment for that year. The actual adjustment is determined during the appropriations process. FEMA reports that the BCA necessitated the development of a new, two-part approach to accounting for disaster-related activity, with one approach for major disasters and another for all other DRF activity: Essentially, requests for DRF funding for FEMA's Stafford Act programs and disaster support activities fall into two categories: disaster relief cap adjustment and base/non-major disasters. Funding requested under the disaster relief cap adjustment is for major disasters declared pursuant to the Stafford Act and designated by the Congress as being for disaster relief pursuant to section 251(b)(2)(D) of the BBEDCA, as amended by the BCA. Funding requested under the base/non-major disasters category includes Emergencies, Pre-disaster Surge Support, Fire Management Assistance Grants and activities that are non-disaster specific, such as Disaster Readiness Support (DRS) activities (e.g., distribution centers, reservist training, etc.). The funding request for major disasters is based on FEMA's spending plans for all past declared major disasters. The non-catastrophic funding request is based on a revised approach that uses a 10-year average for non-catastrophic events. FEMA argued that using a 10-year average of costs as opposed to the previous use of a 5-year average of costs "provides a more accurate projection of non-catastrophic needs since it normalizes the effects of outlier years." As shown in Table 2 , FEMA's new, two-part approach to accounting for disaster-related activity has resulted in higher Administration budget requests for DRF funding. For example, as mentioned previously, from FY2000 to FY2011, the average annual DRF budget request was $2 billion and the average annual spend-out rate was $4.2 billion. The Administration requested almost $6.1 billion for the DRF for FY2013 ($5.481 billion for the disaster relief cap adjustment and $608 million for base/non-major disasters) and nearly $6.2 billion in FY2014 ($5.626 billion for the disaster relief cap adjustment and $570.5 million for base/non-major disasters). The enactments for those years were $7 billion and $6.2 billion respectively. It appears that the allowable adjustment has allowed the DRF to be funded at historically high levels in recent years without supplementals (with the exception of the Sandy supplemental). However, this mechanism will expire, along with the caps, after FY2021. Some might question whether the problem of underfunding the DRF before the BCA will reoccur. In addition to the BCA, Congress has passed additional legislation enabling it to exercise greater control over federal disaster assistance funding. For example, since Hurricane Katrina, a number of measures have been passed requiring FEMA to publish status reports on the DRF. P.L. 109-62 requires the Inspector General of DHS to conduct audits and investigations for Hurricane Katrina response and recovery activities and for the Secretary of DHS to provide (at a minimum) a weekly report to the Committees on Appropriations detailing the allocation and obligation of funds for Hurricane Katrina. P.L. 109-90 requires FEMA to submit a report providing the details on allocations, obligations, and expenditures of funds from the DRF. The Post-Katrina Emergency Management Reform Act ( P.L. 109-295 , hereinafter PKEMRA) required that the report be submitted monthly and include greater detail. The report includes the status of the DRF (which consists of the obligations, allocations, and amounts that are undistributed or unallocated); information on DRF funding for Hurricanes Katrina, Rita, and Wilma; information on national flood insurance claims; and funding information by state for unemployment, crisis counseling, housing assistance, public assistance, and individual assistance. The report also provides Mission Assignment obligations by agency. The requirements established by PKEMRA have since been reauthorized through various appropriations laws. Perhaps one of the most useful aspects of the DRF report to policy makers is the DRF Appropriations Summary (see Figure 3 for an example). Since the passage of the BCA, the summary report now divides funding information into "Major Declarations" and "Base" categories (costs associated with every other activity funded through the DRF—such as support activities, emergency declarations, and FMAGs) and provides information on how much funding was received for the DRF through annual and supplemental appropriations. The summary page of the report provides information on allocations, commitments, and obligations. The report also provides information on funds recovered from DRF-funded projects. Recoveries are often funds from projects that were completed under budget and thus can be "recovered" because they remain unspent. In addition, in some cases DRF funds are disbursed before an insurance company pays for damages. In such cases the recipient must pay back the amount provided by the insurance company. These too are considered recoveries. In the past there have been occasions when the DRF was near depletion. In an effort to keep the DRF solvent, FEMA implemented what is known as Immediate Needs Funding (INF) guidance. INF allows FEMA to divert funds from long-term projects to focus on immediate, lifesaving response and recovery efforts. The INF guidance stayed in effect until the DRF was replenished. FEMA typically steps up its efforts in identifying recoveries when INF guidance is implemented because retrieving recoveries has been an effective stopgap measure when the account has been low. Over the last two or three years, however, FEMA has become more adept at identifying recoveries in its day-to-day operations. As a consequence, FEMA may not be able to rely on as many recoveries in the future implementation of INF guidance. It is unclear how this might affect future efforts to keep the DRF solvent should it run low again. The DRF has been of congressional interest for a number of reasons. These include the amount of funding appropriated to the DRF, the appropriateness and effectiveness of providing additional funding to the DRF through supplemental appropriations, and the use of policy mechanisms to reduce the amount of funding provided to states and localities for emergency and disaster assistance. One fundamental debate that has been of concern, particularly in the light of the national debt, is the federal role in providing disaster assistance. There has been much debate over the supplemental appropriations for disaster assistance. Critics of the DRF budgetary process argued that the weaknesses in the methodology used to develop the budget request for the DRF led to the reliance on supplemental appropriations to fund major disasters. They argued that relying on supplemental appropriations for disaster assistance has the following drawbacks: supplemental appropriations for disasters often are designated as an emergency expenditure, which under congressional budgetary procedures can exceed discretionary spending limits designed to reduce the federal deficit—creating an opportunity for lawmakers to circumvent budgetary enforcement mechanisms by underfunding the DRF during the annual appropriations process 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 scaled, 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 non-germane provisions in the legislation that may not pass on their own, or make the appropriation legislation contentious, thus slowing down the delivery of federal disaster assistance. Advocates of the use of supplemental disaster assistance would argue that: the timing and severity of disasters cannot be anticipated and appropriating a relatively large sum of funds through the regular, annual appropriations process 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; DRF balances may be subject to transfer or rescission, which may carry an additional negative consequence if a large disaster were to take place after the funds have been withdrawn. If this were to happen, 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. Some proposals have been advanced to further reduce the need for supplemental appropriations through the restructuring of budgetary procedures. Some of these options include the following: Supplemental appropriation bills may include a variety of funding and other provisions in a single bill that are unrelated to the incident. The pressing need for assistance may allow the passage of these unrelated measures. In addition, these elements could potentially prevent the passage of legislation that might pass if it were not attached to a supplemental appropriation. Prohibiting unrelated provisions may help reduce costs and eliminate controversial measures that could slow the passage of appropriations legislation. As mentioned earlier in this report, Congress may decide to increase the funding level of the DRF through annual appropriations. Doing so could eliminate, or at least greatly decrease, the need for supplemental funding. As noted earlier, an increase in the regular annual appropriations to the DRF appears to have been one result of the passage of the BCA. A "rainy-day fund," also known as a reserve account, could be financed by cuts in other discretionary accounts, or through revenue-raising measures. Spending from this fund would then only be allowed when needed for expensive disasters. Proponents of this policy option would likely argue that, in contrast to supplemental appropriations, which increase the federal deficit through borrowing funds, rainy-day accounts do not add to the federal deficit because they are funded through savings and/or revenue-raising measures. Furthermore, the balance for a rainy-day fund would increase during periods in which there are few or relatively small disasters. Opponents might argue that a rainy-day fund is infeasible due to the high costs of catastrophic events. For example, Congress appropriated roughly $120 billion for Hurricane Katrina recovery efforts and $60 billion for Hurricane Sandy. Financing a fund capable of providing funds for events such as these through budget cuts and raising revenues would be difficult. Furthermore, once raised, a large fund might be subject to rescissions and transfers. A contingency fund based on a cost analysis of previous disasters could be created for use after a large disaster occurs. A contingency fund could be funded at a level sufficient for large disasters, while relatively routine disasters would still be funded through the DRF. Unlike a rainy-day fund—which pays for disasters through savings and revenue generating measures—a contingency fund would receive an annual appropriation. Funds from the contingency fund would only be disbursed under certain conditions or incidents. For example, there have been discussions concerning the addition of a new category of disaster declaration known as a "catastrophic declaration" for events characterized by extraordinary devastation. Historic events that might qualify for a catastrophic declaration are the 1906 San Francisco earthquake and fire, the terrorist attacks of September 11, 2001, and Hurricane Katrina. A catastrophic declaration might be used for a nuclear bomb explosion, a tsunami hitting a highly populated area, or an immense and destructive earthquake, among others. The contingency fund could be the funding mechanism for catastrophic incidents. On the other hand, some might question the feasibility of a contingency fund. For one, the appropriation amount for a contingency fund capable of paying for an incident such as Hurricane Katrina or Hurricane Sandy would be significant. In addition, large supplemental appropriations for disaster assistance have rarely been contentious because there is great a deal of sympathy toward disaster victims. It may be more difficult to pass a large appropriation in the absence of an incident—particularly in light of the federal deficit. Large-scale disasters are infrequent incidents. If left unused for long periods of time, the contingency fund may need to be adjusted for inflation to meet disaster needs. The contingency fund may also be subject to transfers if the fund is perceived as an unused resource. Some have proposed that supplemental funding should be "offset." Appropriation 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 budget deficit and national debt. As a result of recent congressional deliberations, legislative attempts have been made to offset the costs of disaster assistance. For example, Title VI of the House-reported version of H.R. 2017 , the FY2012 Homeland Security Appropriations bill, would have provided an additional $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 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 sound policy basis. They may also argue that the debate over the use of offsets will 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 growing number of declarations issued each year. As the number of declarations increases over time, so too will their total cost. And as their total cost rises, more and more funding will be needed from other federal programs to fund offsets to subsidize disaster costs. In addition, a significant amount of funding would be needed to fully offset a large-scale disaster. Hurricanes Katrina and Sandy cost the federal government $120 billion and $60 billion respectively. As such, critics might argue that the sheer size of the offset might negatively impact other parts of the federal budget. Restructuring the budgetary process is one approach that may reduce the need for supplemental funding to pay for major disasters. Another approach would be to use various policy mechanisms to reduce the amount of funding the federal government provides for disaster assistance. These include reforming the declaration process, adjusting the federal share for assistance, and shifting some of the responsibility for paying for recovery to the state and/or the private sector. To many, 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 may further argue that providing assistance to disaster-stricken areas is both acceptable and 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, the costs of disasters should be expected given changes in severe weather patterns, as well as increases in population size and development. Some may contend that too many major disasters are being declared and should be limited. Limiting the number of declarations could produce savings because declarations trigger funding for the DRF. The following sections review some policy mechanisms that could be employed to decrease the number of declarations that are being issued. One option consists of preventing what may be perceived by some to be "marginal incidents" from triggering federal assistance. For example, some might question if a snowstorm or an ice storm are incidents that truly exceed the state's response capacity. They may further question whether these incidents are worthy of federal assistance. Potential methods for eliminating marginal incidents include changing the definitions of a major disaster in the Stafford Act, changing the per capita formula for determining whether a disaster is sufficiently large to warrant federal assistance, or the use of other indicators instead of, or in conjunction with, the per capita formula. Some argue that the Stafford Act has enhanced presidential declaration authority because the definition of a major disaster in Section 102(2) of the Stafford Act is, in their view, ill-defined. Because of the expansive nature of this definition under the Stafford Act, they assert, there are not many restrictions on the types of major disasters for which the President may issue a declaration. As noted previously, some would argue that snowstorms do not warrant major disaster declarations. Operationally, changing the definition of a major disaster could also mean changing the definition(s) of the criteria used by FEMA to determine whether or not a major disaster is warranted. One potential method of reducing the number of major disasters being declared is to increase the per capita amount used by FEMA to make major disaster recommendations to the President. A per capita formula based on damages caused by an incident is used by FEMA to make recommendations to the President concerning whether to issue a major disaster declaration. The current per capita amount used by FEMA to make recommendations is $1.32. Essentially, the estimated amount of public property damages caused by the incident is divided by the state's population. In general, if that amount exceeds $1.32 per person (in that state) FEMA will make a recommendation to the President that a major disaster declaration should be issued. The per capita amount of $1.32 could be increased (for example, by 10%) to reduce the number of incidents eligible for federal assistance. The DHS Inspector General issued a report in May 2012 which noted that FEMA had been using a $1 per capita damage amount since 1986 to determine its recommendation (during its preliminary damage assessment process) to the President whether an event warranted federal assistance. The DHS Inspector General also explained that FEMA did not begin adjusting that number for inflation until 1999. The DHS Inspector General pointed out that if the inflation adjustment had been occurring over that 13-year period, from 1986 to 1999, fully 36% fewer disasters would have qualified for a presidential declaration based on that factor. The actual public announcement of factors used in considering a declaration did not become public until 1999. Until then, all of that information had been within the "pre-decisional" part of the process in the executive branch. That is not to say FEMA was not using the per capita amount in its considerations, only that the process was not widely known or understood as it presently is. As the DHS Inspector General noted, FEMA could have been raising that amount gradually since 1986. It is worth noting that when FEMA discussed such proposals (e.g., per capita figures gradually increasing) with Congress, the result was an amendment to the Stafford Act prohibiting the preclusion of a geographic area from receiving assistance solely by virtue of an arithmetic formula or sliding scale based on income or population. In 2001, the Government Accountability Office (GAO) issued a report on disaster declaration criteria. The GAO report was a comprehensive review of FEMA's declaration criteria factors. GAO recommended that FEMA "develop more objective and specific criteria to assess the capabilities of state and local governments to respond to a disaster" and "consider replacing the per capita measure of state capacity with a more sensitive measure, such as a state's total taxable resources." The state's Total Taxable Resources (TTR) were developed by the Department of the Treasury. GAO reported that TTR: is a better measure of state funding capacity in that it provides a more comprehensive measure of the resources that are potentially subject to state taxation. For example, TTR includes much of the business income that does not become part of the income flow to state residents, undistributed corporate profits, and rents and interest payments made by businesses to out-of-state stock owners. This more comprehensive indicator of state funding capacity is currently used to target federal aid to low-capacity states under the Substance Abuse and Mental Health Service Administration's block grant programs. In the case of FEMA's Public Assistance program, adjustments for TTR in setting the threshold for a disaster declaration would result in a more realistic estimate of a state's ability to respond to a disaster. It could be argued that the use of TTR would conflict with the prohibition against the use of arithmetic formulas established by Congress. However, just as FEMA's per capita measurement is one of several factors considered and not the "sole" determinant of a declaration, GAO stated that TTR would not violate Section 320 because TTR could also be used with other criteria such as those identified in regulations. Thus, some could contend that TTR could fill a similar role with perhaps more accuracy. TTR advocates also argue that it may also help reduce federal costs for disaster assistance by denying assistance to marginal incidents that could be otherwise handled by the state. Some have proposed the use of an independent expert panel to review gubernatorial requests for major disaster declarations. Such panels would be comprised of individuals with specialized knowledge in certain subject areas, such as disasters, economics, and public health. The panel would take into account the severity of the incident as well as other factors that might indicate how well the state could respond to and recover from the incident. The panel would then make recommendations to the President whether the circumstances of the incident were worthy of federal assistance based on their assessment. Some might argue that the use of an expert panel would make decisions about whether to provide assistance more objective. Others might argue that the use of a panel may slow down the declaration process and impede the provision of important assets and resources. It may be argued that the panel's recommendation would infringe on the President's authority to issue a declaration. On the other hand, it could also be argued that the President would retain the authority to issue a declaration despite the panel's recommendation. Another potential method to reduce the number of declarations and the costs of federal disaster assistance would be to create incentives to dissuade states from requesting assistance. One method would be converting some, or all, federal assistance provided through emergency declarations into a loan program. For example, emergency declarations could be altered to provide up to a specified amount (for example, $5 billion) in low-interest recovery loans rather than or in addition to assistance grants. Under this arrangement a state could elect to handle the incident without federal assistance rather than having to reimburse the federal government for recovery loans. Similarly, another potential option would be expanding FEMA's Community Disaster Loan (CDL) program to include loans for disaster recovery. Currently, the CDL program provides loan assistance to local governments that are having difficulty providing government services because of a loss in tax or other revenue following a disaster. The program assists local governments by offering federal loans to compensate for this temporary or permanent loss in local revenue. The following section discusses some potential changes to the Stafford Act that might limit the number of declarations being issued each year and thus reduce the demand for DRF funding. Section 320 of the Stafford Act restricts the use of an arithmetic or sliding scale to provide federal assistance. 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 be eligible for a higher federal contribution for mitigation measures than states that do not meet the standards. 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 in five years, giving states time to act, or not. 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 in five years, giving states time to act, or not. 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 in five years to give states and localities an opportunity to increase snow removal budgets, or not. Under the Stafford Act, the federal share for assistance paid out of the DRF is 75%. In other words, state and local governments currently provide 25% of disaster costs on projects and grants to families and individuals with the federal government assuming 75% of all costs. However, it is useful to note that the 75% federal share can be increased if damages reach certain thresholds. Some may contend, however, that efforts should be undertaken to reduce disaster costs by shifting more of the costs to the state and local levels by adjusting cost-shares. Table 3 and Figure 4 provide a hypothetical example of how adjusting cost-shares could potentially reduce federal funding for major disasters. The second column of Table 3 represents federal obligations and supplemental appropriations that have been provided for selected incidents. The federal share for some of the incidents was greater than 75% (such as Hurricanes Katrina and Ike which, in some instances, received 100% of the federal share for certain programs). However, for the purposes of Table 3 and Figure 4 it is assumed that the federal share is 75%. If the federal share for disaster assistance was reduced by 10% (see third column), federal assistance would be reduced by a total of $21.5 billion. If the federal share was reduced by 25% (see column 4), federal assistance would be reduced by a total of $53.9 billion (nearly enough to offset the federal costs for Hurricane Sandy). These savings are just for the large-scale disasters selected for this example. It is unclear how much savings could be garnered by reducing the federal share for all major disasters, but they could be significant. There is no statutory limit on the number of people that can be helped following a disaster. Similarly, when assessing damage to state and local infrastructure there is no cap on the amount of federal funds that can be expended to make the repairs or accomplish a replacement. The only limitation is that the damage must be to eligible facilities and that it is disaster-related damage. Given that open-ended commitment by the federal government, some may argue that increasing the state share of 25% to a higher percentage would be warranted given the federal government's fiscal condition and competing priorities. Another option would be to make the cost-share arrangement not subject to administrative adjustment. Instead, the cost-share could only be adjusted through congressional action. While some might contend that adjusting the federal cost-share would be an effective mechanism for reducing federal disaster costs, others might argue doing so would be burdensome to states and localities. For example, Arizona would have had to pay roughly $1.4 million to meet a 50% matching requirement for the Wallow Fire in 2010. As mentioned previously, the assistance provided for emergency declarations could be provided through the form of loans. Similarly, 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 the CDL program. For example, a state may receive the traditional 75% cost-share amount for an incident but be required to reimburse 25% of that total funding to the federal government. 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. A 2006 Government Accountability Office (GAO) report indicated there was a need to improve the information in FEMA's weekly reports on the status of hurricane relief, and that OMB should take action to improve transparency and accountability regarding the status of hurricane-related funding. Both OMB and FEMA agreed that these improvements were needed and would be forthcoming. Congress could authorize oversight mechanisms to investigate the extent to which FEMA has made such improvements. For example, Section 203 of H.R. 5351 (introduced in the 109 th Congress) would have required each state, local, tribal, and non-profit entity that received federal assistance funds in response to catastrophic events or other emergencies to report to the pertinent federal agency six months after the initial disbursement of resources. Furthermore, the legislation would have also required any agency that disbursed federal assistance funds to report to the Inspector General of the department the purpose for which resources were provided, the amounts disbursed, allocated, and expended, and the status of reporting by agencies that received disbursements. 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, the increased federal involvement has raised policymaking questions concerning how disaster relief should be equitably funded. Some of these questions include the following: The model for emergency and disaster response is built on the premise that emergencies and disasters are local. Requests for assistance from the next level of government are made only if the lower unit of government is overwhelmed. Some would argue that some incidents funded by the federal government do not meet this requirement. An example might be snow removal or repairs after minor flooding. Is the federal government funding emergency and major disaster declarations that do not meet the criterion of the states being overwhelmed before requesting assistance? Are states using federal funding for disaster relief to protect their own budgets? Should federal disaster relief be subject to thresholds and maximums? For example, an emergency or major disaster might not receive federal funding unless damage estimates reach a certain level. While the current system does use a per capita amount, that level could be increased. 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. Should the state's fiscal capability factor into disaster relief? In 1986, FEMA proposed measures to reduce the amount the agency contributed toward disaster relief. One of the proposals argued that funding allocations should be made according to each state's ability to fund its own disaster relief. The determination would be based on a comparison of the state's per capita income with the national per capita income. The calculation would then be used to create a sliding scale for assistance. States capable of funding their own disaster relief would receive limited or no assistance. In contrast, struggling communities would be eligible to receive more federal assistance. Is federal assistance to states and localities unintentionally creating a disincentive for states and localities to prepare for emergencies and major disasters? Some may argue that federal funding for disaster relief through regular annual appropriations has become entrenched to the point that it has contributed to unintended consequences. 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 emergency or major disaster occur. Those advocating this position could arguably point out that federal involvement in disaster relief will continue to increase and that in order to be fiscally responsible, changes should be made in the way in which disaster relief is funded. Others may claim the function of the federal government is to help states in their time of crisis. From this perspective, withholding or limiting the amount of funding a state could receive for an incident would be neglectful of that state's needs. As mentioned earlier, funding the DRF at a higher level through annual appropriations may give some the perception that the funds are not being used and could therefore be subject to rescissions or transfers. If larger appropriations for the DRF witnessed since the enactment of the BCA continue, will there be a temptation to transfer unobligated funds to other disaster assistance programs not authorized by the Stafford Act? For example, could the funds from the DRF be used to fund drought relief programs provided by the United States Department of Agriculture, or to fund fire assistance provided by the Department of the Interior? Would subsidizing other assistance programs negate the benefit of having a larger appropriation? These and other questions may be raised should Congress elect to debate the past and future funding of disaster relief.
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The Robert T. Stafford Emergency Relief and Disaster Assistance Act (P.L. 93-288, as amended) authorizes the President to issue declarations for incidents ranging from destructive, large-scale disasters to more routine, less damaging events. Declarations trigger federal assistance in the forms of various response and recovery programs under the Stafford Act to state, local, and tribal governments. The Federal Emergency Management Agency's (FEMA's) Disaster Relief Fund (DRF) is the primary funding source for disaster response and recovery. 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 upcoming incidents. 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 provides additional funding through both annual and supplemental appropriations to replenish the account. The federal government provides a significant amount of money to state and local governments each year for emergency and major disasters. For example, Congress provided roughly $120 billion for Hurricane Katrina and $60 billion for Hurricane Sandy recovery. Even in years with relatively few major disasters, it is not uncommon for the federal government to annually appropriate between $2 billion and $6 billion to help pay for recovery projects. Studies and analyses of disasters indicate that there has been an uptick in the number of major disasters declared each year. In addition, scholars of disaster policy and other experts such as climatologists expect disasters to increase in both frequency and in costs in the near future. Federal disaster assistance expenditures are influenced by both external and internal factors. External factors that increase federal spending on disaster costs include increases in the frequency and magnitude of weather related events, and increases in population size and development—especially in coastal and other flood prone areas. Internal factors also influence how much assistance is provided and include disaster assistance policies that have evolved over time that have expanded the federal role in emergency and major disaster declarations such as altering declaration criteria and adjusting the federal cost-share for response and recovery. Congressional interest in disaster assistance has always been high given the amount of money provided to states and localities, but also because of increasing disagreements over the appropriate role of the federal government in providing assistance. Other congressional concerns include the use of supplemental appropriations to pay for disaster relief, offsetting expenditures for disaster assistance, and whether some of the federal burden for disaster assistance should be shifted to states and localities. This report describes the declaration process and the types of declarations that can be issued under the Stafford Act: (1) emergency and major disaster declarations, and (2) Fire Management Assistance Grants. The report also examines how the DRF is financed. This discussion is followed by an analysis concerning the issues related to the DRF including the debate over supplemental appropriations, how the DRF is budgeted, and the influence the Budget Control Act has had on the DRF. Some argue that the current method of funding and providing federal assistance for disaster response and recovery is functioning correctly and should not be changed. Others argue that the federal government should increase the amount of funding provided to states and localities for emergency and major disaster declarations. Still others argue that policy options that reduce federal costs for emergency and major disaster declarations or reduce the number of supplemental appropriations needed (or both) should be pursued. Policy proposals that could help achieve these ends include: appropriating more funds for the DRF to reduce the need for supplemental funding, restructuring the budget procedures for disaster assistance, creating alternative funding methods such as a rainy-day fund or a contingency fund, reducing federal costs by eliminating unrelated spending in disaster funding bills, altering policies that would limit the number of declarations issued each year, and converting some or all disaster assistance to disaster loans. This report concludes with policy questions that may help frame future discussions concerning federal emergency and disaster relief. This report will be updated as events warrant.
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Hedge funds are essentially unregulated mutual funds. They are pools of invested money that buy and sell stocks and bonds and many other assets, including foreign currencies, precious metals, commodities, and derivatives. Some funds follow narrowly defined investment strategies (e.g., investing only in mortgage bonds, or East Asian stock markets), while others, the so-called macro funds, invest their capital in any market in the world where the fund managers see opportunities for profit. Hedge funds are structured to avoid SEC regulation. To avoid becoming public issuers of securities, subject to extensive disclosure requirements, they accept funds only from "accredited investors," defined by SEC regulations as persons with assets of $1 million or more. Hedge funds also avail themselves of statutory exemptions in the Investment Company Act of 1940, which governs public mutual funds. Mutual funds must comply with a comprehensive set of regulations designed to protect small, unsophisticated investors. These regulations include limits on the use of borrowed money, strict record keeping and reporting rules, capital structure requirements, mandated adherence to specified investment goals and strategies, bonding requirements, and a requirement that shareholder approval be obtained (through proxy solicitation) for certain fund business. An investment company becomes subject to this regulation only if it has 100 or more shareholders; hedge funds therefore generally limit themselves to 99 investors. (The National Securities Market Improvement Act of 1996 ( P.L. 104-290 ) broadened this exemption by permitting hedge funds to have an unlimited number of partners, provided that each is a "qualified purchaser" with at least $5 million in total invested assets.) Most hedge funds are structured as limited partnerships, with a few general partners who also serve as investment managers. Hedge fund managers are often ex-employees of large securities firms, who strike out on their own in search perhaps of greater entrepreneurial freedom and certainly in search of greater financial rewards. Those rewards, even by Wall Street standards, can be extremely high. In addition to the return on his or her own capital, the typical hedge fund manager takes 15%-25% of all profits earned by the fund plus an annual management fee of 1%-2% of total fund assets. Data on hedge funds are available from several private sources, but estimates as to the size of the hedge fund universe vary considerably. Before the financial crisis that began in 2007, estimates were in the range of 8,000-9,000 funds, with about $2 trillion in assets under management. Large numbers of funds have closed as a result of severe losses in the bear markets of 2008; George Soros, one of the best-known hedge fund managers, has estimated that the value of capital under management may shrink by 75%. Starting a hedge fund is relatively simple, and, with a few quarters of good results, new hedge fund managers can attract capital and thrive on performance and management fees. Because many of them make risky investments in search of high returns, hedge funds also have a high mortality rate. Studies find that the rate of attrition for funds is about 20% per year, and that the average life span is about three years. Estimates of the average annual return earned by hedge funds differ. Some studies find that they generally outperform common benchmarks such as the Standard & Poor's 500, but others conclude that they have lagged. The short life span of many funds creates obvious difficulties for measurement, including a strong survivorship bias: the many funds that shut down each year are not included in return calculations. Annual return figures of course conceal a wide variation from year to year and from fund to fund. In any period, the law of averages dictates that at least a few funds will do extremely well. These success stories may explain the continued popularity of hedge funds with investors, despite the high fees that they charge, and the high risk of loss. Hedge funds are understood to be high-risk/high-return operations, where investors must be prepared for losses. Investors who accept the risks are seeking high returns or a means to diversify their portfolio risk. As long as these investors are sophisticated and wealthy, as current law requires, hedge fund losses or even failures should not be a public policy concern. However, a 1998 case provided an exception to this rule. Long-Term Capital Management (LTCM), a fund headquartered in Connecticut and chartered in the Cayman Islands, opened in 1994 and produced annual returns of over 40% through 1996. It was billed as a "market-neutral" fund, that is, its positions were based not on predictions of the direction of interest rates or other variables, but on the persistence of historical price relationships, or spreads, among different types of bonds. In 1998, however, turmoil in world markets, stemming from financial crises in Asia and Russia, proved to be too much for its computer models: during the month of August 1998 alone, the fund lost almost $2 billion, or about half its capital. By late September, LTCM was on the verge of collapse, whereupon the New York Fed stepped in and "facilitated" a rescue package of $3.6 billion cash contributed by 13 private financial institutions, who became 90% owners of the fund's portfolio. Why was government intervention needed? The Fed cited concerns about systemic risk to the world's financial markets—while LTCM's capital was a relatively modest $3-$4 billion (during the first half of 1998), it had borrowed extensively from a broad range of financial institutions, domestic and foreign, so that the total value of its securities holdings was estimated to be about $80-$100 billion. In addition, the fund supplemented its holdings of stocks and bonds with complex and extensive derivatives positions, magnifying the total exposure of the fund's creditors and counterparties, and making the effect of a general collapse and default difficult to gauge. If the fund (or its creditors) had tried to liquidate its assets and unwind its derivative positions in the troubled market conditions that prevailed, the result might have been extreme price drops and high volatility, with a negative impact on firms not directly involved with LTCM. Critics of the Fed's action expressed concerns about moral hazard—if market participants believe they will be rescued from their mistakes (because they are "too big to fail"), they may take imprudent risks. To the Fed, however, the immediate dangers of system-wide damage to financial markets, and possibly to the real economy as well, clearly outweighed the risks of creating perceptions of an expanded federal safety net. In the wake of the Long-Term Capital Management episode, systemic risk emerged as the major policy issue raised by hedge funds. The funds had demonstrated an ability to raise large sums of money from wealthy individuals and institutions, and to leverage those sums, by borrowing and through the use of derivatives, until they become so large that even U.S. financial markets may be at risk if they fail. Not all hedge funds borrow heavily and not all follow high-risk strategies. But many do, and there is no reason to think that other hedge funds will not amass positions as large and complex as LTCM's. In time, some of them can be expected to suffer equally spectacular losses. The systemic risk concerns may be summarized as follows: failing funds may sell billions of dollars of securities at a time when the liquidity to absorb them is not present, causing markets to "seize up"; lenders to hedge funds, including federally insured banks, may suffer serious losses when funds default—LTCM raised questions about their ability to evaluate the risks lending to hedge funds; default on derivatives contracts may disrupt markets and may threaten hedge fund counterparties in ways that are hard to predict, given the lack of comprehensive regulatory supervision over derivative instruments; and since little information about hedge fund portfolios and trading strategies is publicly available, uncertainty regarding the solvency of hedge funds or their lenders and trading partners may exacerbate panic in the markets. LTCM illustrates the dangers of hedge fund failure. However, the funds' successes can also worry policymakers and regulators. Particularly in foreign exchange markets, manipulation by hedge funds has been blamed as a cause of instability (e.g., the European currency crises in the early 1990s and the Asian devaluations of 1997-1998). Hedge funds and other speculators can borrow a currency and sell it, hoping to profit if the currency is devalued (allowing them to repay with cheaper money). If the size of these sales or short positions is significant in relation to the target country's foreign currency reserves, pressure to devalue can become intense. To defend the currency's value may call for painful steps such as sharp increases in domestic interest rates, which have negative effects on the stock market and economic growth. In the United States, which has not been the target of such speculative raids, many argue that blaming hedge funds for crises is like shooting the messenger who brings bad news, and that speculators' profit opportunities are often created by bad economic policies. The effect of speculation on price volatility is an unresolved question in finance. While there has never been a conclusive demonstration that speculation causes volatility, the two are frequently observed together. Hedge funds, as the most visible agents of speculation in today's global markets, are looked upon by some regulators and market participants with a fair amount of suspicion. In April 1999, the President's Working Group on Financial Markets, which includes the Fed, the SEC, the CFTC, and Treasury, issued a report on hedge funds. The report cites the LTCM case as demonstrating that a single excessively leveraged institution can pose a threat to other institutions and to the financial system, and found that the proprietary trading operations of commercial and investment banks follow the same strategies in the same markets as the hedge funds, and they are much larger and often more highly leveraged. The general issue, then, is how to constrain excessive leverage. The Working Group concluded that more disclosure of financial information by hedge funds was desirable. The report recommended that large funds be required to publish annual disclosure statements containing a "snapshot" of their portfolios and a comprehensive estimate of the riskiness of the fund's position, and that public companies and financial institutions should include in their quarterly and annual reports a statement of their financial exposure to hedge funds and other highly leveraged entities. In 2003, in response to continued rapid growth in hedge fund investment, an SEC staff report recommended that hedge funds be required to register as investment advisers. The staff set out several benefits to mandatory registration: funds registered as investment advisers would become subject to regular examinations, permitting early detection and deterrence of fraud; the SEC would gain basic information about hedge fund investments and strategies in markets where they may have a significant impact; and the SEC could require registered hedge funds to adopt uniform standards and improve disclosures they make to their investors. On October 26, 2004, the SEC adopted (by a 3-2 vote) a rule to require hedge funds to register under the Investment Advisers Act. The rule was controversial: opponents argued that hedge fund investors are sophisticated and know the risks, that the SEC already has authority to pursue hedge fund fraud, that systemic risk concerns are overstated, and that instead of trying to circumscribe hedge funds, the SEC ought to be encouraging registered mutual funds to adopt hedge fund investment techniques. The regulation fell short of what some critics of hedge fund behavior would have liked to see. The SEC would still not be able to monitor hedge fund trading in real time, and the possibility of another LTCM remains. However, the SEC explicitly decided against this course—the 2003 staff report found "no justification for direct regulation" and the adopted rule had "no interest in impeding the manner in which a hedge fund invests or placing restrictions on a hedge fund's ability to trade securities, use leverage, sell securities short or enter into derivatives transactions." The rule took effect on February 1, 2006, and some basic information on registering hedge funds appeared on the SEC website. However, on June 23, 2006, an appeals court found that the rule was arbitrary and not compatible with the plain language of the Investment Advisers Act, vacated it, and returned it to the SEC for reconsideration. SEC Chairman Cox instructed the SEC's professional staff to provide the Commission with a set of alternatives for consideration. Another issue involves the "retailization" of hedge funds. As noted above, all fund investors must meet an "accredited investor" standard: they must have incomes of at least $200,000 and assets of $1 million. This threshold was established in the 1980s, and a much larger fraction of the population now meets the test, particularly since the $1 million includes the value of the investor's residence. The SEC has been concerned that relatively unsophisticated households may be putting their money in hedge funds, encouraged by market developments such as the introduction of funds-of-hedge funds, which accept smaller investments than traditional funds. A related investor protection issue arises from the fact that pension funds and other institutional investors are placing more of their money with hedge funds, meaning that unsophisticated beneficiaries may be unwittingly at risk of significant hedge fund-related losses, if the plan fiduciaries are not prudent and cautious. On December 13, 2006, the SEC proposed a regulation that would raise the accredited investor threshold from $1 million to $2.5 million in assets (excluding the value of the investor's home). If adopted, the rule would significantly reduce the pool of potential hedge fund investors, but would not be expected to have a strong impact on the largest funds, which do not depend on "mere" millionaires. The SEC received many unfavorable comments from investors who meet the current standard but would be excluded under the new limits: these investors do not wish to be protected from risks that the SEC might view as excessive. The SEC has yet to adopt a final rule raising the accredited investor standard. In February 2007, the President's Working Group issued an "Agreement Among PWG and U.S. Agency Principals on Principles and Guidelines Regarding Private Pools of Capital." The document expresses the view that policies that support market discipline, participant awareness of risk, and prudent risk management are the best means of protecting investors and limiting systemic risk. The Agreement does not call for legislation to give regulators new powers or authorities to regulate hedge funds. In December 2008, the revelation that a firm registered as both a broker/dealer and an investment adviser with the SEC, Bernard L. Madoff Investment Securities, had operated a multi-billion dollar Ponzi scheme raised new questions about the efficacy of market self-regulation. A number of hedge funds and funds-of-funds had placed billions of their clients' money with Madoff, but failed to detect the fraud. The Madoff case prompted calls for more stringent regulation of investment advisers, including hedge funds. The Obama Administration's 2009 white paper, Financial Regulatory Reform: A New Foundation , recommends that advisers to hedge funds (and other private pools of capital, including private equity funds and venture capital funds) whose assets under management exceed some modest threshold should be required to register with the SEC under the Investment Advisers Act. The advisers should be required to report information on the funds they manage that is sufficient to assess whether any fund poses a threat to financial stability. In the 109 th Congress, the House passed H.R. 6079 (Representative Castle), which directed the President's Working Group to study the growth of hedge funds, the risks they pose, their use of leverage, and the benefits they confer. The Senate did not act on the bill. In the 111 th Congress, H.R. 711 (Representatives Capuano and Castle) would remove the exemption in the Investment Advisers Act for firms with fewer than 15 clients, which was the figure at the center of the 2006 Goldstein decision. This would require hedge funds with more than $25 million in client funds to register as investment advisers with the SEC. H.R. 712 (Representative Castle) would require defined benefit pension plans to disclose their investments in hedge funds. H.R. 713 (Representative Castle) directs the President's Working Group on Financial Markets to conduct a study of the hedge fund industry, and report to Congress with any recommendations regarding hedge fund regulation. S. 344 (Senator Grassley) would limit the exemptions available under the Investment Company Act, requiring hedge funds with more than $50 million under management to register with the SEC. S. 506 and H.R. 1265 would change the tax treatment of offshore funds. S. 1276 would require managers of hedge funds to register as investment advisers, private equity firms, and venture capital funds, and would authorize the SEC to collect systemic risk data from them. Hedge funds are not seen as a principal cause of the financial crisis that erupted in 2007. They are, however, widely viewed as part of the "shadow" financial system that includes over-the-counter derivatives, non-bank lending, and other lightly regulated or non-regulated financial sectors. As part of sweeping regulatory reform legislation before the House and Senate in the 111 th Congress, certain hedge funds would be required to register with the SEC and to provide information about their positions and trading strategies to be shared with the systemic risk authorities. Under H.R. 4173 , passed by the House on December 11, 2009, managers of funds with more than $150 million under management would be required to register as investment advisers with the SEC. They would be required to report (on a confidential basis) certain portfolio information of interest to the Federal Reserve or other systemic risk authorities. The bill provides exemptions for advisers to venture capital funds and small business investment corporations (SBICs). Senator Dodd's Restoring American Financial Stability Act, as ordered reported by the Senate Banking Committee on March 22, 2010, includes similar provisions regarding registration and reporting of systemic risk data. The Senate version also exempts venture capital funds, private equity funds, and SBICs. It sets the SEC registration threshold for all investment advisers at $100 million in assets under management. Advisers below that figure would register with the states.
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In an echo of the Robber Baron Era, the late 20th century saw the rise of a new elite class, who made their fortunes not in steel, oil, or railroads, but in financial speculation. These gilded few are the managers of a group of private, unregulated investment partnerships, called hedge funds. Deploying their own capital and that of well-to-do investors, successful hedge fund managers frequently (but not consistently) outperform public mutual funds. Hedge funds use many different investment strategies, but the largest and best-known funds engage in high-risk speculation in markets around the world. Wherever there is financial volatility, the hedge funds will probably be there. Hedge funds can also lose money very quickly. In 1998, one fund—Long-Term Capital Management—saw its capital shrink from about $4 billion to a few hundred million in a matter of weeks. To prevent default, the Federal Reserve engineered a rescue by 13 large commercial and investment banks. Intervention was thought necessary because the fund's failure might have caused widespread disruption in financial markets—the feared scenario then closely resembled what actually occurred in 2008 (except that large, regulated financial institutions took the place of hedge funds). Despite the risks, investors poured money into hedge funds in recent years, until stock market losses in 2008 prompted a wave of redemption requests. In view of the growing impact of hedge funds on a variety of financial markets, the Securities and Exchange Commission (SEC) in October 2004 adopted a regulation that required hedge funds to register as investment advisers, disclose basic information about their operations, and open their books for inspection. The regulation took effect in February 2006, but on June 23, 2006, a court challenge was upheld and the rule was vacated. In December 2006, the SEC proposed raising the "accredited investor" standard—to be permitted to invest in hedge funds, an investor would need $2.5 million in assets, instead of $1 million. In the face of opposition from individuals who did not want to be protected from high-risk, unregulated investment opportunities, the SEC did not adopt a final rule. Hedge funds are not seen as a principal cause of the financial crisis that erupted in 2007. They are, however, widely viewed as part of the "shadow" financial system that includes over-the-counter derivatives, non-bank lending, and other lightly regulated or non-regulated financial sectors. As part of sweeping regulatory reform legislation before the House and Senate in the 111th Congress, certain hedge funds would be required to register with the SEC and to provide information about their positions and trading strategies to be shared with the systemic risk authorities. Under H.R. 4173, passed by the House on December 11, 2009, managers of funds with more than $150 million under management would be required to register as investment advisers with the SEC. They would be required to report (on a confidential basis) certain portfolio information of interest to the Federal Reserve or other systemic risk authorities. The bill provides exemptions for advisers to venture capital funds and small business investment corporations. The Restoring American Financial Stability Act, as ordered reported by the Senate Banking Committee on March 22, 2010, includes similar provisions regarding registration and reporting of systemic risk data. The Senate version exempts venture capital funds and private equity funds. It sets the SEC registration threshold for all investment advisers at $100 million in assets under management. Advisers below that figure would be regulated by the states.
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In the early morning of Friday, November 8, 2013, Typhoon Haiyan (known in the Philippines as Yolanda ), one of the strongest typhoons to strike land on record, slammed into the central Visayas region. Over a 16 hour period, the super typhoon or cyclone, with a force equivalent to a Category 5 hurricane and clouds that covered two-thirds of the country, directly swept through six Philippine provinces and affected over 10% of the nation's population of 105 million people. Haiyan's estimated wind speeds were 195 mph at its peak and 155 mph as it weakened and moved west, with wind gusts of up to 235 mph. Several hundred thousand people reportedly had fled their homes in advance of Haiyan's arrival. Many of those displaced were moved to evacuation centers. (See Figure 1 and Figure 2 .) The speed of the storm as well as advance warning prevented greater flooding and may have saved many lives. However, in some of the hardest hit areas, particularly in coastal communities in eastern and western Leyte province and the southern tip of Eastern Samar, there appears to have been little defense against Haiyan's wrath. Between two-thirds and 90% of structures were heavily damaged or destroyed, including medical facilities. Downed trees and other debris blocked roads. Airports, vital links to the rest of the archipelagic country, were damaged. Furthermore, decentralized government authority, a shortage of available government workers, looting, and heavy rains delayed some relief efforts. The typhoon was the deadliest natural disaster ever recorded in the Philippines. Within a few days of the typhoon, the Philippine government reported that an estimated 11.5 million people had been affected by the storm, with more than 540,000 displaced (of which roughly 380,000 were staying in 1,215 evacuation centers and 162,000 outside the centers). The government also reported that 792,000 people were evacuated in advance of the disaster. The city of Tacloban (population 220,000), capital of Leyte province, was one of the hardest hit places and the scene of the most concentrated destruction and death. Thousands of Tacloban residents reportedly drowned in a "two-story-high" storm surge, including people seeking safety in a sports stadium that served as a shelter. Many others were killed by flying debris. (See Figure 3 , Figure 4 , and Figure 5 .) The estimated number of dead and missing is often fluid and subject to change in the days, weeks, and months following a natural disaster, particularly one on the scale of Typhoon Haiyan (Yolanda). Two and a half months after the typhoon struck, based on figures provided by the Philippine government, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) reported that 14.1 million people had been affected, with more than 4.1 million displaced (as of mid-January 2014, 26,000 were staying in evacuation centers). Estimates of the number killed had risen to 6,201 with more than 1,785 missing. The number of injured was unknown. In addition, assessments revealed that nearly 5.6 million people required food assistance and an estimated 1.1 million houses had been damaged or destroyed. All numbers remain subject to revision. Steady population increases in disaster-prone areas, combined with a geography consisting of islands and poor infrastructure, make the Philippines vulnerable to humanitarian crises. An average of 20 major storms batter the country each year. In 2012, Typhoon Bopha (Pablo) struck the southern island of Mindanao, leaving nearly 2,000 people dead or missing. On the island of Bohol, a 7.1 magnitude earthquake in October 2013 displaced 350,000 people, many of whom resisted going to shelters as Haiyan approached, fearing that they might collapse in an aftershock. Until Haiyan, the country's most destructive typhoon was Tropical Storm Thelma (Uring) of 1991, which killed over 5,000 people in the Visayas region. According to many observers, U.S. support to the Philippines following the typhoon, including disaster assistance, expressions of sympathy, and a flurry of diplomatic activity, has bolstered the already strong bilateral relationship. Some Philippine leaders and political commentators argue that the U.S. military response to the disaster has strengthened the case for an enhanced U.S. military presence in the country, an issue that the two sides have been discussing intensively during the past few months (see " U.S.-Philippines Relations " below). Some analysts opine that the response of the United States has significantly boosted its soft power in the Philippines and the region, particularly in comparison to that of China. On November 10, 2013, President Obama made a statement expressing sympathy and support to the people of the Philippines. On November 21, the Senate expedited the confirmation of the new U.S. Ambassador to the Philippines, Philip Goldberg, so that he could help coordinate U.S. humanitarian assistance there. U.S. Secretary of State John Kerry travelled to the Philippines on December 17, 2013, where he met with President Benigno Aquino and visited the city of Tacloban. He announced $40 million in military assistance and $25 million in additional humanitarian aid (on top of roughly $60 million in disaster assistance already provided). Kerry had cancelled a trip to Manila in October 2013 due to tropical storm Nari. Members of Congress were among the first U.S. government officials to offer support. Representative Chris Smith led a congressional delegation to Leyte province on November 25, 2013. On November 19, the Subcommittee on East Asian and Pacific Affairs of the Senate Committee on Foreign Relations held a hearing entitled "Assessing the Response to Typhoon Yolanda/Haiyan." The Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations of the House Committee on Foreign Affairs conducted a hearing on the U.S. response on December 3. Members circulated "Dear Colleague" letters including those calling for assistance to remote areas affected by the disaster and protection for vulnerable Filipina women and children. U.S. legislators also sponsored resolutions expressing condolences, supporting assistance and charitable donations to the people of the Philippines, and urging the U.S. government to grant Temporary Protected Status to eligible Philippine nationals, which would allow them to stay and work in the United States and thereby support their families in storm-affected areas (see Textbox ). In general, experts divide relief operations into several phases: search and rescue; treatment and survival; relocation and rehabilitation; early recovery; and long-term reconstruction. As with any significant natural disaster that has many moving parts, it can take days and sometimes weeks to get a relief effort underway. Delays in transportation and congestion, lack of transportation infrastructure, bureaucratic problems, and lack of access all can cause bottlenecks at key points in the system. While timing is critical to save lives, a relief effort of this size requires the coordination of assessments and appropriate responses with the government, local communities, and the international community to function efficiently. The humanitarian relief operation, led by the Philippine government, was initially hampered by a number of significant challenges, not unusual in a disaster of this magnitude, including a general lack of transportation, extremely limited communications systems, and damaged infrastructure. Although aid personnel and humanitarian supplies arrived within days in many of the affected areas, there were challenges getting food and relief commodities to some of the more remote locations. Despite the physical and logistical challenges facing the relief effort, regular relief activities reportedly reached most of the worst-stricken areas within two weeks of the storm. In-depth assessments, necessary to obtain a better understanding of the situation on the ground, were conducted and are ongoing. Overall aid delivery to affected areas has been mobilized and sustained. By mid-December, a little more than one month after the typhoon struck, immediate, life-saving efforts in general began to shift more towards early recovery programming and the development of plans for longer-term recovery and reconstruction. However, affected areas were impacted by the heavy rains and strong winds associated with Tropical Depression Agaton from January 17-20, 2014. The impact of the storm exposed ongoing vulnerabilities of those affected by Typhoon Haiyan. The Philippine government plans and administers disaster relief primarily through the National Disaster Risk Reduction and Management Center (NDRRMC) and the Department of Social Welfare and Development (DSWD). Other agencies involved in relief efforts include the Armed Forces of the Philippines, the Office of Civil Defense, and the Department of Health. The NDRRMC oversees activities along with Local Disaster Risk Reduction Management Councils (LDRRMCs), the DSWD, DSWD field offices, local governments, and other agencies. The DSWD and its field offices coordinate relief efforts on the ground. The NDRRMC also collaborates with private sector disaster management networks. The Department of Foreign Affairs serves as the first point of contact for countries and international organizations wishing to provide assistance. Taking the lead on the disaster response, the Philippine government formed a high-level national taskforce to ensure fast track transition from relief efforts to the rehabilitation and rebuilding of affected areas. President Aquino appointed Senator Ping Lacson as Presidential Assistant for Rehabilitation and Recovery, a cabinet-level position. In response to widespread fears about government corruption, the Aquino administration launched a web portal that allows the public to track international disaster funds, the Foreign Aid Transparency Hub (FAITH). The Philippine government launched a four-year Reconstruction Assistance in Yolanda (RAY) plan, on December 18, 2013. Requesting nearly $8.2 billion, RAY focuses on rebuilding areas affected by the typhoon and developing resilience to natural disasters. Three main activities include $780 million for critical actions focused on shelter, education, agriculture, livelihoods, and protection; $2 billion for short-term interventions through 2014; and $5.3 billion to address longer-term needs through 2017. The government has launched an effort to provide temporary housing—469 "bunkhouses" have been built or planned so far—for people living in tent cities, particularly for those who formerly lived closed to the sea and are not allowed to return due to the risk of future storm surges. Each bunkhouse consists of 24 rooms (one room per family) and common kitchen and bath areas. The homes lack electricity and running water. International aid agencies have criticized them for not meeting international standards. In January 2014, the government announced that it would build 60,000 permanent housing units over a two-year period. On November 9, 2013, U.S. Charge d'Affaires Brian L. Goldbeck issued a disaster declaration, and the U.S. Agency for International Development (USAID), through the Office of Foreign Disaster Assistance (OFDA), immediately authorized funds to be released for the initial implementation of an emergency response program. Secretary of Defense Chuck Hagel directed the U.S. Pacific Command to deploy rescue teams, dispatch helicopters for airlifts, and conduct other relief efforts. As of January 31, 2014, the United States has provided over $87 million in humanitarian assistance through USAID, the Department of State, and the Department of Defense (DOD), and $59 million in private sector contributions. The U.S. government immediately set up an interagency task force to coordinate and facilitate the humanitarian response to the typhoon in the Philippines through the Washington, DC-based Response Management Team (RMT) headed by USAID through OFDA. It also deployed Disaster Assistance Response Teams (DARTs). The RMT supports USAID/DART efforts, which are focused on assessing humanitarian needs, positioning emergency relief supplies, and coordinating assistance with the U.S. Embassy in the Philippines, the Philippine government, and the international community. On December 18, 2013, the DARTs transitioned to a field office as the emergency phase of the response began to shift to early recovery. OFDA will maintain an ongoing presence in the Philippines for now to coordinate ongoing humanitarian activities. The State Department set up a Crisis Response Task Force to help monitor developments, facilitate coordination with other agencies as needed, and respond to inquiries from concerned Americans. The U.S. Embassy in Manila provided a center for coordination and communication among other U.S. agencies, Philippine authorities, and private organizations and citizens. U.S.-based NGOs have played an active role in the relief and recovery effort. DOD's initial response to Typhoon Haiyan was greatly facilitated by the advanced warning of the storm as well as naval, air, and Marine Corps assets either visiting or stationed in mainland Japan and the Japanese island of Okinawa. The USS George Washington naval task force as well as elements of the 31 st Marine Expeditionary Unit (MEU) from Okinawa formed the majority of Joint Task Force (JTF) 505, which was formed to conduct initial relief operations, dubbed Operation Damayan . Nearly 1,000 U.S. military personnel were deployed directly to the disaster area while the rest served on ships or provided support from bases around the world. U.S. military aircraft provided reconnaissance of the affected areas, lifted aid workers into the disaster zones, transported relief supplies, and evacuated those affected by the typhoon to various locations in the Philippines. Marines who were deployed ashore assisted with road clearance and with the distribution of humanitarian assistance. Once ground routes were improved, about 90% of relief supplies were then relegated to truck transportation. The Marines concentrated their efforts in the Guiuan, Eastern Samar, area which was the hub for supply transport and focused their remaining efforts south of Tacloban in the Leyte Gulf area. On November 24, 2013, DOD officials announced it would begin to transition all of its relief efforts to the Philippine government and that JTF 505 would stand down on December 1, 2013. The U.S. Embassy in Manila announced JTF 505's December 1 disestablishment, noting that at their peak, U.S. military efforts included more than 13,400 military personnel, 66 aircraft, and 12 naval vessels. The U.S. military delivered more than 2,495 tons of relief supplies and evacuated over 21,000 people, including over 500 American citizens. Also, over 1,300 flights were completed in support of the relief efforts for Operation Damayan delivering to approximately 450 sites. In addition to the United States, roughly 20 other nations and multilateral organizations, including Australia, Japan, NATO, South Korea, and the United Kingdom, contributed military assistance. This aid involved the use of military ships, transport planes, and helicopters. International military personnel provided disaster relief and helped distribute medical supplies, drinking water, and food. China, which had been criticized for providing too little assistance and being slow to respond, sent a naval hospital ship, the Peace Ark , to the Philippines on November 21. Provisions exist in the Immigration and Nationality Act (INA) to offer temporary protected status (TPS) or relief from removal under specified circumstances. TPS is blanket relief that may be granted under the following conditions: there is ongoing armed conflict posing serious threat to personal safety; a foreign state requests TPS because it temporarily cannot handle the return of nationals due to environmental disaster; or there are extraordinary and temporary conditions in a foreign state that prevent aliens from returning, provided that granting TPS is consistent with U.S. national interests. A foreign national who is granted TPS receives a registration document and an employment authorization for the duration of TPS. Within a few days of the typhoon, U.S. Citizenship and Immigrant Services (USCIS) in the Department of Homeland Security (DHS) announced a limited set of immigration relief measures that Filipinos impacted by the typhoon might be eligible for, but did not grant TPS. The government of the Philippines formally requested on December 16, 2013, that President Barack Obama designate TPS for Filipinos in the United States. Legislation that would grant TPS to Filipinos ( H.R. 3602 , the Filipino Temporary Protected Status Act of 2013) has been introduced in the 113 th Congress. The international community typically provides significant humanitarian assistance in response to major disasters and their ongoing impact. Following Typhoon Haiyan, at the request of the Philippine government and in a supporting role, the United Nations established Disaster Assessment and Coordination (UNDAC) and U.N. Office for the Coordination of Humanitarian Affairs (OCHA) teams. With the U.N. Humanitarian Country Team (HCT) already in place, OCHA is helping to coordinate actors on the ground and enlist donor support. Humanitarian relief sectors are typically established during humanitarian crises to enable the United Nations to coordinate partners, prioritize resources, and facilitate planning. In the Philippines, as with other disasters, response activities were organized into 12 relief sectors or "clusters" led by various agencies. The clusters currently include Camp Coordination and Camp Management; Coordination; Early Recovery and Livelihoods; Education; Emergency Shelter; Emergency Telecommunications; Food Security and Agriculture; Health; Logistics; Nutrition; Protection; and Water, Sanitation and Hygiene. The United Nations, along with other partners, including the United States, has a strong relationship with the Philippines, and remains at the forefront of the current on-the-ground response for humanitarian assistance and early recovery. International recovery efforts are typically complex because they require coordination among numerous actors and international entities. In the current crisis, apart from U.N. agencies, those responding to humanitarian crises include international organizations, NGOs, Private Voluntary Agencies (PVOs), and bilateral and multilateral donors. More than two months after the storm, humanitarian assistance is still required in some affected areas, particularly food, clean water, shelter, and basic health care. The HCT, in partnership with 14 U.N. organizations and 39 non-governmental and international organizations, designed a Strategic Response Plan (SRP) to support the government's activities in meeting immediate humanitarian needs, complement its reconstruction plan, and fill gaps identified by the government or through interagency assessments. The SRP covers 171 municipalities in 14 provinces and 4 regions, where it is estimated that over 14 million people were affected by the typhoon. The overall humanitarian and early recovery priorities and objectives identified by the HCT are listed below, but the implementation of the projects is expected be guided by location and caseload. Meeting basic food needs and nutritional requirements through community-based services and building food security through stimulation of markets and production. Activities include providing food assistance, nutritional support, and agricultural inputs for farmers. Attaining protective and sustainable shelter solutions for those families who were displaced or have homes that were destroyed or damaged. Shelter needs remain urgent and vary greatly by location. Activities include providing populations with shelter material, tools, cash for work, technical training, and site management in evacuation centers. Most of those displaced are in transitional shelters, such as bunkhouses or tarpaulins, or they have received shelter kits to rebuild their homes. Regaining self sufficiency of livelihoods in urban and rural areas through restoration of local economies, agriculture, and fisheries. Recovery of livelihoods is critical to enable people to rebuild their homes and their lives. Sustaining access to water, sanitation, hygiene, and the ongoing provision of health care in affected areas and evacuation centers. Activities include a focus on surveillance and early warning to prevent the outbreak of communicable diseases. Activities also include restoring water systems and access to sanitation facilities in communities, schools, and health care facilities. Establishing access to community and local government services, particularly for basic education in temporary learning spaces, social welfare, community support, and a protective environment. Removing and recycling debris from public spaces for use in reconstruction and to improve access to homes. Undertaking these objectives with a view to enhancing resilience and preparedness for future disasters. The SRP covers 12 months from the date of the disaster. The plan targets up to 3 million people under any one relief cluster. The government has identified three consecutive phases of the response: (1) critical humanitarian needs (to June 2014); (2) short-term investments (July to December 2014); and (3) medium-term, longer-term investments (January 2015-December 2017). The SRP covers the response through the first two phases. A Post-Disaster Needs Assessment is planned starting in early 2014, which will help inform the way forward on phases 2 and 3. It is expected that the United Nations, Asian Development Bank, World Bank, and European Union will work with the government in support of its plans. In addition, other selected ongoing activities include: The U.N. Population Fund (UNFPA) launched a plan for national authorities and humanitarian partners to provide assistance and protection support to more than 3 million women and girls affected by the disaster. The U.N. Children's Fund (UNICEF) and others are focused on identification, documentation, tracing, and reunification for unaccompanied and separated children. Trafficking among vulnerable populations has also been raised as a concern. An estimated 35,000 people have requested help from the Philippine Red Cross in tracing family members who are thought to have gone missing in connection with the typhoon. The International Committee of the Red Cross (ICRC), which is supporting the Philippine Red Cross in its emergency humanitarian response, is also working with the Philippine authorities on the proper management of the dead. A number of international actors are providing relief to the Philippines, either through financial contributions to the government or aid organizations or by directly providing relief supplies and emergency personnel. On November 12, 2013, the HCT appealed for $301 million in the Haiyan Action Plan to provide life-saving assistance and early recovery support for a six-month period. On November 22, this plan increased to $348 million, based on assessments completed as partners gained better access to affected areas. Launched on December 27, 2013, the Strategic Response Plan (described above) replaces these earlier appeals and requests $788 million. Additional pledges and contributions have also been made outside the appeal. A number of countries, including the U.S. government, have provided assistance in the form of direct contributions of items such as food and tents, or through the operation of relief flights and logistics support. As of January 31, 2014, $662.9 million has been contributed to the overall Typhoon Haiyan response, and of that amount, $356.1 million has been contributed to the SRP. As of January 31, 2014, the U.N.'s Central Emergency Response Fund (CERF) has made available approximately $25.3 million to the Plan. The United States and the Republic of the Philippines maintain close ties stemming from the U.S. colonial period (1898-1946), a security alliance, extensive military cooperation, and common strategic and economic interests. Other pillars of the bilateral bond include shared democratic values and people-to-people contacts. Filipino Americans number approximately 4 million, making them the second-largest Asian American population, and comprise the largest foreign-born group in the U.S. Armed Forces. An estimated 150,000 Americans live in the Philippines. U.S. military forces are involved in several regular joint exercises and ongoing military missions in the Philippines. The two major ones are the Balikatan ( Shoulder to Shoulder ) exercises and the U.S. Joint Special Operations Task Force–Philippines (JSOTF-P) counterterrorism assistance, which involves a U.S. rotating presence on Mindanao Island and the Sulu archipelago. Both of these programs include large humanitarian components. Other annual joint exercises include the Cooperation Afloat Readiness and Training (CARAT) naval event and the Amphibious Landing Exercise (PHIBLEX). In addition, U.S. warships have made frequent port calls in the Philippines in the past year. DOD officials stated that the U.S. military had a "small footprint" of people and equipment in the Philippines at the time of Typhoon Haiyan. No injuries or damage to them were reported. Currently, there are about 500 U.S. military personnel from JSOTF-P conducting counterterrorism training for selected units of the Philippine military. Some members of JSOTF-P supported Operation Damayan in Ormoc City, Leyte province. The involvement of U.S. military forces in relief efforts following Typhoon Haiyan comes at a time of growing U.S.-Philippine security cooperation. The bilateral security relationship has gained prominence as a key link in the U.S. foreign policy "pivot" or "rebalancing" toward Asia. Since 2012, U.S. and Philippine officials have discussed increasing U.S. ship and aircraft access to Philippine military facilities, particularly at Subic Bay, site of the former U.S. naval base, and bolstering U.S. military facilities and forces in the country on a rotational or non-permanent basis. Since August 2013, the two sides have been negotiating a framework agreement for the increased U.S. military presence. The Philippines, regarded by Washington as a partner in maintaining regional security, is one of the largest recipients of U.S. foreign assistance in Southeast Asia. U.S. assistance has focused upon poverty reduction, broad-based economic growth, and, increasingly, external security concerns. In the past decade, over half of U.S. assistance to the country supported development programs in Mindanao and the Sulu Archipelago, where there has been a sustained Muslim insurgency, with the aim of reducing the attractiveness of radical or extremist ideologies and activities. For FY2014, the Obama Administration requested raising Foreign Military Financing to the Philippines by 75%, to $50 million. (See Table 1 .) In 2010, the Millennium Challenge Corporation (MCC) approved a five-year, $434 million compact with the Philippine government that focused on poverty reduction, transportation, and the modernization of the Bureau of Internal Revenue. The Philippines is a lower middle income country with an estimated population of 105 million—Southeast Asia's second largest. Once one of the wealthiest nations in Southeast Asia, it had been considered one of the region's economic laggards since the 1970s, due in large part to widespread corruption and poor governance. However, in the past three years, the Philippines had emerged as one of Asia's strongest economies. The 7.6% GDP growth rate it posted in 2010 was the country's fastest annual growth rate in 30 years. The Philippines' overall growth represents a strong resurgence for a country that had been a recipient of IMF loans beginning in 1983, due to fiscal crises in the 1980s and the economic vulnerabilities exposed by the Asian financial crisis in the 1990s. Many Philippine observers felt it was symbolically important that the country became an IMF creditor in 2012, contributing to multilateral loans to Europe. Analysts note that the Philippines, like many Southeast Asian nations, has benefitted from substantial investment inflows over the past three years, but this raises the risks that the trend could reverse, with private capital outflows possibly arising from the typhoon or for other reasons, such as the possible tightening of U.S. monetary policy in the coming years. The areas damaged by Haiyan are some of the poorest parts of the Philippines, many of them dominated by agricultural and fishing industries, with some tourist destinations also severely harmed by the storm. Damage to other crops, such as sugar cane, coconut, and pineapple, is likely to have considerable impacts on livelihoods in the Visayas region. The Philippine government has sought temporary trade arrangements with export markets such as the United States that would allow duty-free access for a limited number of products coming from affected areas. According to some analysts, GDP growth is expected to continue to be strong despite the costs of Typhoon Haiyan, estimated at $13 billion. The Philippines' economy is forecast to expand by 6.7% in 2014, slightly less than the estimated 6.9% growth of 2013. Because the region affected by the storm is one of the country's least developed, impacts on the Philippines' manufacturing base and overall GDP may not be deep. Economists also note that once reconstruction efforts begin, construction spending is likely to spur growth. Furthermore, the storm's drag on the economy may be only slightly greater than the effects of other natural disasters in recent years. Many observers have been surprised the economy has fared so well. Economic Secretary Arsenio Balisikan reportedly called the performance "a remarkable turnaround." Nonetheless, although the affected areas are not the country's largest sources of rice, the damage to rice crops in the region may reverse the Philippines' trend in recent years towards rice self-sufficiency, and rice imports are likely to rise. One important issue for the Philippine economic recovery in the months and years ahead will be whether decentralized governance and corruption limits the efficiency of stimulus efforts. The Philippine central government's relative lack of control over decisions by regional governments has been one of the chief obstacles to Philippine economic development for decades, many observers say. While the World Bank rated the Philippines one of the world's 10 most improved business environments in an October 2013 survey, the strains arising from the typhoon's damage will be a test of whether the central government can effectively implement economic stimulus without running into the issues of corruption or poor local governance. The impact of Typhoon Haiyan is of significant interest to the United States. As the extent of the disaster becomes clearer, other issues may emerge for Congress as it considers the ongoing U.S. response. These fall into several possible categories: The initial humanitarian relief period: Congressional interest and support is likely to focus on the humanitarian impact of the disaster, the U.S. and international response, and ongoing humanitarian developments. Ongoing oversight: Congress may exercise its oversight authority in the ongoing provision of U.S. humanitarian assistance. It may consider how USAID and DOD responses to the Haiyan disaster mesh with overall and existing U.S. foreign aid programs, contributions by other governments, and overall global humanitarian priorities. Longer-term assistance strategy: Given the extensive damage to the central Philippines' economy and infrastructure, Congress may consider broad, long-term U.S. assistance strategies in the Philippines, including policies to boost Philippine exports from storm-affected areas. Lessons learned from the response to the Philippines typhoon may influence future U.S. global disaster assistance strategies and the provision of food aid. Strategic questions: Congress may consider how the U.S. disaster response may impact the U.S.-Philippines relationship as well as regional geopolitical dynamics, and how existing and ongoing U.S. military activities in the Philippines may be affected by DOD's role in disaster relief. Appendix A. Donor Contributions and Pledges to the Philippines in Response to Typhoon Haiyan (Yolanda) Appendix B. U.S. Government Humanitarian Assistance to Typhoon Haiyan (Yolanda) Relief Appendix C. Sources for Further Information U.S. Embassy in Manila, Philippines Disaster Assistance: http://manila.usembassy.gov/disaster-assistance.html U.S. Citizen Services: http://manila.usembassy.gov/wwwha017.html#Missing This page provides information for persons trying to find American citizens who were in the Philippines at the time of the storm. U.S. Agency for International Development (USAID) http://www.usaid.gov/haiyan http://www.usaid.gov/philippines USAID Office of Foreign Disaster Assistance (USAID/OFDA) Twitter Feed: https://twitter.com/theOFDA U.S. Department of Defense Operation Damayan: http://www.defense.gov/home/features/2013/1113_haiyan/ Government of the Philippines Official Gazette Updates on Typhoon Yolanda: http://www.gov.ph/crisis-response/updates-typhoon-yolanda/ U.N. News Centre http://www.un.org/News/ The UN News Service publishes reports on the humanitarian aid efforts in the Philippines, as well as news about the United Nations' work in other countries . Relief Web http://reliefweb.int/disaster/tc-2013-000139-phl This site is administered by the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) and provides links to r eports by governments, international and intergovernmental entities, and non-governmental organizations (NGOs) on humanitarian activities as well as maps and fact sheets. This site is continuously updated . Selected U.N. Entities U.N. Country Team in the Philippines http://reliefweb.int/organization/unct-philippines United Nations Children's Fund (UNICEF) http://www.unicef.org/infobycountry/philippines.html World Food Program (WFP) http://www.wfp.org/countries/philippines World Health Organization (WHO) http://www.who.int/hac/en/index.html United Nations High Commissioner for Refugees (UNHCR) http://www.unhcr.org/52820a359.html Food and Agricultural Organization of the United Nations (FAO) http://www.fao.org/emergencies/crisis/philippines-typhoon-haiyan/en/ InterAction http://www.interaction.org/crisis-list/interaction-members-respond-typhoon-haiyan InterAction is an alliance of more than 180 U.S.- based nongovernmental organizations (NGOs) that work around the world. The site describes the humanitarian assistance being provided by each member organization responding to the Philippines disaster and provides links to the individual websites where contributions can be made. Appendix D. How to Contribute to Relief Efforts USAID— How to Help http://www.usaid.gov/what-we-do/working-crises-and-conflict/crisis-response/how-help U.S. Embassy in Manila, Philippines How to Contribute: http://manila.usembassy.gov/response-contribute.html Charity Navigator Super Typhoon Haiyan Disaster Relief: http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=1659 Provides analysis , eval uations , and rat ings of charity finances as well as accountability and transparency. Guide Star Helping Typhoon Haiyan Survivors: http://www.guidestar.org/rxg/give-to-charity/donor-resources/philippines-typhoon-relief.aspx?gsicn=November11TyphoonRelief&gsici=HomepageFeature This organization gathers information about nonprofit organizations and reports on each organization's mission, legitimacy, impact, reputation, finances, programs, transparency, and governance. Appendix E. The U.S. Government Emergency Response Mechanism for International Disasters The United States is generally a leader and major contributor to relief efforts in response to humanitarian disasters. The President has broad authority to provide emergency assistance for foreign disasters and the U.S. government provides disaster assistance through several U.S. agencies. The very nature of humanitarian disasters—the need to respond quickly in order to save lives and provide relief—has resulted in a rather unrestricted definition of what this type of assistance consists of at both a policy and an operational level. While humanitarian assistance is assumed to provide for urgent food, shelter, and medical needs, the agencies within the U.S. government providing this support typically expand or contract the definition in response to circumstances. Funds may be used for U.S. agencies to deliver services or to provide grants to international organizations (IOs), international governmental and non-governmental organizations (NGOs), and private or religious voluntary organizations (PVOs). The U.S. Agency for International Development (USAID) is the U.S. government agency charged with coordinating U.S. government and private sector assistance. It also coordinates with international organizations, the governments of countries suffering disasters, and other governments. The Office of Foreign Disaster Assistance (OFDA) in USAID's Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA) provides immediate relief materials and personnel, many of whom are already abroad on mission. It is responsible for providing non-food humanitarian assistance and can quickly assemble Disaster Assistance Response Teams (DARTs) to assess conditions. OFDA has wide authority to borrow funds, equipment, and personnel from other parts of USAID and other federal agencies. USAID has two other offices that administer U.S. humanitarian aid: Food For Peace (FFP) and the Office of Transition Initiatives (OTI). USAID administers emergency food aid under the Food for Peace Act (Title II of P.L. 480) and provides relief and development food aid that does not have to be repaid. OTI provides post-disaster transition assistance, which includes mainly short-term peace and democratization projects with some attention to humanitarian elements but not emergency relief. Although not all applicable to the disaster in the Philippines, the Department of Defense (DOD) Overseas Humanitarian, Disaster, and Civic Aid (OHDACA) funds three Dodd humanitarian programs: the Humanitarian Assistance Program (HAP), Humanitarian Mine Action (HMA) Program, and Foreign Disaster Relief and Emergency Response (FDR/ER). OHDACA provides humanitarian support to stabilize emergency situations and deals with a range of tasks including providing food, shelter and supplies, and medical evacuations. In addition the President has the authority to draw down defense equipment and direct military personnel to respond to disasters. The President may also use the Denton program to provide space-available transportation on military aircraft and ships to private donors who wish to transport humanitarian goods and equipment in response to a disaster. Generally, OFDA provides emergency assistance for 30 to 90 days after a disaster. The same is true for Department of Defense humanitarian assistance. After the initial emergency is over, assistance is provided through other channels, such as the regular country development programs of USAID. The State Department also administers programs for humanitarian relief with a focus on refugees and the displaced. The Emergency Refugee and Migration Account (ERMA) is a contingency fund that provides wide latitude to the President in responding to refugee emergencies. Assistance to address emergencies lasting more than a year comes out of the regular Migration and Refugee Account (MRA) through the Population, Migration, and Refugees (PRM) bureau. PRM assists refugees worldwide, conflict victims, and populations of concern, often extended to include internally displaced people (IDPs). Humanitarian assistance includes a range of services from basic needs to community services. Appendix F. Mass Fatality Management Management of the dead is one challenge of the response to a catastrophe. The task often falls upon local communities, which are typically overwhelmed tending to the needs of the living. A pervasive myth holds that human remains cause epidemics in disaster-stricken communities. Human remains do not carry pathogens that are not already in circulation in a community, and they do not generally pose an additional threat to the public. Rather, epidemics of intestinal illness that follow a disaster typically result from loss of the infrastructures that prevent sewage from contaminating potable water. Under such circumstances, many become exposed to the illnesses of a few. Upon review of the aftermath of the 2004 Asian tsunami, the Pan American Health Organization (PAHO), the World Health Organization (WHO), and the International Committee of the Red Cross (ICRC) published a first responder manual on mass fatality management. In it they said that "political pressure brought about by [rumors of epidemics from human remains] causes authorities to use unnecessary measures such as rapid mass burials.... The consequences of mismanagement of the dead include mental distress and legal problems for relatives of the victims." Responders are urged to take steps that allow the eventual identification of remains, and the opportunity for relatives to claim remains. Recommended approaches include rapid retrieval of remains by responders who are not medical personnel (in order to focus the efforts of medical personnel on survivors), best practices for victim identification, and options for storage of remains pending identification. Because the means for optimal storage—ice and refrigeration—may be in short supply following a disaster and are also needed by survivors, the manual recommends temporary burial as a good option for immediate storage where no other method is available.
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This report examines the impact of Typhoon Haiyan (Yolanda), which struck the central Philippines on November 8, 2013, and the U.S. and international response. Haiyan was one of the strongest typhoons to strike land on record. Over a 16 hour period, the "super typhoon," with a force equivalent to a Category 5 hurricane and sustained winds of up to 195 mph, directly swept through six provinces in the central Philippines. The disaster quickly created a humanitarian crisis. In some of the hardest hit areas, particularly in coastal communities in Leyte province and the southern tip of Eastern Samar, the storm knocked out power, telecommunications, and water supplies. The humanitarian relief operation was initially hampered by a number of significant obstacles, including a general lack of transportation, extremely limited communications systems, damaged infrastructure, and seriously disrupted government services. Despite the physical and logistical challenges, regular relief activities reportedly reached most of the worst-stricken areas within two weeks of the storm. Two and a half months after the typhoon struck, United Nations (U.N.) agencies reported that 14.1 million people had been affected, with more than 4.1 million displaced. Estimates of the number killed had risen to 6,201 with more than 1,785 missing. The number of injured was unknown. In addition, assessments revealed that an estimated 1.1 million houses had been damaged or destroyed and nearly 5.6 million people required food assistance. Ongoing humanitarian relief operations and recovery efforts are being led by the Philippine government. The United Nations, along with other partners, including the United States, remains at the forefront of the on-the-ground response. Apart from U.N. agencies, those responding to the crisis include international organizations, non-governmental organizations (NGOs), Private Voluntary Agencies (PVOs), and bilateral and multilateral donors. As of January 31, 2014, international donors have contributed a total of $662.9 million to the relief efforts. U.S. assistance has included approximately $87 million in disaster aid and $59 million in private sector contributions, a massive U.S. military humanitarian effort, as well as diplomatic and legislative activity. At their peak, 66 U.S. military aircraft and 12 naval vessels were involved in relief efforts and nearly 1,000 U.S. military personnel were deployed directly to the disaster areas. The USS George Washington naval task force as well as elements of the 31st Marine Expeditionary Unit from Okinawa formed the majority of Joint Task Force (JTF) 505, which coordinated and carried out U.S. military relief efforts (Operation Damayan) in cooperation with the Armed Forces of the Philippines and the Philippine government. U.S. military assistance included clearing roads, transporting aid workers, distributing 2,495 tons of relief supplies, and evacuating over 21,000 people. More than two months after the storm, humanitarian assistance is still required in some affected areas, particularly food, clean water, shelter, and basic health care. The Philippine government launched an $8.2 billion, four-year plan, Reconstruction Assistance in Yolanda (RAY), which focuses on rebuilding areas affected by the typhoon and developing resilience to natural disasters. The U.N. Humanitarian Country Team (HCT), in partnership with U.N. organizations and non-governmental and international organizations, designed a Strategic Response Plan (SRP) to support the Philippines government's activities in meeting immediate humanitarian needs and reconstruction goals. The United States and the Philippines maintain close ties stemming from the U.S. colonial period (1898-1946), a security alliance, and common strategic and economic interests. Other pillars of the bilateral relationship include shared democratic values and extensive people-to-people contacts. The involvement of U.S. military forces in Haiyan relief efforts bolstered support for enhanced U.S.-Philippine military cooperation, an issue that the two sides have been discussing intensively during the past several months. Congressional concerns related to the storm and its aftermath include the short-term U.S. and international humanitarian response, the long-term U.S. foreign aid strategy for the Philippines, and how the U.S. response to the disaster may impact the U.S.-Philippines relationship as well as regional geopolitical dynamics. This report will be updated as events warrant. For background and information on the Philippines, see CRS Report RL33233, The Republic of the Philippines and U.S. Interests. For background on how the U.S. responds to international disasters, see CRS Report RL33769, International Crises and Disasters: U.S. Humanitarian Assistance Response Mechanisms.
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The U.S. Co nstitution originally provided for the question of presidential disability or inability in Article II, Section 1, clause 6: In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office , the Same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, death, Resignation or Inability , both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed , or a President shall be elected [emphasis added]. This language designated the Vice President to exercise the powers and duties of the presidency if the President died, resigned, was removed from office, or was unable to discharge the position's powers and duties. It did not, however, provide any mechanism or procedure for determining presidential inability. The same clause authorized Congress to provide by law for instances of removal, death, resignation, or inability of both the President and Vice President, which it did with the Succession Act of 1792 and its subsequent revisions in 1886 and 1947. Despite several instances of incapacitating presidential illness during the 19 th and 20 th centuries, however, it was not until ratification of the Twenty-Fifth Amendment in 1967 that procedures governing inability or disability of the President were established in the Constitution. This report provides a description and analysis of Sections 3 and 4 of the amendment, which deal with presidential disability or inability. It also reviews the history of presidential disability and earlier proposals to provide for such contingencies, provides a legislative history of the Twenty-Fifth Amendment and examines relevant legislative proposals pending in the 115 th Congress. The Twenty-Fifth Amendment, proposed by Congress in 1965 and ratified by the states in 1967, provides for presidential succession, vice presidential vacancies, and presidential disability. Presidential inability or disability is specifically covered in Section 3, whereby the President may declare a disability, and Section 4, whereby a disability is declared by the Vice President and a majority of the Cabinet or such other body as may be established by law. The text of Section 3 of the Twenty-Fifth Amendment follows: Whenever the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice President as Acting President. Section 3 of the Twenty-Fifth Amendment provides the President with the authority to declare himself or herself unable to discharge the powers and duties of the office. By so doing, the President transfers authority of the office to the Vice President, who exercises it as Acting President until the President reclaims his authority by declaring the disability to be ended. The vehicle for implementing Section 3 is described in the amendment as a written declaration, which the President "transmits" to the Speaker and the President pro tempore. The declaration would be delivered to the Speaker and President pro tempore and would take effect regardless of whether Congress was in session. This language arguably allows for a variety of delivery options, including physical delivery or transmission by various electronic media. The amendment's language suggests, however, that these officers must receive the declaration before it can take effect. Given this requirement, it could be argued that the Speaker and the President pro tempore might appropriately issue an official acknowledgement of the declaration, either jointly or separately. Section 3 can be invoked to cover either an unanticipated disability, such as a sudden injury or illness, or an anticipated disability, such as scheduled medical treatment that might leave the President less than fully aware or cognizant for some period of time. It may potentially cover other situations, such as absence from the country or a period of "intense grief over the loss of a loved one." Opinion among scholars as to whether a President could invoke Section 3 to concentrate on defense in a case of impeachment remains divided. The amendment's authors intended Section 3 to give the President broad discretion over the duration of any anticipated disability declaration. For an anticipated event, the President can set a specific time in the declaration of disability at which the Vice President will assume the powers and duties of the office. By setting a time and date certain for Section 3 to take effect, the President can determine the exact moment at which the Vice President becomes Acting President, while also ensuring that the Vice President has adequate preparation time to assume the powers and duties as chief executive. The President could also issue a declaration of disability as a result of an unanticipated injury or diagnosis of serious illness. Such a contingent declaration could take effect immediately on transmission to the Speaker and the President pro tempore. The President also enjoys broad discretion when declaring a disability to be ended. According to scholar John D. Feerick, under Section 3, "a President is permitted to declare himself disabled either for an indefinite or a specified period of time and to name the hour when the Vice President is to become Acting President." The President would be free to declare any disability ended at his sole discretion at any time, without need for consultation with, or concurrence by, the Vice President, the Cabinet, or Congress. The amendment's legislative history supports this interpretation: Under the terms of Section 3, a President who voluntarily transfers his duties and powers ... may resume these powers and duties by making a written declaration of his ability to perform [them].... This will reduce the reluctance of the President to utilize the provisions of this section in the event he fears it would be difficult for him to regain his powers and duties once he has voluntarily relinquished them. The chief executive would remain President for the duration of any disability declaration, but the powers and duties of the office would be transferred to the Vice President. The question might arise as to whether the President's declaration that a disability no longer exists under Section 3 might be contested using Section 4's procedure authorizing the Vice President and the Cabinet or disability review body to dispute such a declaration. The record indicates that the amendment's authors considered the two sections to be separate, and that a President's actions under Section 3 would not in their view be subject to challenge using Section 4's authorization. Section 3 also affects the Vice President: the Twenty-Fifth Amendment created a new constitutional office with its provision that in the event of a declared presidential disability, the Vice President discharges the powers and duties of the office of chief executive as Acting President . During service as Acting President, however, the question might be raised whether the Vice President would lose the title of President of the Senate, and be succeeded for the duration of the declared disability by the President pro tempore. Support for this assertion could be inferred from the provisions of Article I, Section 3, clause 5 of the Constitution: The Senate shall chuse their other Officers, and also a President pro tempore, in the Absence of the Vice President, or when he shall exercise the Office of President of the United States. Under such a scenario, the President pro tempore would exercise the powers and duties as President of the Senate for the duration of the disability. The Vice President would resume both the title and duties of President of the Senate once the President declared his disability to be ended. Disability scholar John Feerick has questioned whether the Vice President would need to take the President's oath of office before becoming Acting President. He has suggested that "the duty of acting as President is encompassed by his vice-presidential oath to perform his duties faithfully," and that assuming the office of Acting President constitutes a duty to be so performed. If the President were to leave office during an activation of Section 3, the Acting President would succeed to the presidency under the provisions of the Twenty-Fifth Amendment's Section 1, which provides that "[i]n case of the removal of the President from office or of his death or resignation, the Vice President shall become President." Section 3 of the Twenty-Fifth Amendment has been informally implemented once, by President Ronald Reagan in 1985, and formally implemented twice, by President George W. Bush, in 2002 and 2007. On July 13, 1985, President Ronald Reagan underwent surgery at Bethesda Naval Medical Center to remove a cancerous polyp in his large intestine. During the surgery, which required several hours, the President was fully anesthetized and unconscious. At 11:28 a.m., he transmitted a letter to House Speaker Thomas P. O'Neill and Senate President pro tempore Strom Thurmond stating that he would be "briefly and temporarily incapable of discharging the Constitutional powers and duties of the Office of the President" during this procedure. In the letter, the President designated Vice President George H.W. Bush to discharge the powers and duties of the presidency while Reagan was under anesthesia. When the President emerged from anesthesia later that day, his Chief of Staff and counsel met with him in the hospital and asked whether he felt well enough to resume his authority as President. Reagan agreed that he did, and at 7:22 p.m. he issued a letter to the Speaker and President pro tempore reclaiming his powers and duties: "please be advised I am able to resume the discharge of the Constitutional powers and duties of the Office of the President of the United States." While President Reagan's actions arguably constituted the first implementation of Section 3 of the Twenty-Fifth Amendment, he claimed not to be doing so in his first letter, which declared his impending disability: After consultation with my Counsel and the Attorney General, I am mindful of the provisions of Section 3 of the 25th Amendment to the Constitution and of the uncertainties of its application to such brief and temporary periods of incapacity. I do not believe that the drafters of this Amendment intended its application to situations such as the instant [present] one. Fred Fielding, then White House counsel, later stated that Reagan was concerned with setting a precedent that would bind future successors, particularly for a procedure that he considered "a minor procedure of short duration." While President Reagan may not have intended to invoke the Twenty-Fifth Amendment, the balance of opinion on this episode suggests that, notwithstanding the wording of his letter, he did implement Section 3. John Feerick notes that although he "declaimed any invocation of the Twenty-Fifth Amendment, he nevertheless must have used Section 3." Senator Birch Bayh, "father" of the amendment, noted in 1991 that "... although President Reagan said he didn't think Congress intended a transfer of power by invoking the Twenty-Fifth Amendment under those circumstances, there was no other way it could have been done." Feerick further notes that both the President and First Lady Nancy Reagan claimed in their memoirs that the Twenty-Fifth Amendment had been put into effect by his letter. President George W. Bush invoked Section 3 of the Twenty-Fifth Amendment twice during his presidency, when he was anesthetized for routine medical procedures. In contrast with President Reagan in 1985, on both occasions President Bush specifically cited the amendment when declaring his disability and reclaiming his authority. On June 28, 2002, President Bush was sedated while undergoing a routine colonoscopy. The procedure was conducted at Camp David, near Thurmont, Maryland, by a medical team from Bethesda National Naval Medical Center. In his letter to Speaker Dennis Hastert and President pro tempore Robert Byrd, the President specifically cited the Twenty-Fifth Amendment in his transfer of constitutional powers: ... in accordance with the provisions of Section 3 of the Twenty-Fifth Amendment to the United States Constitution, this letter shall constitute my written declaration that I am unable to discharge the Constitutional powers and duties of the office of President of the United States. Pursuant to Section 3, the Vice President shall discharge those powers and duties as Acting President until I transmit to you a written declaration that I am able to resume the discharge of those powers and duties. The procedure was begun at 7:09 a.m., ended at 7:29 a.m., and the President was awakened two minutes later. He resumed his duties approximately two hours later, at 9:24 a.m., after attending physician Dr. Richard Tubb conducted an overall examination. A press account published prior to a later colonoscopy stated that in 2002 Dr. Tubb had "recommended the additional time to make sure the sedative had no aftereffects." The President declared his disability ended, stating in his letter that it constituted his ... written declaration that I am presently able to resume the discharge of the Constitutional powers and duties of the office of President of the United States. With the transmittal of this letter, I am resuming those powers and duties effective immediately. The President's second activation of Section 3 followed similar procedures. On July 21, 2007, President Bush was again anesthetized while undergoing a routine colonoscopy. This procedure was also performed at Camp David by a medical team from Bethesda Naval Medical Center led by Dr. Tubb. In a letter to Speaker Hastert and President pro tempore Byrd, effective at 7:09 a.m., the President again cited Section 3 of the Twenty-Fifth Amendment in transferring the powers and duties of his office to Vice President Cheney. At 9:21 a.m. he reclaimed his authority in a letter to the Speaker and President pro tempore. During both these procedures, Vice President Richard Cheney served as Acting President of the United States. Neither President Bush nor the Vice President mentioned these episodes in their published memoirs, and the only apparent reference to Cheney's performance as Acting President was a press report that during his two hours as Acting President in 2007, he wrote a letter to his grandchildren as "a souvenir for them to have down the road someday." The text of Section 4 of the Twenty-Fifth Amendment follows: Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President. Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty-eight hours for that purpose if not in session. If the Congress within twenty-one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty-one days after Congress is required to assemble, determines by two-thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office. Section 4 provides for situations of presidential disability or inability that differ from and are arguably more potentially complex and arguably more problematic than those addressed in Section 3. Some of the differences between the two sections should be noted. Most obviously, Section 3 can be activated only by the President, while the disability initiation element of Section 4 can be implemented only by the Vice President and either (1) a majority of the Cabinet or (2) a majority of "such other body as Congress may by law provide." Section 3 was designed to be invoked either in anticipation of presidential inability, or as a response to a disability, while Section 4 was intended by the amendment's sponsors to be activated only in response to a presidential disability. Section 3 assumes that the President is fully aware and competent, and capable of declaring his disability, while Section 4 assumes that the President, for whatever reason, is unable or unwilling to declare an obvious disability, and that he or she cannot or will not step aside for its duration. Reflecting on the gravity that would attend any implementation of Section 4, Senator Birch Bayh, architect of the Twenty-Fifth Amendment, and manager of its passage in the Senate, sought to clarify what the amendment meant in its language: ... I am fully aware of the complexity of the terms with which we are dealing, and feel that the word "inability" and the word "unable," as used in ... this article, which refer to an impairment of the President's faculties, mean that he is unable either to make or communicate his decisions as to his own competency to execute the powers and duties of his office. Representative Richard Poff, one of the amendment's framers, cited two of the more likely contingencies under which Section 4 might be invoked: One is the case where the President by reason of some physical ailment or sudden accident is unconscious or paralyzed and therefore unable to make or to communicate the decision to relinquish the powers of his Office. The other is the case when the President, by reason of mental debility, is unable or unwilling to make any rational decision, including particularly the decision to stand aside. A more recent commentator on Section 4 emphasizes the constitutional gravity associated with implementing this section , noting that "[t] he s eparation of a [P]resident of the United States from his powers and duties for any reason should be extraordinarily difficult and should not even be contemplated except under extraordinary circumstances. A stable and mature democracy demands no less. " Section 4 includes the following four distinct possible procedures: a declaration of presidential disability by the Vice President acting in agreement with a majority of the Cabinet or such other body as Congress may establish by law (disability review body), followed by assumption of the powers and duties of the presidency by the Vice President as Acting President; and an uncontested declaration by the President that no inability exists, followed by the President's resumption of the office's powers and duties; and a declaration by the Vice President and a majority of the Cabinet or the disability review body contesting the President's declaration and asserting that he or she remains disabled, followed by a decision on the issue by Congress. If Congress, by a two-thirds vote of the Members of both chambers present and voting, taken within 21 days of assembling, "determines … that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President." If Congress does not determine that the President is unable to discharge the powers and duties of the office, the President resumes the powers and duties of the office. Alternative outcomes or actions—which could be a decision by Congress not to vote on the question, or a decision to vote to sustain the President's declaration, or if the 21-day window closes without Congress having made a decision—would result in the chief executive resuming the powers and duties of the office. The Twenty-Fifth Amendment delegates specific roles in Section 4 to two people and three institutions: the President; the Vice President, including in his role as Acting President; "the principal officers of the executive departments" (the Cabinet); "such other body as Congress may by law provide" (identified in this report as the "disability review body"); and Congress. A brief description of their specific roles follows. The Vice President is listed here ahead of the President because he or she is the indispensable actor in implementing a Section 4 declaration of presidential disability: the amendment's provisions can be invoked only on his or her initiative or agreement. The Vice President's constitutional associates, the Cabinet or the disability review body, could pass a declaration or otherwise petition the Vice President to initiate the process, but barring his or her action, no implementation of Section 4 is possible. The amendment's framers deliberately placed the Vice President at the center of the process, as the President's constitutionally designated successor, and, in modern practice, the officer most closely associated with the chief executive. The Senate Judiciary Committee explained this arrangement in its report on the amendment: The combination of the judgment of the Vice President and a majority of the Cabinet members appears to furnish the most feasible formula without upsetting the fundamental checks and balances between the executive, legislative, and judicial branches. It would enable prompt action by the persons closest to President, both politically and physically, and presumably familiarity with his condition. Representative Richard Poff reinforced this argument when he cited the modern Vice President's unique relationship with the chief executive during House debate on the proposed Twenty-Fifth Amendment: The Vice President, a man of the same political party, a man originally chosen by the President, a man familiar with the President's health, a man who knows what great decisions of state are waiting to be made, a man intended by the authors of the Constitution to be the President's heir at death or upon disability, surely should participate in a decision involving the transfer of presidential powers. Since the Twenty-Fifth Amendment was ratified, the Vice President's role has been sometimes criticized for its potential for abuse. As one study noted, "scenarios for endless mischief have been constructed and widely printed as both fact and fiction, horror stories of what the 25 th [Amendment] might produce." The balance of opinion, however, suggests that a Vice President would be unlikely to press a politically motivated activation of Section 4. As Professor Feerick notes, "[h]istorically, Vice Presidents have been very hesitant to exercise what power they may have or to appear disloyal to the President." As another commentator put it, ... because of the Vice President's conflict of interest—the powers and duties transferred from the President would come to him—he was unlikely to move except in clear cases of disability. History had suggested that vice-presidential timidity was a greater problem than vice-presidential aggression. Logic would confirm that intuition. A politically ambitious Vice President would seem unlikely to risk his political future by seeming to supplant the President improvidently. The Twenty-Fifth Amendment's authors included an additional institutional restraint to any inappropriate action by the Vice President: mindful of the Constitution's many safety mechanisms and fallback procedures, the amendment requires that any activation of Section 4 must be agreed to jointly by the Vice President and a majority of either the Cabinet or "such other body as Congress by law may provide." The President's role under Section 4 is essentially reactive: the chief executive may at any time issue a declaration stating that he or she is no longer disabled. If the Acting President, together with a majority of the Cabinet or disability review body, does not contest this finding within four days, the President resumes the powers and duties of the office; if, as noted earlier in this report, they do contest the President's declaration, the issue is decided by Congress. The President, who retains the office of chief executive throughout a disability, can declare the disability to be ended at any time, and can do so any number of times. Neither Section 3 nor Section 4 can affect the President's tenure in office or term of office—barring death, resignation, or impeachment, a chief executive who is disabled for any length of time under the amendment's provisions continues in office until the term expires. The Cabinet's role in determining presidential inability is one of the novel features of the Twenty-Fifth Amendment. A role for the Cabinet in assessing and declaring presidential disability had been discussed during the disabilities of Presidents Garfield and Wilson and was suggested by author Ruth Silva in Presidential Succession , her 1951 study of the question. Accounts of the amendment's legislative history reveal general support by Senators and Representatives active in the process, as well as by witnesses offering testimony during hearings on the proposal. As noted above, the Senate Judiciary Committee report on S.J.Res. 1 (89 th Congress), the proposed amendment, stated that "the combination of the judgment of the Vice President and a majority of the Cabinet members appears to furnish the most feasible formula without upsetting the fundamental checks and balances.... It would enable prompt action by the persons closest to the President, both politically and physically, and presumably most familiar with his condition. It is assumed that such decision would be made only after adequate consultation with medical experts who were intricately (sic) familiar with the President's physical and mental condition." Professor Feerick echoed these findings, noting that, with some exceptions, there was consensus among witnesses at hearings that [t]he Cabinet was said to be the best possible body to assist the Vice President in making his determination because its members are close to the president and likely to be aware of any inability and to know whether the circumstances require that the Vice President act as President. Furthermore, the use of the Cabinet would be consistent with the principle of separation of powers and would inspire public confidence. The question of who constituted the Cabinet was decided during the course of committee hearings and congressional debate on the amendment: it was agreed that the Cabinet consisted of "the principal officers of the executive departments," the department secretaries only. Certain other officers who are customarily accorded "cabinet rank"—such as the U.S. Ambassador to the United Nations, the U.S. Trade Representative, secretaries of the individual armed services, and the President's personal staff members—were intended to be excluded from that definition. At the present time, the following 15 officers would be eligible for inclusion in a discussion or finding of presidential disability under Section 4: Secretary of State Secretary of the Treasury Secretary of Defense Attorney General Secretary of the Interior Secretary of Agriculture Secretary of Commerce Secretary of Labor Secretary of Health and Human Services Secretary of Housing and Urban Development Secretary of Transportation Secretary of Energy Secretary of Education Secretary of Veterans Affairs Secretary of Homeland Security The Vice President would need the concurrence of at least 8 of the 15 officers listed above in order to activate a declaration of presidential disability. Respecting details of the Cabinet's participation, the House Judiciary Committee's 1965 report on the proposed amendment stated that in the event of a vacancy in any of the Cabinet offices, "the acting head would be authorized to participate in a presidential disability determination," while Feerick notes that the amendment's supporters asserted that recess appointees to Cabinet offices would also be eligible to participate in a Section 4 deliberation. While the Cabinet has also figured in some of the "scenarios for endless mischief" cited above, the balance of opinion on this question at the time that the Miller Center Commission published its report in 1988 suggested that Cabinet would be likely to act with great caution in any implementation of Section 4: ... while the Cabinet members are apt to be loyal to the administration and have first hand awareness of the president's condition, they are also likely to be overly reluctant to acknowledge publicly that the president has any deficiencies. Debate in Congress on the question of the alternative body was vigorous; the reports of both the Senate and House Judiciary Committees give credit to opponents of this proposal. Arguments in its favor appear to have been persuasive, even if the report was less than enthusiastic in its endorsement of a disability review body: "However, in the interest of providing flexibility for the future, the Amendment would authorize Congress to designate a different body if this were deemed desirable in light of subsequent experience." Congress is given a broad mandate to fashion the disability review body, including deciding its composition. According to Professor Feerick, the following options were mentioned during debate on the amendment: Congress could designate itself; it could retain the Cabinet but enlarge or shrink it; or it could include a mix of Members of Congress and distinguished public figures. Others have suggested Justices of the Supreme Court, medical doctors, and the Surgeon General as possible members of such a body. In the context of the checks and balances of the legislative process, Congress has broad authority over the lifespan of a disability panel. It could establish the body as a permanent institution. Alternatively, it could require reauthorization at regular intervals—for instance, specifying renewal of its mandate with each change of presidential administration. A review panel established by law during a Section 4 disability could also be limited by Congress to the duration of the disability during which it was created. As Senator Jacob Javits noted during debate on the amendment, Congress has the right to provide for the exclusivity of that body in exercising this authority, as well as the way in which the body shall exercise that authority, and other pertinent details necessary to the creation of such a body, its continuance, its way of meeting, the rules of the procedure, and the way in which it shall exercise its power. As noted above, the amendment's framers placed a check on Congress's ability to create a disability review body by requiring that it be created "by law." Any bill or joint resolution to establish such an institution would thus be subject to the full range of the legislative process before it was enacted, up to and including the President's veto. Some observers have argued that any President might be reluctant to cooperate in establishing a disability review panel while she or he is in good health. Here again, a deterrent factor might involve the "scenarios for endless mischief ... and horror stories of what the 25 th [Amendment] might produce." Barring a veto override, it could be effected only with the President's approval. Section 4 does not place a time constraint on creation of a disability review panel. A panel could be established at any time—at the beginning of a presidential administration, or in connection with a declared presidential disability. Some studies of the Twenty-Fifth Amendment considered this option, suggesting the prospective establishment of a standing review body—"standby equipment"—that would supplant the Cabinet and join with the Vice President in declaring a Section 4 presidential disability. Establishing a disability review body on a contingent basis—that is, during the actual implementation of a Section 4 disability—would, however, face a considerable obstacle in the timetable set by Section 4. No more than 21 calendar days would be available to Congress for the consideration of legislation establishing such an entity. The scope of Congress's action in a Section 4 disability declaration is potentially varied. It could be minimal, or it could be a role of profound constitutional gravity. Assuming an uncontroversial activation of Section 4 followed by the President's eventual recovery and reclamation of powers and duties, the only congressional certainty would be that the Speaker of the House of Representatives and the President pro tempore of the Senate would receive any initial declaration of disability from the Vice President and Cabinet (or disability review body) and the President's subsequent undisputed declaration that the disability was ended. The creation by law of a disability review body, as provided in Section 4 and discussed in detail earlier in this report, would place considerable additional responsibility on Congress. The legislative procedures necessary to establish such a body could present demands for what could involve complex action, potentially under strict time constraints. First, as discussed previously, the Constitution offers no guidance on composition of a review body: Congress would work from a blank slate should it decide to draft and consider the relevant legislation. Second, although a standing disability review body could be established prospectively under Section 4, it is also possible that Congress would decide to legislate in this area during a Section 4 disability, which would add an element of extreme urgency to such a task. Finally, the most significant element of Congress's role during a Section 4 disability would be if it were called on to decide the issue during an instance in which the President has declared that his or her disability, as declared by the Vice President and the Cabinet or disability review body, is ended and that he or she is fit to resume the powers and duties of office; and this declaration is disputed by the Vice President and the Cabinet or disability review body. Under these circumstances, in the words of the amendment, "Congress shall decide the issue ..." The amendment further directs Congress to convene within 48 hours if it is not in session, and to vote to decide whether or not the President is still disabled within 21 days. The first component of Section 4 is the declaration by the Vice President, acting in agreement with either a majority of Cabinet officers or a majority of the members of "such other body as Congress may by law provide" (the disability review body), that "the President is unable to discharge the powers and duties of his office...." This constitutes a contingent, or unanticipated, implementation of the amendment, a process that could be invoked if the President were unable for any reason, or unwilling, to declare a disability. The vehicle for activating this component of Section 4 is the same as that for Section 3: a "written declaration," which presumes a document jointly agreed to by the Vice President and his or her associates and transmitted to the Speaker and the President pro tempore. Although nothing in the amendment appears to prohibit the Cabinet or disability review body from acting independently to issue a declaration of presidential disability, such action would not be implemented without the Vice President's concurrence. It could be argued from this practical effect and the language in Section 4, which refers to the Vice President first and then the Cabinet or disability review body, that the amendment's framers intended the Vice President to take the lead in activating Section 4. Certainly, no action can be taken unless or until the Vice President issues a declaration. As with Section 3, the amendment's language arguably allows for a variety of delivery options, including physical delivery or transmission by various electronic media. It also suggests, however, that (1) these officers must receive the declaration before it can take effect; and (2) as with a declaration issued under Section 3, it would take effect immediately upon transmission to the Speaker and President pro tempore, regardless of whether Congress is in session. Given the constitutional gravity of such a declaration, it could be argued that, as with Section 3, the Speaker and the President pro tempore might appropriately issue an official acknowledgement of the declaration, either jointly or separately. Presidential disability scholar John Feerick reports that the amendment's sponsors envisioned a single document, a joint declaration by the Vice President and his or her constitutionally designated associates. Upon delivery of the declaration, the Vice President would "immediately" assume the powers and duties of the office as Acting President. Section 4 authorizes the President to declare his disability ended, again by transmitting to the Speaker and President pro tempore "a declaration that no inability exists." It should be noted that the amendment does not authorize the Vice President and the Cabinet or disability review body to declare a disability to be ended—that responsibility is vested exclusively in the chief executive. Following the declaration, the President would automatically resume the powers and duties of office unless the Vice President and a majority of the Cabinet or disability review body were to contest the declaration within four days. The language in the amendment thus arguably prescribes a waiting period of not less than four days between the President's declaration of recovery and resumption of the powers and duties of office. If, after the President has declared the disability to be ended, the Vice President/Acting President and a majority of the Cabinet or the disability review body determine that the President remains unable to resume the powers and duties of office, Section 4 empowers them to issue a written declaration, delivered to the Speaker and the President pro tempore, that the chief executive continues to be "unable to discharge the powers and duties of his office." This counter-declaration must be issued within four days of the President's assertion that the disability is over. The question of the disability is then decided by Congress. In the event the President and the Vice President and Cabinet or disability review body disagree on the continuation of the chief executive's disability, Congress decides the issue. Once the finding of continued disability is transmitted to the Speaker and President pro tempore, Congress is called on to act expeditiously to resolve the impasse. The amendment imposes two time constraints on Congress when it is called on to make this decision. First, Congress has 21 days to consider the question of the President's disability if it is in session when the Speaker and President pro tempore receive the joint declaration. If it is not in session, Congress must assemble within 48 hours, after which it then has 21 days to consider the question, a theoretical maximum of 23 days. If Congress determines by a two-thirds vote of the Members of both houses present and voting that "the President is unable to discharge the powers and duties of his office," the state of disability continues and "the Vice President shall continue to discharge the same as Acting President." If the required two-thirds majority is not obtained within the specified time period, "the President shall resume the powers and duties of his office[,]" presumably in most cases immediately following a failed vote in the House and Senate. The amendment does not address the question of appropriate procedures when Congress considers a disagreement on Section 4 presidential disability, but some of the elements might be discerned in the supporting congressional documents and original debate in Congress on the amendment. For instance, the Senate's report on the amendment emphasized that "congressional action [on a question of presidential disability] ... should be taken under the greatest sense of urgency." Congress would be able to proceed in considering the question in whatever manner it chooses: "[t]he discussion of the committee made it abundantly clear that the proceedings in the Congress ... would be pursued under rules prescribed, or to be prescribed, by the Congress itself." The language requiring a "two-thirds vote of both Houses" to confirm a finding of continued presidential disability was interpreted by the amendment's framers as meaning a two-thirds vote of Members present and voting, the same requirement as for proposal of a constitutional amendment. In addition, during debate on the amendment in the House of Representatives, Representative Richard Poff suggested that Congress had a de facto third option to its two choices of voting with the Vice President and Cabinet to confirm the disability or to agree with the President when considering a declaration—it could decide to take no action at all on continuation of the disability: "Circumstances may be such that the Congress by tacit agreement may want to uphold the President in some manner that will not amount to a public rebuke of the Vice President who is then Acting President.... [This] option furnishes the graceful vehicle." Disability scholar John Feerick also notes that "[s]ince an inability decision does not result in the President's removal from office, there is nothing to prevent him, after an adverse congressional decision[,] from issuing another recovery declaration, thereby activating the process again." Feerick further suggests that debates on the amendment indicate that "a congressional decision supporting either the President or Vice President is not subject to judicial review," on the grounds that this would be a "political question" of the sort that the Supreme Court and lower courts have traditionally avoided. As noted earlier in this report, Section 3 of the Twenty-Fifth Amendment has been implemented on several occasions. In contrast, Section 4 has not been activated since the amendment was ratified in 1967. According to contemporary accounts, however, the possibility of declaring a presidential disability under Section 4 was considered twice during the Administration of President Ronald Reagan (1981-1989). On March 30, 1981, President Reagan was shot and seriously wounded while leaving a speaking engagement in Washington. When the extent of his injuries became known, the President was rushed to George Washington University Hospital for emergency surgery, for which he was anesthetized. During and after the surgery, Cabinet members and presidential advisors met at the White House to consider the situation, at which time Fred Fielding, a presidential counsel, briefed the principals on the disability provisions of the Twenty-Fifth Amendment, using a draft position paper he had prepared in anticipation of such an event. According to Fielding, the group discussed implementing Section 4 of the amendment, until it was learned that the President's surgery had been successful and that his medical team predicted a full recovery. Presidential succession and disability scholar John D. Feerick further noted in The Twenty- Fifth Amendmen t : Its Complete History and Applications that James A. Baker (the Chief of Staff), Michael Deaver (his deputy), and Edwin Meese (counselor to the President) discussed implementing Section 4 of the amendment while they were at the hospital, during the President's surgery. When they learned that the President's condition was stable and a full recovery was anticipated, they decided not to consider Section 4. Feerick notes that these discussions took place while Vice President George H. W. Bush, whose action would have been required to implement Section 4, was not present, and that "it seems clear that the issue was resolved by a handful of officials without the kind of formal action by the Cabinet and Vice President that the Amendments contemplated." Presidential counsel Fielding later recalled that when Vice President Bush arrived at the White House, he conferred with Fielding, Attorney General William French Smith, Chief of Staff Baker, and Defense Secretary Caspar Weinberger, at which time they confirmed the earlier decision not to proceed to invoke Section 4. Six years later, early in 1987, former Senator Howard Baker, President Reagan's newly appointed Chief of Staff, reportedly received a memorandum from an aide that claimed the President was "inattentive and inept." The memorandum went on to urge Baker to "consider the possibility that section four of the 25 th Amendment might be applied." Chief of Staff Baker, however, found the President to be "attentive and alert" at a March 2 meeting and dismissed the report as inaccurate. He later said that when he observed President Reagan, "[i]t did not take me a day to figure out that this man was sharp, well organized, fully capable, and the same person that I knew from previous years." Section 4 of the Twenty-Fifth Amendment has been questioned because of the arguable complexity of its provisions, and its potential for misuse, as discussed earlier in this report. In its 1965 report on the amendment, the Senate Judiciary Committee reasoned that "[t]he final success of any constitutional arrangement to secure continuity in cases of inability must depend upon public opinion with a possession of a sense of 'constitutional morality.'" Another commentator noted the following: Because the Amendment deals with unpredictable human frailties, it is not a perfect solution, but few exist in constitutional history. The task is to make the most of what the Amendment encompasses. Success depends on the good judgment and good sense of our leaders and the citizenry. As noted in the previous section, presidential counsel Fred Fielding had begun to prepare a contingency planning notebook on presidential succession in 1981, early in the Reagan Administration. According to Fielding, the book "was really a kind of emergency manual, which detailed every possible scenario that we could think of for presidential inability or even vice presidential inability." Although it was in draft form at the time, Fielding and various senior members of the President's staff consulted it on March 30, 1981, after the President had been shot by a would-be assassin. The disability briefing manual was subsequently formalized and was available for consultation throughout the Reagan Administration. Various study groups and conferences on presidential disability and succession since that time have urged advance contingency planning by the President's staff. Although little or no information on these plans has been made available to the public, subsequent Presidents may have followed a course similar to that of the Reagan White House. For instance, several sources claimed that President George H. W. Bush (1989-1993) commissioned a "mostly secret" contingency planning document that was also adopted by President Bill Clinton (1993-2001) during his tenure in office. A 2010 Fordham Law Review article suggests that subsequent administrations may have adopted the same procedures: "Whether the same plan was adopted by the administrations of Presidents George W. Bush [2001-1009] and Barack Obama [2009-2017] is unclear, but it is known that both had comprehensive contingency plans." Two bills that would establish the "other body" contemplated in Section 4 of the Twenty-Fifth Amendment have been introduced to date in the 115 th Congress. Both would create a disability review panel as a potential partner with the Vice President in the presidential disability process. As noted earlier in this report, congressional authority to establish a body as an alternative to the Cabinet in determinations of Section 4 presidential disability is balanced both by the internal procedural requirements any bill would face in the legislative process, and the fact that it is subject to the President's approval, unless Congress were able to override a presidential veto. This measure was introduced by Representative Jamie Raskin on April 6, 2017. He has since been joined by 67 cosponsors at the time of this writing. H.R. 1987 has been referred to the Subcommittee on the Constitution and Civil Justice of the House Committee on the Judiciary and to the Committee on House Rules for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdictions of the committees concerned. No further action had been taken at the time of this writing. H.R. 1987 would establish a legislative branch commission that would supplant the Cabinet in determining presidential disability under Section 4 of the Twenty-Fifth Amendment. The 11 commission members would include eight physicians, four of whom would be psychiatrists, appointed by the following officers of Congress: two members appointed by the majority leader of the Senate; two members appointed by the minority leader of the Senate; two members appointed by the Speaker of the House of Representatives; and two members appointed by the minority leader of the House of Representatives. The commission would also include the following additional members: two members, one appointed jointly by Democratic leadership of the Senate and House of Representatives, and the other appointed jointly by the Republican leadership of the Senate and House of Representatives. The majority party "leader" in the House of Representatives for the purposes of this legislation is the Speaker. Each of these members shall have served in one of the following offices: President, Vice President, Secretary of State, Attorney General, or as Secretary of State, Defense, or as Surgeon General; and one member, to serve as Chair of the Commission, appointed by a simple majority vote by the aforementioned 10 appointed commission members. Commission members would serve a four-year term, and would be appointed during a 30-day period following every presidential election. Member vacancies would be "filled in the manner in which the original appointment was made," not later than 30 days after the vacancy occurred. The commission would be activated by the adoption of a concurrent resolution of Congress under expedited procedures; within 72 hours of the resolution's adoption, it would conduct "an examination of the President to determine whether the President is incapacitated, either mentally or physically...." The commission would be directed to take any "refusal by the President to undergo such examination" into account in its report to Congress. Not later than 72 hours after completing its examination of the President, it would be required to submit a report to the Speaker and the President pro tempore "describing the findings and conclusions of the examination." H.R. 1987 may be considered an example of a "medical professionals" model for a disability review body, as discussed in congressional debate on the Twenty-Fifth Amendment and reported by Robert E. Gilbert and the Miller Center in its Report on Presidential Disability and the Twenty Fifth Amendment . This bill would replace the Cabinet, vesting the authority to join the Vice President in making a Section 4 declaration of disability in a body (the Oversight Commission on Presidential Capacity) composed largely, but not exclusively, of physicians. In addition to offering professional expertise, a review panel on this model would arguably be capable of rendering a dispassionate, clinical decision in the event of a disability. As one scholar noted, "cabinet members also owe their high political positions to the president. They are members of the president's official family and understandably would be reluctant to appear disloyal to him." And, as the Miller Center suggested in its 1988 study, Cabinet members might be "overly reluctant to acknowledge that the President has any deficiencies." Conversely, Gilbert noted potential drawbacks to the medical professionals model, arguing that such a body might itself be unable to reach definitive resolution to a question of disability: "the President would find himself badly compromised by any adverse or ambiguous medical 'reports' it [the impairment review body] issued.... Indeed, conflicting medical opinions might well make it considerably more difficult for the vice president ... to act." It may also be noted that H.R. 1987 establishes an internal schedule for action by the panel: when directed by Congress to assemble and conduct an examination of the President, the commission would have 72 hours for this purpose, and another 72 hours to report its findings to the Speaker and President pro tempore. These requirements would be subordinate to the timeline established in the amendment for congressional consideration. The bill takes into consideration the fact that the President might not agree to a physical examination by the panel, directing it to take the President's refusal "into consideration" in reaching its conclusions concerning the President's condition. Although the bill does not refer to the primacy of the Vice President under Section 4, it may be noted that any finding of disability by an Oversight Commission on Presidential Capacity established by H.R. 1987 would be advisory absent the Vice President's participation in the presidential disability process. This measure was introduced by Representative Earl Blumenauer on April 14, 2017. He has since been joined by five cosponsors at the time of this writing. H.R. 2093 has been referred to the Subcommittee on the Constitution and Civil Justice of the House Committee on the Judiciary. No further action had been taken at the time of this writing. H.R. 2093 would establish an "alternative body to transmit a written declaration that the President is unable to discharge the powers and duties of his office in accordance with Section 4 of the 25 th Amendment to the Constitution." The members of the body would include all former Presidents and Vice Presidents who had not been impeached by the House of Representatives and convicted by the Senate. The size of the body would therefore vary according to the number of persons who were qualified to be members. Members would serve for life, unless removed by vote of a majority of the other members. The body's existence would depend on there being at least two qualified members (i.e., former Presidents or Vice Presidents who had not been impeached by the House and convicted by the Senate) alive at any time. Otherwise, the body would be terminated until there were two people meeting the membership criteria, at which time it would be reestablished. The powers and duties of the body would be limited to transmitting a written declaration that the President is unable to discharge the powers and duties of his office in accordance with Section 4 of the Twenty-Fifth Amendment to the Constitution. H.R. 2093 could be considered as a "distinguished statesmen" model for a disability review body. It would have an exclusive membership: only living former Presidents and Vice Presidents would be eligible. The principal argument for this approach suggests that with their accumulated experience, perspective, and wisdom, the former Presidents and Vice Presidents would be able to reach a balanced judgment in the case of a presidential disability. Proponents might further note that nothing in the bill's language appears to prohibit a distinguished statesmen panel from requesting information, advice, and counsel from the same sort of medical professionals who would comprise a review body under H.R. 1987 . Under the act, the body would have the theoretical authority to initiate a finding of presidential disability under Section 4, or to join a Vice President who had initiated such action in declaring a President to be disabled. The bill, however, would not change the constitutional requirement that both the Vice President and the disability review body must agree, either on an initial finding of disability, or on disputing a President's declaration that his or her inability no longer existed. Article II, Section 1, clause 6 of the Constitution governed presidential succession and inability from 1789 until the Twenty-Fifth Amendment was ratified in 1967. Throughout these years, however, it was never invoked to cover an instance of presidential disability, although several Presidents were arguably incapacitated, in some cases for weeks or months, during this period. Neither presidential succession nor the related question of disability was included in the original detailed plans of government—the New Jersey and Virginia Plans of Union—submitted to the Constitutional Convention when it convened in late May of 1787. Although they were included by Alexander Hamilton and Charles Pinckney in their less-well-known government outlines, these issues were first addressed in the Report of the Committee on Detail, on August 6, 1787. They continued to evolve until late in the Convention, when the following language was settled on: In case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office, the same shall devolve on the Vice president, and the Congress may by Law provide for the Case of Removal, Death, Resignation, or Inability of both the President and Vice President.... While the designation of the Vice President was clear, clause 6 was short on definitions and procedures. During the convention, John Dickinson of Pennsylvania noted this silence when he raised the issue in what was, perhaps, a rhetorical question. While seconding a postponement of the question on August 27, he was recorded in Madison's notes as follows: "Mr. Dickinson 2ded [seconded] the postponement[,] remarking that it was too vague. What is the extent of the term 'disability' & who is to be the judge of it?" The Second Congress (1791-1793) exercised its constitutional authority to provide for instances of the simultaneous vacancy or disability of both the President and Vice President in the Succession Act of 1792. Enacted as part of a larger bill that also set procedures for the impending 1792 presidential election, it did not provide any definition of disability and did not address the question of how a presidential disability would be treated: Sec. 9 That in case of death, resignation, removal or inability of both the President and Vice President of the United States, the President pro tempore of the Senate, and in case there shall be no President of the Senate, then the Speaker of the House of Representatives, for the time being shall act as President of the United States until the disability be removed or a President shall be elected. Thus, the latter of Dickinson's questions was to remain unanswered until ratification of the Twenty-Fifth Amendment in 1967, while the former, a clear-cut definition of what constitutes presidential inability or disability, arguably remains at issue today. The ambiguities inherent in clause 6 may have contributed to its dormancy over the long period between adoption of the Constitution and ratification of the Twenty-Fifth Amendment. During these 178 years, eight Presidents died in office and were succeeded largely without serious incident, notwithstanding controversy as to whether the Vice President acted as President or became the President under such circumstances. Presidential disability, however, presented a more difficult issue. In an era when sanitation was poor, the practice of medicine problematic at best, and germ theory unknown, it is not surprising that many Presidents suffered from disabling illnesses at some point of their tenure. For instance, George Washington contracted pneumonia in 1790 and lay near death for two weeks. James Madison suffered from a disabling fever during his presidency. Andrew Jackson lived with the after-effects of smallpox and malaria, and for much of his life carried two bullets in his body, which may have caused long-term lead poisoning. President James A. Garfield's assassination in 1881 was the first instance in which officials of the federal government were confronted with the situation of a President who was disabled to the extent that he was incapable of carrying out his duties over an extended period. President Garfield was shot by a disappointed office-seeker in Washington on July 2, 1881, four months after his inauguration. One of two bullets fired by the assassin lodged in his spine, but physicians were unable to locate it. As the summer passed, his condition fluctuated, although in September he was well enough to be transported to the New Jersey shore, where it was believed his health would benefit from the ocean air. Within a week, however, his condition began to deteriorate, and on September 19, the President died from complications of blood poisoning and pneumonia. Throughout Garfield's long ordeal, several succession-related questions were privately raised among executive branch officers and Members of Congress. One concerned the issue of disability—should the constitutional provision covering presidential inability be implemented? Was clause 6 intended to cover mental or physical disability, or both? If it were implemented, who or what body had the authority to do so? If the President were declared to be disabled, would the Vice President continue to act as President for the balance of the term? How and by whom could a disability declaration be rescinded? The Cabinet unanimously favored Vice President Chester A. Arthur assuming the President's duties, but was split on whether the President could reclaim his authority should he recover. In the final analysis, the Cabinet deferred action on the grounds that the President was too weak to discuss the question and that it could not act without consulting him. The President was reported to be lucid and conscious for much of the time between his wounding and death, but he had only a few visits with individual Cabinet officers, and official business was not discussed at these meetings. He signed only one official paper after he had been shot. Throughout this period, the Cabinet directed the executive departments, and the federal government essentially ran on "autopilot." Vice President Arthur paid one brief call on the Cabinet when he came to Washington early in July, but was never invited to see the President. Seeking to avoid the appearance of usurping the President's authority, Arthur returned to his home in New York on July 13 and went into virtual seclusion until he received notice of Garfield's death on September 19. Another instance of presidential inability or disability occurred in 1893, when President Grover Cleveland (1885-1889, 1893-1897) twice underwent major surgery for oral cancer aboard a private yacht followed by a lengthy recovery, both of which events were kept secret for more than 20 years. The President's illness, surgery, and recovery took place in the context of the Panic of 1893, a collapse of financial markets that led to bank failures, widespread unemployment, and a prolonged business depression that lasted through 1897. It was feared by the President and his advisors that news of his illness might exacerbate the economic crisis. On June 30, 1893, and again in July, the President underwent surgery to remove a tumor from the roof of his mouth. The successful procedures were conducted by a team of doctors aboard a private yacht cruising in Long Island Sound. The press were informed that the President was on a fishing trip, followed by a vacation. The President recuperated at Gray Gables, his Massachusetts seaside home, for the month of July; during his recovery, he was fitted with an oral prosthesis, which made it possible for him to speak, and on August 5, he returned to Washington. According to disability and succession scholar John Feerick, Vice President Adlai Stevenson was never told of the operation, and only one Cabinet member was informed in advance. Other than contemporary rumors that were widely dismissed as sensational journalism, the operation remained a secret until 1917, nine years after Cleveland's death, when a member of the surgical team reported the event in The Saturday Evening Post . During the autumn of 1919, President Woodrow Wilson (1913-1921) campaigned across the country to build support for the Covenant of the League of Nations, a politically contentious component of the Treaty of Versailles, the post-World War I settlement that he had submitted for ratification by the Senate. On September 25, exhausted from a demanding schedule, Wilson suffered an apparent stroke in Pueblo, Colorado. The balance of his speaking tour was canceled, and the President returned to Washington, where he suffered a second stroke on October 2. This one was disabling: his left side was paralyzed, and his vision, speech, and emotions were affected. Wilson never fully recovered. First Lady Edith Galt Wilson, Admiral Cary Grayson, the President's physician, and Joseph Tumulty, his private secretary, screened all visitors and were reported to have made numerous policy decisions on the President's behalf. At the same time, other official business went unattended: one source notes that 28 bills became law without the President's signature during the period of his most severe disability. Between October 2, 1919, and February 7, 1920, Secretary of State Robert Lansing called the Cabinet into session on 21 occasions to transact routine government business, evidently without Wilson's knowledge. At one meeting, Cabinet members discussed whether Vice President Thomas Marshall might assume the duties of office, but Admiral Grayson and Tumulty personally intervened to end the discussion. When President Wilson eventually learned about the meetings, he accused Lansing of attempting to usurp presidential authority and asked for, and received, his resignation. Lansing's dismissal generated public questions concerning the President's disability, and several bills to provide for instances of future presidential disabilities were introduced in the House of Representatives, but no further action was taken beyond hearings in the House Judiciary Committee. By the time his term ended on March 4, 1921, Wilson had regained sufficient strength to walk and conduct routine business, but he never fully recovered. As one observer noted, "[i]n this depressed and semiparalyzed state, the President of the United States would wait out the rest of his term...." President Franklin Roosevelt's lower body had been paralyzed by an attack of polio in 1921, but he remained otherwise physically and intellectually vigorous throughout most of his 12 years in office (1933-1945). While he never experienced a sudden and dramatic disability comparable to that which afflicted Wilson, some observers maintain that Roosevelt's health began to decline rapidly during the last year of his life, hampering his ability to discharge the powers and duties of the presidency. By many accounts, Roosevelt's physical condition deteriorated during World War II. As the war progressed, he coped daily with the strain of managing the U.S. war effort, undertook long and fatiguing trips to overseas conferences on war planning and postwar arrangements, and conducted a physically demanding reelection campaign for his fourth term as President in 1944. As the President continued to weaken, his schedule was curtailed, and specialists in cardiology examined him in March 1944. According to one account, "all laboratory and functional data ... pointed to congestive heart failure." Although Roosevelt rebounded later in the year, apparently energized by his successful reelection campaign, his blood pressure remained "alarmingly high." Following the campaign, the President's health resumed its decline. After his inauguration to a fourth term on January 20, 1945, the President left Washington on January 23 for a long and what has been described as an exhausting trip to the U.S.S.R. to attend the February 4-11 Yalta Conference, a "summit" meeting of Allied leaders to settle postwar arrangements. Following the conference, the President flew to Egypt for additional deliberations before boarding the USS Quincy for the voyage home. Roosevelt docked at Newport News, Virginia, on February 27, returned to Washington, and made a report on the conference before a joint session of Congress on March 1. On March 29, on the advice of his medical team, the President left Washington for a vacation at his Georgia retreat at Warm Springs, where he died of a likely cerebral hemorrhage on April 12. The inability or unwillingness of the President and his advisors to anticipate his disability or death led to the succession of Harry Truman, who had 10 years' prior experience in the Senate before assuming "the second office," but who, even following his inauguration as Vice President, was seen by some as largely uninformed on major issues and not fully prepared to assume the presidency. Between the opening of the presidential campaign in September 1944 and the President's death in April, the two men conferred in person infrequently: Truman met with Roosevelt on just eight occasions. During his short time as Vice President, Truman was neither briefed on major war issues, nor included in confidential policy discussions. For instance, he was informed about the Manhattan Project and the development of the atomic bomb by the Secretary of War only after he took office as President. As with Wilson, some said the President's medical team concealed his declining condition; his primary physician's "few appearances before the White House scribes were occasions for prepared statements about [what he characterized as] the president's generally robust health, with only infrequent reference to a 'cold or sinusitis.'" Succession scholar John D. Feerick notes that, in the final analysis, "[t]he extent to which President Franklin D. Roosevelt was disabled, if at all, during the last year of his life is unclear.... What is clear is that the President refused to acknowledge his medical condition lest his goals of ending World War II and of establishing an organization for world peace be thwarted." Two principal issues associated with the Wilson inability could also be cited as factors in the physical decline of President Franklin Roosevelt during the last year of his life. As noted above, news of the President's condition was denied by his inner circle of advisors, and the Vice President was never informed of the President's condition or briefed on pending issues, and was excluded from any role in, or information on, policy determination and decisionmaking. The attention of Congress and the nation focused to perhaps a greater extent in the 1950s on the question of presidential disability. The three illnesses suffered by President Dwight Eisenhower during his tenure in office (1953-1961) that left him hospitalized or physically disabled for varying periods while he convalesced were a major contributing factor to this attention. There was, however, a departure from official reporting practices associated with the earlier illnesses and disabilities suffered by Presidents Wilson and Roosevelt, which had been concealed from the public. In contrast, President Eisenhower and his staff decided that his illnesses should be reported through regular White House announcements that were then published in the press and reported on radio and TV. In further contrast to these earlier presidential disabilities, Vice President Richard Nixon was kept informed of the President's condition throughout his illnesses. In a change from previous Vice Presidents, he had been informed from the beginning on policy questions and given a previously unprecedented level of participation in administration policy consideration. During the President's illnesses, he was further briefed by the President's closest advisors and was authorized to discharge routine executive duties during Eisenhower's recuperation. During his first term, President Eisenhower suffered a heart attack while on vacation in Colorado and was hospitalized between September 24 and November 11, 1955. After a further two-month convalescence, he returned to the White House, resuming a full schedule of duties on January 16, 1956. Less than a year later, on June 9, 1956, the President underwent surgery for a partial intestinal blockage resulting from what was later diagnosed as Crohn's disease. On November 25 of the same year, he suffered a mild stroke, from which he apparently recovered in little more than a week. During his illnesses, the President arrived at an informal understanding with Vice President Nixon whereby the latter represented him at official functions and presided over Cabinet meetings. On March 3, 1958, the disability agreement was formalized when President Eisenhower released a document outlining the Vice President's role in the event of his incapacitation any time during the balance of his term: The President and the Vice President have agreed that the following procedures are in accord with the purposes and provisions of Article 2, Section I, of the Constitution, dealing with Presidential inability. They believe that these procedures, which are intended to apply to themselves only, are in no sense outside or contrary to the Constitution but are consistent with its present provisions and implement its clear intent. (1) In the event of inability the President would—if possible—so inform the Vice President, and the Vice President would serve as Acting President, exercising the powers and duties of the Office until the inability had ended. (2) In the event of an inability which would prevent the President from so communicating with the Vice President, the Vice President, after such consultation as seems to him appropriate under the circumstances, would decide upon the devolution of the powers and duties of the Office and would serve as Acting President until the inability had ended. (3) The President, in either event, would determine when the inability had ended and at that time would resume the full exercise of the powers and duties of the Office. The Eisenhower-Nixon arrangement closely prefigured Sections 3 and 4 of the Twenty-Fifth Amendment in its general order and the procedures it established. It also set a precedent for later presidencies: Presidents John F. Kennedy (1961-1963) and Lyndon B. Johnson (1963-1969) implemented similar agreements with their Vice Presidents. A House Judiciary Committee staff study had addressed the question of disability in 1955, even before the President's first illness. Hearings on alternative vehicles to provide for instances of presidential disability, which included a draft constitutional amendment offered by the Administration, were held in the House Judiciary Committee in 1956. The Senate Judiciary Committee's Subcommittee on Constitutional Amendments convened hearings in 1958, and voted to report amendments on presidential disability in both the 85 th (S.J.Res.61) and 86 th (S.J.Res. 40) Congresses, but the full Judiciary Committee did not act on either proposal. In fact, no floor action was taken in either chamber on the question during this period. According to several accounts, congressional leadership was unwilling to go beyond committee hearings on the disability question or on the disability agreement in order to avoid the appearance of partisan interest or congressional interference in executive branch prerogatives. Concerns about presidential disability among the general public arguably eased following the election in 1960 of John F. Kennedy. When President Eisenhower left office at 70, he was the oldest person to have served as President up to that time, while Kennedy, at 43, was the youngest elected President in the nation's history. The issue continued to be of interest to many in Congress, however. In 1963, Senators Estes Kefauver and Kenneth Keating introduced a resolution, S.J.Res. 35 (88 th Congress) that proposed a constitutional amendment to establish procedures in the event of presidential disability. As Chairman of the Senate Judiciary Committee's Subcommittee on Constitutional Amendments, Kefauver convened hearings on the amendment in June 1963, with the support of the Kennedy Administration. The proposal was reported favorably to the full Judiciary Committee on June 25, but Kefauver's unanticipated death on August 10 brought an end to further legislative activity. The situation was dramatically transformed by the assassination of President Kennedy on November 22, 1963. News of his death astonished and saddened the nation, and while the President succumbed to his wounds within an hour of being shot, the issue of disability, which had been so recently before Congress, was soon raised again: "[s]uppose President Kennedy, following the shooting had lingered in a coma? Who could declare him unable to perform the duties of his office?" To this, the question of succession was now also added: Vice President Johnson was sworn in as President the same day, but under the Constitution, the vice presidency would remain vacant for 14 months, until the President and Vice President to be elected were inaugurated on January 20, 1965. During that period, the Speaker of the House of Representatives and the President pro tempore of the Senate were first and second in line to succeed the President. Among the compelling images of the period were those of President Johnson when he appeared before a televised joint session of Congress on November 27, 1963. House Speaker John McCormack and Senate President pro tempore Carl Hayden were seated directly behind him on the dais in the House chamber. Press accounts of the period noted that McCormack was 71 years old, while Hayden was 86 and visibly frail. Against this backdrop, according to John Feerick, "[t]he ability of both to act as President should it become necessary was seriously questioned, and it was suggested that they resign their positions so that persons more suitable in the line of succession could replace them." Before the end of 1963, Senator Birch Bayh, new chairman of the Subcommittee on Constitutional Amendments, introduced an amendment proposal, S.J.Res. 139 in the 88 th Congress. After amendments in the subcommittee, the measure as reported to the full Judiciary Committee incorporated provisions that were substantially identical to the amendment as it was eventually ratified. It settled the long-standing question of presidential succession, provided for the filling of vice presidential vacancies, and established provisions governing presidential disabilities substantially identical to those found in Sections 3 and 4 of the Twenty-Fifth Amendment. The Senate approved S.J.Res. 139 on September 29, 1964, but the House took no action on the proposal before the 88 th Congress adjourned sine die. Feerick attributes this at least in part to a protective reaction by House Members to questions raised about Speaker McCormack's fitness to serve as President during the 14-month period between the Kennedy assassination and the inauguration of Vice President Humphrey in January 1965. As Senator Bayh wrote, "[a]fter the next election, there would be a Vice President, and such a legislative proposal could no longer be interpreted as an affront to the Speaker of the House, or, to a lesser extent, to Senator Hayden." The proposed amendment was introduced early in the 90 th Congress as S.J.Res. 1 by Senator Bayh, with a companion measure, introduced in the House as H.J.Res. 1, by Representative Emanuel Celler of New York, the House Judiciary Committee chairman. In the Senate, the measure was reported favorably by the Subcommittee on Constitutional Amendments on February 1, 1965, and by the full Judiciary Committee on February 10. The primary focus of debate on the Senate floor concerned Section 4, particularly the procedures for resolving presidential disability disputes. Some Senators questioned the wisdom of including such a level of detail within the amendment, preferring that Congress be authorized to provide these arrangements by statute. Supporters of the Bayh proposal as reported prevailed, however, and the resolution was adopted by the Senate on February 19, with only minor technical amendments. The House of Representatives began consideration of H.J.Res. 1 with hearings before the full Judiciary Committee in early 1965. Here, again, debate centered on procedures by which a President could be declared to be disabled, and on subsequent disputes that might arise as to whether—and when—the period of disability was over. The committee reported its version, which incorporated changes indicated by these concerns, on March 24. The full House passed its own amended version of the proposal April 13, by a vote of 368 to 29, voting to substitute it for the Senate resolution. Conferees required two months to resolve differences between the competing amendments before the House approved the conference report by a voice vote on June 30, with which the Senate concurred on July 6 by a vote of 68 to 5. The proposed amendment was circulated to the states on July 7, 1965. Although it enjoyed widespread support, most state legislatures were not able to begin ratification proceedings immediately, since many had adjourned for the year by the time the proposal was transmitted. Ratification by the necessary 38 states (three-fourths, as provided by the Constitution) required 19 months, and was completed on February 10, 1967, at which time the Twenty-Fifth Amendment became an operative part of the Constitution. The provisions of Article II, Section 1, clause 6 of the Constitution created uncertainties concerning aspects of (1) presidential succession, (2) vacancies in the vice presidency, and (3) presidential disability that remained unresolved from the time government under the Constitution was established in 1789 until ratification of the Twenty-Fifth Amendment in 1967. The Twenty-Fifth Amendment benefited from the alignment of factors that are shared by amendments that have met the stringent requirements imposed by Article V of the Constitution. Most successful constitutional amendments have emerged as responses to the stimulus of sudden transformative events, or have benefited from the "ripeness" of an idea that has been before the public for many years. Both factors contributed to the successful proposal and ratification of the Twenty-Fifth Amendment. A decade of congressional investigation of the issue of presidential disability, combined with the shock President Kennedy's assassination, provided a galvanizing impetus to congressional action on issues—presidential succession and disability—that had been discussed and debated for decades. A final element was the committed approval and active leadership support from senior Members of both chambers, including House Judiciary Committee Chairman Emanuel Celler and Senator Birch Bayh, chairman of the Senate Judiciary Committee's Subcommittee on Constitutional Amendments. Of the amendment's two sections concerned with presidential disability, Section 3 has been explicitly implemented twice since ratification, during the George W. Bush presidency, and implicitly once, during the Ronald Reagan presidency. On all three occasions, the President implemented and rescinded declarations of disability in connection with routine medical procedures that presented no complications and generated little comment. To date, it has arguably met its framers' expectations with little controversy or criticism. Section 4's comparative complexity, particularly its potential for declaring a President to be disabled without his or her concurrence, has troubled some observers. The section, they have argued, provides opportunities for political mischief and the potential usurpation of the President's authority. It might be further suggested that Section 4, like the impeachment process, is a procedure so powerful and fraught with constitutional and political implications that it would likely be used only in the most compelling circumstances, since its invocation might arguably precipitate a constitutional crisis. In response to these concerns, however, it may be noted from the record that Senator Bayh and the framers of the Twenty-Fifth Amendment gave these issues serious consideration and included powerful checks to deter abuse. These include the President's ability to challenge a Section 4 declaration of disability; the requirement of a timely decision by Congress; and, ultimately, the need for a two-thirds vote in both houses to sustain a contested Section 4 finding of disability by the Vice President and the Cabinet or disability review body. As one commentator quoted earlier in this report concluded, "[b]ecause the Amendment deals with unpredictable human frailties, it is not a perfect solution, but few exist in constitutional history. The task is to make the most of what the Amendment encompasses. Success depends on the good judgment and good sense of our leaders and the citizenry."
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Sections 3 and 4 of the Twenty-Fifth Amendment to the U.S. Constitution provide for presidential disability or inability. Section 3 of the amendment sets the procedure whereby a President may declare himself or herself "unable to discharge the powers and duties" of the office by transmitting a written declaration to this effect to the President pro tempore of the Senate (President pro tem) and the Speaker of the House of Representatives (Speaker). For the duration of the disability, the Vice President discharges the President's powers and duties as Acting President. When the President transmits "a written declaration to the contrary" to the President pro tem and the Speaker, he or she resumes the powers and duties of the office. Section 3 is intended to cover either unanticipated disability, such as injury or illness, or anticipated disability, such as medical treatment. It has been activated three times under circumstances in which the President underwent general anesthesia for medical treatment. It was informally implemented by President Ronald Reagan in 1985 and was formally implemented twice by President George W. Bush, in 2002 and 2007, under similar circumstances. Section 4 provides for instances of contingent presidential disability. It was intended by the Twenty-Fifth Amendment's authors to provide for cases in which a President was unable or unwilling to declare a disability. In these circumstances, the section authorizes the Vice President and a majority of either the Cabinet, or such other body established by law (a presidential disability review body), acting jointly, to declare the President to be disabled. When they transmit a written message to this effect to the President pro tem and the Speaker, the Vice President immediately assumes the powers and duties of the office as Acting President. If the President, at a time of his choice, transmits a written message to the President pro tem and the Speaker that no disability exists, he or she resumes office. The Vice President and a majority of the Cabinet or disability review body may, however, contest this finding by a written declaration to the contrary to the aforementioned officers, delivered within four days of the President's declaration. Congress then decides the question, assembling within 48 hours if it is not in session. If Congress decides by a two-thirds vote of both houses that the President is unable to discharge the duties of the office, the Vice President continues as Acting President until the disability is resolved. If the two-thirds margin is not obtained, or if Congress is in session at the time but does not vote on the question within 21 days of receiving the requisite declaration, then the President resumes the powers and duties of the office. Similarly, if Congress is not in session at the time, and assembles as required by Section 4, but does not vote within 21 days of the day on which it is required to assemble, then the President resumes the powers and duties of the office. Section 4's complexity and concern about its potential for misuse have raised questions among some observers that it could be implemented for political purposes. During debate on the amendment, its authors and proponents largely rejected such claims. They insisted the section was not intended to facilitate the removal of an unpopular or failed President, in support of which they cited checks and balances incorporated in the amendment that were designed to prevent abuse of the procedure. To date, Section 4 has not been implemented. Two bills pending in the 115th Congress would establish a presidential disability review body as authorized by Section 4 of the Twenty-Fifth Amendment: H.R. 1987, introduced on April 6, 2017, and H.R. 2093, introduced on April 14 of the same year. H.R. 1987 has been referred to the House Committee on House Rules and the House Judiciary Committee's Subcommittee on the Constitution and Civil Justice, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. H.R. 2093 has been referred to Judiciary Committee's Subcommittee on the Constitution and Civil Justice.
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Block grants have been a part of the American federal system since 1966. They are one of three general types of grants-in-aid programs: categorical grants, block grants, and general revenue sharing. These grants differ along three dimensions: the range of federal control over who receives the grant; the range of recipient discretion concerning aided activities; and the type, number, detail, and scope of grant program conditions. Categorical grants can be used only for a specifically aided program and usually are limited to narrowly defined activities; legislation generally details the program's parameters and specifies the types of funded activities. There are four types of categorical grants: project categorical grants, formula-project categorical grants, formula categorical grants, and open-end reimbursement categorical grants. There are currently 1,078 categorical grants. Block grants are a form of grant-in-aid that the federal government uses to provide state and local governments a specified amount of funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement. Although legislation generally details the program's parameters, state and local governments are typically provided greater flexibility in the use of the funds and are required to meet fewer administrative conditions than under categorical grants. There are currently 21 funded block grants, totaling about $50.8 billion in FY2014 (less than 10% of total federal grant-in-aid assistance). General revenue sharing provides state and local governments funds that are distributed by formula, accompanied with few restrictions on the purposes for which the funding may be spent, and have the least administrative conditions of any federal grant type. The general revenue sharing program is no longer operational. It distributed funds to states from 1972 through 1980 and to local governments from 1972 through 1986. Project categorical grants and general revenue sharing represent the ends of a continuum on the three dimensions differentiating grant types, with block grants being at the mid-point. However, there is some overlap among grant types in the middle of the continuum. For example, some block grants have characteristics normally associated with formula categorical grants. This overlap, and the variation in characteristics among block grants, helps to explain why there is some disagreement concerning precisely what is a block grant, and how many of them exist. Block grant advocates view block grants as a means to increase government efficiency and program effectiveness by redistributing power and accountability through decentralization and partial devolution of decision-making authority from the federal government to state and local governments. They also view them as a means to reduce government expenditures without sacrificing government services. For example, Representative Paul Ryan, chair of the House Committee on the Budget, has recommended that the federal share of Medicaid be converted into a block grant "tailored to meet each state's needs" as a means to improve "the health-care safety net for low-income Americans" and to save $732 billion over 10 years. Also, the House-passed FY2013, FY2014, and FY2015 Concurrent Budget Resolutions ( H.Con.Res. 112 , H.Con.Res. 25 and H.Con.Res. 96 ) proposed converting Medicaid from an open-ended, individual entitlement formula categorical grant into a block grant. The report accompanying the House's FY2015 Concurrent Budget Resolution estimated that converting Medicaid to a block grant would save $732 billion over 10 years. Block grant critics argue that block grants can undermine the achievement of national objectives and can be used as a "backdoor" means to reduce government spending on domestic issues. They also claim that the decentralized nature of block grants makes it difficult to measure block grant performance and to hold state and local government officials accountable for their decisions. This report provides an overview of the six grant types, provides criteria for defining a block grant and uses those criteria to provide a list of current block grants, examines competing perspectives concerning the use of block grants versus other grant mechanisms to achieve national goals, provides a brief historical overview of the role of block grants in American federalism, and examines recent changes to existing block grants and proposals to create new ones. Different federal departments and agencies, including the U.S. Census Bureau, the Government Accountability Office (GAO), and the U.S. Office of Management and Budget (OMB), use different definitions to determine what counts as a federal grant-in-aid program. However, there is agreement on the general characteristics associated with each grant type. Of the six grant types, project categorical grants typically impose the most restraint on recipients (see Table 1 ). Federal administrators have a high degree of control over who receives project categorical grants (recipients must apply to the appropriate federal agency for funding and compete against other potential recipients who also meet the program's specified eligibility criteria); recipients have relatively little discretion concerning aided activities (funds must be used for narrowly specified purposes); and there is a relatively high degree of federal administrative conditions attached to the grant, typically involving the imposition of federal standards for planning, project selection, fiscal management, administrative organization, and performance. General revenue sharing imposes the least restraint on recipients. Federal administrators have a low degree of discretion over who receives general revenue sharing (funding is allocated automatically to recipients by a formula or formulas specified in legislation); recipients have broad discretion concerning aided activities; and there is a relatively low degree of federal administrative conditions attached to the grant, typically involving periodic reporting criteria and the application of standard government accounting procedures. Block grants are at the midpoint in the continuum of recipient discretion. Federal administrators have a low degree of discretion over who receives block grants (after setting aside funding for administration and other specified activities, the remaining funds are typically allocated automatically to recipients by a formula or formulas specified in legislation); recipients have some discretion concerning aided activities (typically, funds can be used for a specified range of activities within a single functional area); and there is a moderate degree of federal administrative conditions attached to the grant, typically involving more than periodic reporting criteria and the application of standard government accounting procedures, but with fewer conditions attached to the grant than project categorical grants. In practice, some block grants have from their inception offered programmatic flexibility within a narrow range of activities. Others started out with few program restraints, but, over time, have become "re-categorized" as Congress has chosen to limit state and local government programmatic flexibility by imposing additional administrative and reporting requirements, typically to augment congressional oversight. For example, in its examination of 11 block grants in 1995, GAO found that in 9 of the 11 block grants Congress added new cost ceilings and set-asides or changed existing ones 58 times: These constraints often took the form of set-asides, requiring a minimum portion of funds to be used for a specific purpose, and cost-ceilings, specifying a maximum portion of funds that could be used for other purposes. This trend reduced state flexibility. Many of these restrictions were imposed because of congressional concern that states were not adequately meeting national needs. Congress has also increased programmatic flexibilities for some categorical grants, making them look increasingly like block grants. This blurring of characteristics can present challenges when analyzing the federal grants-in-aid system, as agencies and researchers may disagree over definitions and, as a result, reach different conclusions about block grants and their impact on American federalism and program performance. This blurring of characteristics should be kept in mind whenever generalizations are presented concerning the impact various grant types have on American federalism and program performance. Congress has a central role in shaping the scope and nature of the federal grants-in-aid system. In its deliberative, legislative role, Congress determines its objectives, decides which grant mechanism is best suited to achieve those objectives, and creates legislation to achieve its objectives, incorporating its chosen grant mechanism. It then exercises oversight to hold the Administration accountable for grant implementation and to determine whether the grant is achieving its objectives. The following criteria were used to determine the current number of block grants: eligibility is limited to state and local governments (not foreign governments or nongovernmental organizations); program funds are typically distributed using a formula that may be prescribed in legislation or regulations; and unlike categorical programs, which target funds for a specific activity, recipients undertake, at their discretion, a number of activities within a broad functional category aimed at addressing national objectives. Most of the 23 block grants (21 funded and 2 authorized, but not currently funded) identified in Table 2 award funding to state governments. Block grants that provide funding to local governments, including sub-state regional entities, either directly or through "pass-through" provisions, are identified in the table. Given disagreements over definitions, the list of block grants presented in Table 2 should be considered illustrative, as opposed to definitive, of the present number of block grants. A federalism scholar has suggested that efforts to enact block grants typically have been based on the following arguments: the national government was too large, and its elected officials and appointed officials were out of touch with grassroots needs and priorities; the federal bureaucracy was too powerful and prone to regulation; the United States Congress was too willing to preempt states and localities and to enact mandates without sufficient compensatory funding; the national government was too involved in domestic activities that were properly state or local affairs; there were too many narrow, overlapping federal grant-in-aid programs; and state governments were too often considered mere administrative subunits of the national government rather than the vital "laboratories of democracy" envisioned by Justice Louis Brandeis. He also suggested that efforts to enact block grants often met resistance in Congress because of congressional concerns about recipients' management capacity and commitment to the program, recipients' ability to make the "right" allocation choices, and the possibility that converting categorical grants to block grants might diminish both congressional and executive branch ability to provide effective program oversight. He also argued that Congress had a tendency to prefer categorical grants over block grants because they provide greater opportunity for receiving political credit. Another federalism scholar also suggested that block grant advocates have often found it difficult to gain congressional approval for block grants because their arguments have been superseded by political considerations: Why is it so difficult to do block granting? Why is it politically hard? And I think the answer's pretty straightforward: it seldom has more friends than it has enemies. Liberals prefer a categorical approach to intergovernmental grant giving. Essentially for two reasons: First of all, it locks in - it institutionalizes constituencies; that is, it sets up a pretty sturdy relationship between client groups; program authorizing committees in Congress; and patron agencies in the Executive Branch. And this pretty much ensures that intended target populations get funded, consistently. But, secondly, unlike block grants, which are often administered by formula, the categorical system gives politicians more opportunities for credit claiming. I'm going to quote, here from Yale political scientist David Mayhew on this subject. He says, "The categorical grant is for modern Democratic Congressmen what the Rivers and Harbors Act and the tariff were for pre-New Deal Republican Congressmen." That's true, but when the chips were down, conservatives are often not that keen about block granting, either.... They may like the fact that it may be somewhat easier to trim program spending, once programs are taken out of their political silos or cease to be entitlements. But they don't necessarily like the total lack of accountability, the absence of any strings to the money, once it goes out to the states. The following discussion examines in more detail the arguments presented by block grant advocates and block grant critics. Block grant advocates argue that federal administrators are often out of touch with grassroots needs and priorities whereas state and local government officials are "closer to the people" than federal administrators and, therefore, are better positioned to identify state and local government needs. They also argue that state and local government officials are more "visible" to the public than federal administrators and, as a result, are more likely to be held accountable for their actions. From their perspective, this heightened level of visibility and accountability encourages state and local government officials to seek the most efficient and cost-effective means to deliver program services. As a result, they view the added flexibility provided by block grants as a means to produce both better programmatic outcomes and at a lower cost. Block grant advocates also argue that the flexibility afforded to states and localities under block grant programs allows them to innovate and experiment with new approaches to governmental challenges that would not be possible if the funding were provided through more restrictive categorical grants. They argue that states have a history of learning from one another through the sharing of best practices at forums sponsored by the National Governors Association, through state and local government officials' participation in their respective national organizations' annual meetings, and through word-of-mouth. Block grant advocates also assert that block grants promote long-term planning. Unlike project categorical grants that require state and local government officials to compete for funding, block grants use formulas to distribute funds. They argue that the use of formulas provides recipients greater assurance that funding will be continued, which makes it easier for them to predict the amount of their grant and to create long-range plans for the funds' use. Block grant advocates also claim that block grants help to address what they believe is unnecessary and wasteful duplication among existing categorical grant programs. They believe that block grants eliminate this duplication and waste by consolidating categorical grant activities, and by providing states and localities the ability to set their own priorities and allocate funds accordingly. Block grant advocates also argue that block grants will generate cost savings by reducing federal administrative costs related to state and local government paperwork requirements. However, there has been no definitive, empirical evidence that total administrative costs have been significantly reduced by converting categorical grants into block grants. Some federalism scholars have argued that costs related to "administrative overhead burdens may only have been shifted from the national to the state to the local levels through block grants." Converting entitlement programs into block grants is viewed by some as a means to eliminate what they view as uncontrollable spending. By design, entitlement program funding responds automatically to economic and demographic changes. In the short run, enrollment in entitlement programs tends to increase during and shortly after economic recessions. In the long run, enrollment in entitlement programs tends to increase with overall increases in eligible populations. Because block grants have pre-determined funding amounts, converting entitlement programs, like Medicaid, into block grants has been seen by some as a means to impose greater fiscal discipline in the federal budget process. As a federalism scholar put it: We face, as a nation, severe, long-term fiscal problems. We face a collision between rising costs for elderly entitlements and a shrinking revenue base.... Over time, some things, many things have to give. And I think block grants are attractive to some policy makers, as a way over a long period of time to squeeze funding for some of the big low-income programs, relative to what it would be under the current entitlement funding structures and it enables it to do it without looking heartless by proposing to throw x-numbers of people over the side in program A, B, or C. Critics of block grants argue that providing state and local government officials increased flexibility concerning the use of the program's funds reduces the ability of federal administrators and Congress to provide effective program oversight. Because block grants purposively minimize administrative requirements, there are often no federal requirements for uniform data collection, making it difficult to compare data across states and, in the view of some, rendering whatever data are available unusable for effective federal agency and congressional oversight of program performance. To address this deficiency, Congress has added reporting requirements to some block grants and performance incentives that reward states for documented improvements to others. Block grant critics also assert that state and local government officials will use their increased programmatic flexibility to retarget resources away from individuals or communities with the greatest need toward those with greater political influence. They cite studies of the Community Development Block Grant program (CDBG) that found that political considerations did influence at least some local government officials when they allocated CDBG funds. Block grant advocates counter this argument by insisting that even if this was the case block grant formulas can be designed to adequately target funds to jurisdictions with the greatest need by including objective indicators of need in the distribution formula. They also point to various studies that have examined the retargeting issue and have not found evidence of significant redirection of funds. For example, a GAO study of the five block grants enacted prior to 1981 found that of the three block grant programs that had a stated objective of serving the economically needy, "there were no consistent differences between the earlier categorical programs and the pre-1981 block grants in targeting benefits to lower income people or to minority groups." A study of the block grants enacted during the Reagan Administration also found that states did not use their flexibility to redirect resources away from poor or low-income families. Block grant critics, however, counter these arguments by pointing out that block grant formulas often include population as a criterion of need to attract political support. From their perspective, including population in block grant formulas prevents block grants from adequately targeting assistance to needy individuals and jurisdictions. Some block grant critics oppose the consolidation of existing categorical grants into block grants because they believe that funding for the programs is likely to diminish over time, as it is thought to be more difficult to generate political support for broad-purpose, state-administered programs than for categorical programs targeted at specific purposes. For example, they cite a 1995 analysis of five block grants enacted during the 1980s that found that their real (inflation-adjusted) funding level decreased from 1986 to 1995, despite a 66% increase in total federal grant funding during that period; and a 2003 analysis of federal funding for 11 block grants that found that their inflation-adjusted funding levels fell by an average of 11%. Also, in 2006 GAO found that real per capita funding for the Community Development Block Grant (CDBG) program had declined since 1978 "by almost three-quarters from about $48 to about $13 per capita." From their perspective, block grants critics view block grants as a "backdoor" means to reduce government spending on domestic issues. Critics of block grants also contend that recipients may substitute federal block grant funds for their own financial contribution to an activity. Congress has addressed this concern by including state maintenance-of-effort provisions in grant programs which require recipients to maintain the level of funding for an activity that existed either before receiving the grant funds or over a specified period. A search of federal grants-in-aid programs in the Catalog of Federal Domestic Assistance revealed that 69 federal grants to state and local governments have state spending maintenance-of-effort (MOE) requirements to prevent state and local governments from substituting federal funds for existing state and local government funds. For example, the Temporary Assistance for Needy Families (TANF) block grant program requires states to maintain spending from their own funds on specified TANF or TANF-related activities at 75% of what was spent from state funds in FY1994 in TANF's predecessor programs of cash, emergency assistance, job training, and welfare-related child care spending ($10.4 billion in the aggregate for all states). States are required to maintain their own spending at least at that level, and the MOE requirement increases to 80% of FY1994 spending for states that fail to meet TANF work participation requirements. States failing to meet the MOE requirement are subject to a reduction in the state's subsequent year's block grant funding by $1 for each $1 shortfall from the required spending level. Since the first block grant's enactment in 1966, analysts and policy makers have tried to identify the circumstances in which block grants are most desirable and circumstances in which it is appropriate to consider converting existing categorical grants into block grants. A leading federalism scholar suggested that block grants should be considered if the following conditions are present: when the federal government desires to supplement service levels in certain broad program areas traditionally provided under state and local jurisdiction; when broad national objectives are consistent with state and local program objectives; when the federal government seeks to establish nationwide minimum levels of service in those areas; and when the federal government is satisfied that state and local governments know best how to set subordinate priorities and administer the program. In the past, Congress has consolidated categorical grant programs to create new block grants. The now–defunct U.S. Advisory Commission on Intergovernmental Relations (ACIR) said that it may be appropriate to terminate or consolidate categorical programs when programs are too small to have much impact or to be worth the cost of administration; programs do not embody essential and clear national objectives; programs get (or could get) most of their funding from state and local governments, or from fees for services, or could be shifted to the private sector; and in functional areas including health, education, and social services, that have a large number of programs; or in functional areas including justice, natural resources, and occupational health and safety, that have a high fragmentation index score (ACIR devised a fragmentation index that measured the percentage of grant programs in a functional category [i.e., housing, transportation] relative to the percentage of federal funding allocated to programs in the functional category). Block grants have been praised by some for providing state and local government officials additional flexibility to meet state and local needs, but are criticized by others because, in their view, accountability for results can be difficult when funding is allocated based on formulas and population counts rather than performance or meeting demonstrated need. In addition, block grants pose performance measurement challenges precisely because they can be used for a wide range of activities. For example, the obstacles to measuring and achieving results through block grants were reflected in their Program Assessment Rating Tool (PART) scores. PART was a set of questionnaires that the George W. Bush Administration developed to assess the effectiveness of seven different types of federal programs, in order to influence funding and management decisions. These seven "program types" included direct federal programs; competitive grant programs; block/formula grant programs; regulatory based programs; capital assets and service acquisition programs; credit programs; and research and development programs. The Obama Administration initially announced that it would continue to use PART to evaluate programs, but would seek changes to the questionnaires to reflect different performance goals and to ensure that "programs will not be measured in isolation, but assessed in the context of other programs that are serving the same population or meeting the same goals." It subsequently decided not to use PART scores to measure program performance. Instead, the Obama Administration decided to use program evaluations focused on performance improvement strategies to achieve identified high priority performance goals. PART focused on four program aspects: purpose and design (20%); strategic planning (10%); program management (20%); and program results/accountability (50%). Each program aspect was provided a percentage "effectiveness" rating (e.g., 85%) based on answers to a series of questions. The scores for the four program aspects were then averaged to create a single PART score. Programs were then rated, effective (193 in 2008), moderately effective (326 in 2008), adequate (297 in 2008), ineffective (26 in 2008), and results not demonstrated (173 in 2008). Block grants received the lowest average score of the seven PART program types in 2008, 5% of block grant programs assessed were rated ''ineffective,'' and 30% were rated ''results not demonstrated." Block grant critics point to PART's low ratings of block grants as proof that block grants should be avoided. Block grant advocates argue that PART's heavy weighting of program results/assessment in its calculations made PART a poor measure for assessing block grant performance. As one study concluded, the federal requirements ... tend to ignore the reality that many programs contain multiple goals and outcomes, rather than focusing on a single goal or outcome. These multiple goals and outcomes are often contradictory to each other. Yet PART pushes agencies to focus on single goals.... The federal efforts dealing with performance move against the devolution tide.... Efforts to hold federal government agencies accountable for the way programs are implemented actually assume that these agencies have legitimate authority to enforce the requirements that are included in performance measures. Block grant advocates also note that during his presidency President George W. Bush proposed several new block grants, despite PART's low scoring of block grant performance. Historically, the success or failure of block grant proposals has often been determined, in large part, on stakeholders' views of the program's future funding prospects. However, in recent years, this issue has taken on even greater prominence than in the past. Prior to 1995, the primary rationale provided by block grant advocates for converting categorical grants into block grants was to eliminate program overlap and duplication and introduce greater program efficiencies by providing state and local government officials additional flexibility in program management. Since then, block grant advocates have continued to argue that converting categorical grants into block grants reduces program overlap and duplication, but they have also increasingly touted block grants as a means to control federal spending by capping expenditures and closing open-ended entitlement programs. The recent increased emphasis on capping expenditures and closing previously open-ended entitlement programs has changed the nature of congressional consideration of what some have labeled "new-style" block grant proposals. During their deliberations, instead of focusing primarily on questions concerning state and local government administrative and fiscal capacity and commitment to the program, Congress has increasingly focused on the short- and long-term budgetary implications of block grants, both for the federal budget and for recipients. Some have argued that the new-style block grants send a mixed message to state and local government officials, providing them added programmatic authority, flexibility in administration, and greater freedom to innovate, but at the cost of restrained federal financial support and increased performance expectations. The following are some of the more recent block grant proposals that have received congressional consideration. In his FY2006 budget proposal, President George W. Bush included a Strengthening America's Communities Initiative, which would have combined 18 existing community and economic development programs (including the Community Development Block Grant program) into a two-part block grant. Administrative responsibility for the 18 programs would have been transferred from five federal agencies (the Department of Housing and Urban Development, the Economic Development Administration in the Department of Commerce, the Department of the Treasury, the Department of Health and Human Services, and the Department of Agriculture) to the Department of Commerce, which administers the programs of the Economic Development Administration. Under the proposal, the Department of Commerce would have administered a core block grant program and a bonus program. The bonus program would have awarded additional funds to communities that demonstrated efforts to improve economic conditions. The proposal would have reduced total funding for the 18 programs from $5.6 billion in FY2005 to $3.7 billion in FY2006. Congress rejected the Administration's budget proposal and funded all 18 programs at a total level of $5.3 billion. The National Commission on Fiscal Responsibility and Reform, a bipartisan debt commission established by President Obama by executive order, recommended in December 2010 that the federal-state responsibility for Medicaid be adjusted, with consideration given to the use of block grants for acute or long-term care as a means to contain Medicaid costs. In addition, as mentioned previously, Representative Paul Ryan, chair of the House Committee on the Budget, has recommended that the federal share of Medicaid be converted into a block grant as a means to "improve the health-care safety net for low-income Americans" and to save $732 billion over 10 years. Also, the House-passed FY2013, FY2014, and FY2015 Concurrent Budget Resolutions ( H.Con.Res. 112 , H.Con.Res. 25 , and H.Con.Res. 96 ) proposed converting Medicaid from an open-ended, individual entitlement formula categorical grant into a block grant. The report accompanying the House Concurrent Budget Resolution for FY2015 estimated that converting Medicaid into a block grant would save $732 billion over 10 years. Advocates of converting Medicaid into a block grant argue that Medicaid's current structure gives states a perverse incentive to expand the program and little incentive to save. For every dollar that a state government spends on Medicaid, the federal government pays an average of 57 cents. Expanding Medicaid coverage during boom years is tempting and easy to do—state governments pay less than half the cost. Yet to restrain Medicaid's growth, states must rescind a dollar's worth of coverage to save 43 cents. The recently enacted health-care law adds even more liabilities to an already unsustainable program. CBO estimates the new law will increase federal Medicaid spending by $792 billion over the 2015-2024 period. This is due to the millions of new beneficiaries that the law drives into the program. In fact, CBO estimates that in 2024, 13 million new enrollees will be added to the Medicaid program as a result of the Affordable Care Act. For all these reasons, this budget recommends a fundamental reform of the Medicaid program. …The exact contours of a Medicaid reform—as well as other policies flowing from the fiscal assumptions in this budget resolution—will be determined by the committees of jurisdiction. Nevertheless, the need for fundamental Medicaid reform and other measures to slow the growth of federal spending are critical, and one set of potential approaches is described below. … Provide State Flexibility on Medicaid. One way to secure the Medicaid benefit is by converting the federal share of Medicaid spending into an allotment that each state could tailor to meet its needs, indexed for inflation and population growth. Such a reform would end the misguided one-size-fits-all approach that has tied the hands of state governments. States would no longer be shackled by federally determined program requirements and enrollment criteria. Instead, each state would have the freedom and flexibility to tailor a Medicaid program that fit the needs of its unique population. The budget resolution proposes to transform Medicaid from an open-ended entitlement into a block-granted program like SCHIP. These programs would be unified under the proposal and grown together for population growth and inflation. Opponents argue that "Block-granting" Medicaid is simply code for deep, arbitrary cuts in support to the most vulnerable seniors, individuals with disabilities, and low-income children.… Claiming to "repair" Medicaid by cutting it by a third is like saving a drowning person by throwing them an anchor. … Millions of seniors in nursing homes will be especially hurt by the reckless cuts to Medicaid. Over two-thirds of the base Medicaid program supports the elderly and the disabled and this budget slashes the Medicaid budget in its last year by a full 25%—in addition to repealing the Affordable Care Act expansion of the program. … This [House version of the concurrent] budget [resolution for FY2015] reserves perhaps its cruelest blow to those seeking to climb out of poverty and into the middle class.… It absolutely decimates safety net programs—like SNAP and Medicaid—designed to stop people from falling into deep poverty. The House's FY2015 Concurrent Budget Resolution also would convert the Supplemental Nutrition Assistance Program (food stamps) into a block grant, estimating the savings as $125 billion over 10 years. It also would terminate the Social Services Block Grant indicating that the grant provides services that "… are also funded by other Federal programs." President Obama has not issued a formal federalism plan and has not advocated a major shift in funding priorities within functional categories. However, the expansion of Medicaid eligibility under P.L. 111-148 , ACA, which President Obama strongly endorsed, is expected to increase health care's position as the leading category of federal assistance to state and local governments. The ACA also either authorized or amended 71 federal categorical grants to state and local governments, further enhancing the role of categorical grants in the intergovernmental grant-in-aid system. The Obama Administration has also not formally advocated a major shift in funding priorities from categorical grants to block grants, or from block grants to categorical grants. However, the number of funded block grants has declined somewhat during the Obama Administration, from 24 in 2009 to 21 in 2014. The Obama Administration supported ARRA's funding for two, relatively significant temporary block grants (the $53.6 billion Government Services State Fiscal Stabilization Fund for public education; and the $3.2 billion Energy Efficiency and Conservation Block Grant for energy efficiency and conservation programs) and ARRA's provision of additional, temporary funding to TANF ($5 billion), the Child Care and Development Block Grant ($2 billion), the Community Development Block Grant ($1 billion), the Community Services Block Grant ($1 billion), and the Native American Housing Block Grant ($510 million) programs. However, the Obama Administration has generally advocated enactment of new competitive categorical grant programs (e.g., TIGER surface transportation grants and Race to the Top education grants) rather than the expansion of existing block grants or the creation of new ones. For example, in its FY2015 budget request, the Obama Administration asked Congress to permanently authorize the TIGER surface transportation grant program "to help spur innovation by competitively awarding funding to projects around the Nation" and to provide $4 billion "for a competitive grant program, Fixing and Accelerating Surface Transportation, designed to create incentives for State and local partners to adopt critical reforms in a variety of areas, including safety and peak traffic demand management." In the community and regional development area, the Obama Administration argued that the Community Services Block Grant program's "current structure does little to hold [community action] agencies accountable for outcomes" and proposed to reduce its funding from $635 million to $350 million and "to competitively award funds to high performing agencies that are most successful at meeting community needs." The Obama Administration also recommended funding reductions for the Community Development Block Grant program and the HOME Investment Partnership Program, arguing that these block grants needed "reforms to improve each program's performance by eliminating small grantees, thereby improving efficiency, driving regional coordination, and supporting grantees in making strategic, high-impact investments that address local community goals." In the education, training, employment, and social services area, the Obama Administration requested $4 billion "for a new competitive grant program, the State Higher Education Performance Fund" to "support States that are committed to investing in higher education and improving performance and outcomes at their higher education institutions" and $6 billion "to offer competitive grants to partnerships of community colleges, public and non-profit training entities, industry groups, and employers to launch new training programs and apprenticeships." In the health area, the Obama argued that the Preventative Health and Health Services Block Grant should be eliminated because it is "duplicative with existing activities that could be more effectively implemented through targeted programs." The Obama Administration has advocated the consolidation of categorical grant programs in several functional areas as a means to reduce duplication and promote program efficiency. However, instead of merging these categorical grants into a new block grant, the Obama Administration has advocated merging them into other categorical grant programs. For example, the Obama Administration supported the consolidation of dozens of surface transportation categorical grant programs into other surface transportation grant programs in P.L. 112-141 , the Moving Ahead for Progress in the 21 st Century Act of 2012 (MAP-21). The Obama Administration has also advocated merging categorical grant programs in the Department of Homeland Security as a means to "better target these funds." H.R. 5686, The Public Welfare Act of 1946, introduced by Representative Aime J. Forand, D-RI, as an amendment to the Social Security Act, is the first known congressional effort to enact a block grant. It would have allowed states to continue providing public welfare assistance in "the present categories of old-age assistance, aid to dependent children, and aid to the blind, or whether they preferred to provide for these groups as part of a comprehensive assistance program" with choices about program design left to the states. In 1949, the Commission on the Organization of the Executive Branch of the Government, known as the Hoover Commission in honor of its chair, Herbert Hoover, further raised awareness of the block grant concept by recommending that "a system of grants be established based upon broad categories – such as highways, education, public assistance and public health – as contrasted with the present system of extensive fragmentation." However, Congress did not create the first block grant until 1966 for comprehensive health care services (now the Preventive Health and Health Services Block Grant) in P.L. 89-749, the Comprehensive Health Planning and Public Health Services Amendments of 1966, later known as the Partnership for Public Health Act. It replaced nine formula categorical grants. Two years later, Congress created the second block grant, the Law Enforcement Assistance Administration's Grants for Law Enforcement program (sometimes referred to as the "Crime Control" or "Safe Streets" block grant) in the Omnibus Crime Control and Safe Streets Act of 1968. Unlike the health care services block grant, it was created de novo, and did not consolidate any existing categorical grants. In his 1971 State of the Union speech, President Richard M. Nixon announced a plan to consolidate 129 federal grant programs in six functional areas, 33 in education, 26 in transportation, 12 in urban community development, 17 in manpower training, 39 in rural community development, and 2 in law enforcement into what he called six "special revenue sharing" programs. Unlike the categorical grants they would replace, the proposed special revenue sharing programs had no state matching requirements, relatively few auditing or oversight requirements, and the funds were distributed automatically by formula without prior federal approval of plans for their use. The education, transportation, rural community development, and law enforcement proposals failed to gain congressional approval, primarily because they generated opposition from interest groups affiliated with the programs who worried that the programs' future funding would be compromised. Nonetheless, the Nixon Administration's efforts led to the adoption of three more block grants; the first was signed by President Nixon and the remaining two were signed by President Gerald R. Ford. The Comprehensive Employment and Training Assistance Block Grant program was created by the Comprehensive Employment and Training Act of 1973. It merged 17 existing manpower training categorical grant programs. The Community Development Block Grant program (and its affiliated Indian Community Development Block Grant program which is funded through a set-aside of the Community Development Block Grant's formula funds) was created by the Housing and Community Development Act of 1974. It consolidated six existing community and economic development categorical grant programs. Title XX social services, later renamed the Social Services Block Grant program, was created de novo and, therefore, did not consolidate any existing categorical grant programs. It was authorized by the 1974 amendments of the Social Security Act which was signed into law on January 4, 1975. Congress did not approve any additional block grants until 1981. President Ronald Reagan had proposed consolidating 85 existing elementary and secondary education, public health, social services, emergency assistance (for low-income energy assistance and emergency welfare assistance), and community development categorical grants into seven block grants (two in elementary and secondary education, two in public health, and one each for social services, emergency assistance, and community development). He also recommended that the programs' funding be reduced 25%, arguing that the administrative savings brought about by the conversion to block grants would largely offset the budget reduction. Congress subsequently adopted the Omnibus Budget and Reconciliation Act of 1981 which consolidated 75 categorical grant programs and two existing block grants into the following nine new, or revised, block grants: Elementary and Secondary Education (37 categorical grants); Alcohol, Drug Abuse, and Mental Health Services (10 categorical grants); Maternal and Child Health Services (9 categorical grants); Preventive Health and Human Services Block Grant (merged 6 categorical grants with the Health Incentive Grants for Comprehensive Health Services Block Grant); Primary Care (2 categorical grants); Community Services (7 categorical grants); Social Services (one categorical grant and the Social Services for Low Income and Public Assistance Recipients Block Grant); Low-Income Home Energy Assistance (1 categorical grant); and revised Community Development Block Grant program (adding an existing discretionary grant and 3 categorical grants). Overall, funding for the categorical grants bundled into these block grants was reduced 12%, about $1 billion, from their combined funding level the previous year. In retrospect, some federalism scholars consider these block grants as more "historical accidents than carefully conceived restructurings of categorical programs" because they were contained in a lengthy bill that was adopted under special parliamentary rules requiring a straight up or down vote without the possibility of amendment, the bill was designed to reduce the budget deficit not to reform federalism relationships, and the bill was not considered and approved by authorizing committees of jurisdiction. Nonetheless, largely due to the Omnibus Budget and Reconciliation Act of 1981, in FY1984 there were 12 block grants in operation (compared to 392 categorical grants), accounting for about 15% of total grants-in-aid funding. During the first six years of his presidency, President Ronald Reagan submitted 32 block grant proposals to Congress, with 9 created by the Omnibus Budget and Reconciliation Act of 1981 and the Federal Transit Capital and Operating Assistance Block Grant added in 1982. In addition, the Job Training Partnership Act of 1982 created a new block grant for job training that replaced the block grant contained in the Comprehensive Employment and Training Act of 1973. Federalism scholars generally agree that President Reagan had unprecedented success in achieving congressional approval for block grants. However, they also note that most of President Reagan's block grant proposals failed to gain congressional approval, primarily because they were opposed by organizations that feared that, if enacted, the block grants would result in less funding for the affected programs. For example, in 1982, President Reagan proposed, but could not get congressional approval for, a $20 billion "swap" in which the federal government would return to states full responsibility for funding Aid to Families With Dependent Children (AFDC) (now Temporary Assistance for Needy Families) and food stamps in exchange for federal assumption of state contributions for Medicaid. As part of the deal, he also proposed a temporary $28 billion trust fund or "super revenue sharing program" to replace 43 other federal grant programs. Both the swap proposal and the proposed devolution of 43 federal grants were opposed by organizations that feared that, if enacted, they would result in less funding for the affected programs. For example, the National Governors Association supported the federal takeover of Medicaid, but objected to assuming the costs for AFDC and food stamps. The economy was weakening at that time and governors worried that they would not have the fiscal capacity necessary to support the programs without continued federal assistance. From 1983 until 1995, Congress approved six new block grants: the Community Youth Activity Block Grant (1988), Child Care and Development Block Grant (1990), the HOME Investment Partnerships Program (1990), the Surface Transportation Program (1991), Substance Abuse Prevention and Treatment Block Grant (1992), and the Community Mental Health Services Block Grant (1992). Established by the Intermodal Surface Transportation Efficiency Act of 1991, the Surface Transportation Program had, by far, the largest budget of any block grant program at that time, with $17.5 billion appropriated in FY1993. Three block grants were terminated during this period: Community Youth Activity Program, Law Enforcement Assistance, and Alcohol, Drug Abuse, and Mental Health (which was broken into two new block grants, the Community Mental Health Services Block Grant and the Prevention and Treatment of Substance Abuse Block Grant, in 1992). According to the now defunct U.S. Advisory Commission on Intergovernmental Relations, there were 15 block grants in operation in 1995 (23 block grants had been enacted, 4 were converted into other block grants, and 4 were eliminated), and 618 categorical grants. In FY1995, block grants accounted for about 14% of the $228 billion in federal grants-in-aid assistance. In 1996, the open-ended entitlement categorical grant, Aid to Families With Dependent Children, was converted into the Temporary Assistance to Needy Families (TANF) block grant by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Funded at $16.7 billion annually, TANF rivaled the Surface Transportation Program for the largest budget of all the block grants. Like some other block grants, TANF "was a hybrid program balancing stringent federal standards against significant state flexibility." Funding ($424 million) was also provided for a Local Law Enforcement Block Grant which had been authorized the previous year in the Local Law Enforcement Block Grant Act of 1995. In 1998, the Juvenile Accountability Block Grant program was created by the FY1998 Department of Justice Appropriations Act, and later codified by the 21 st Century Department of Justice Reauthorization Act of 2002. It provides funding for 16 accountability-based purpose areas, including, but not limited to, implementing graduated sanctions; building or operating juvenile correction or detention facilities; hiring juvenile court officers, including judges, probation officers, and special advocates; and hiring additional juvenile prosecutors. The 21 st Century Department of Justice Reauthorization Act of 2002 also consolidated several pre-existing categorical grant programs into the Juvenile Delinquency Prevention Block Grant program. It provides funding for a wide array of services, treatments, and interventions, including, but not limited to projects that provide treatment to juvenile offenders and at risk juveniles who are victims of child abuse or neglect, or who have experienced violence at home, at school, or in their communities; and educational projects or support services for juveniles that focus on encouraging juveniles to stay in school; aiding in the transition from school to work; and encouraging new approaches to preventing school violence and vandalism. Prior to the September 11, 2001, terrorist attacks and the subsequent creation of the Department of Homeland Security, the federal government had three categorical grants-in-aid programs pertinent to homeland security: the State Domestic Preparedness program administered by the Department of Justice, the Emergency Management Performance Grant program administered by the Federal Emergency Management Agency, and the Metropolitan Medical Response System administered by the Department of Health and Human Services. In 2011, there were 17 federal grant programs administered by the Grant Programs Directorate within the Federal Emergency Management Agency in the Department of Homeland Security, including 14 categorical grant programs and three block grant programs: State Homeland Security Grants, formerly called the State Domestic Preparedness Program (created in 2003), Urban Area Security Initiative Grants (created in 2003), and the Regional Catastrophic Preparedness Grant (created in 2008). In 2005, the Violence Against Women and Department of Justice Reauthorization Act of 2005 combined the Edward Byrne Memorial State and Local Law Enforcement Assistance programs and the Local Law Enforcement Block Grant program into the Edward Byrne Memorial Justice Assistance Grant program. Its funds can be used for seven broad purposes: law enforcement, prosecution and court programs, prevention and education programs, corrections and community corrections programs, drug treatment programs, planning, evaluation, and technology improvement programs, and crime victim and witness programs (other than compensation). P.L. 111-5 , the American Recovery and Reinvestment Act of 2009 (ARRA) provided temporary additional funding for several block grant programs, including $3.2 billion for the Energy Efficiency and Conservation Block Grant (EECBG) program. It was authorized by the Energy Independence and Security Act of 2007, but had not been appropriated any funding. It provides federal grants to local governments, Indian tribes, states, and U.S. territories to reduce energy use and fossil fuel emissions, and for improvements in energy efficiency. Approximately $2.7 billion of the ARRA funding was allocated through an apportionment formula and approximately $454 million was allocated through competitive grants. ARRA also authorized the temporary $53.6 billion Government Services State Fiscal Stabilization Fund, which operated as a block grant. Under that program, the Department of Education awarded states approximately $48.6 billion through an apportionment formula "in exchange for a commitment to advance essential education reforms" focusing on state support for education, equity in teacher distribution, data collection, standards and assessments, and support for struggling schools. Most of the $48.6 billion (81.8%) was to be spent "for the support of elementary, secondary, and postsecondary education and, as applicable, early childhood education programs" and the remainder (18.2%) "for public safety and other government services, which may include assistance for elementary and secondary education and public institutions of higher education, and for modernization, renovation, or repair of public school facilities and institutions of higher education facilities, including modernization, renovation, and repairs that are consistent with a recognized green building rating system." The fund's remaining $5 billion was awarded competitively under the "Race to the Top" and "Investing in What Works and Innovation" categorical grant programs. In FY2012, there were 28 block grants (26 funded and 2, the Innovative Education Program Strategies Block Grant and the Juvenile Delinquency Prevention Block Grant, were authorized, but were not funded). In FY2013, there were 25 block grants (22 funded and 3, the Innovative Education Program Strategies Block Grant, the Energy Efficiency and Conservation Block Grant, and the Juvenile Delinquency Prevention Block Grant, were authorized, but were not funded). The Government Services State Fiscal Stabilization Fund (Department of Education) and the Regional Catastrophic Preparedness Grant (Department of Homeland Security) are no longer available. In addition, the State Homeland Security Grant and Urban Area Security Initiative Grant programs are now within the Department of Homeland Security's Homeland Security Grant Programs. In FY2014, there are 23 block grants (21 funded and 2, the Innovative Education Program Strategies Block Grant and the Energy Efficiency and Conservation Block Grant, are authorized, but are not funded). The authorizations for the Juvenile Delinquency Prevention Block Grant and the Juvenile Accountability Block Grant programs have expired, and neither program is currently being funded through the appropriations process.
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Block grants are a form of grant-in-aid that the federal government uses to provide state and local governments a specified amount of funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement. Block grant advocates argue that block grants increase government efficiency and program effectiveness by redistributing power and accountability through decentralization and partial devolution of decision-making authority from the federal government to state and local governments. Advocates also view them as a means to reduce the federal deficit. For example, Representative Paul Ryan, chair of the House Committee on the Budget, has recommended that the federal share of Medicaid be converted into a block grant "tailored to meet each state's needs" as a means to improve "the health-care safety net for low-income Americans" and to save $732 billion over 10 years. Block grant critics argue that block grants can undermine the achievement of national objectives and can be used as a "backdoor" means to reduce government spending on domestic issues. For example, opponents of converting Medicaid into a block grant argue that "block granting Medicaid is simply code for deep, arbitrary cuts in support to the most vulnerable seniors, individuals with disabilities, and low-income children." Block grant critics also argue that the decentralized nature of block grants makes it difficult to measure block grant performance and to hold state and local government officials accountable for their decisions. Block grants, which have been a part of the American federal system since 1966, are one of three general types of grants-in-aid programs: categorical grants, block grants, and general revenue sharing. These grants differ along three dimensions: the range of federal control over who receives the grant; the range of recipient discretion concerning aided activities; and the type, number, detail, and scope of grant program conditions. Categorical grants can be used only for a specifically aided program and usually are limited to narrowly defined activities; legislation generally details the program's parameters and specifies the types of funded activities. There are four types of categorical grants: project categorical grants, formula-project categorical grants, formula categorical grants, and open-end reimbursement categorical grants. Project categorical grants and general revenue sharing represent the ends of a continuum on the three dimensions differentiating grant types, with block grants being at the mid-point. However, there is some overlap among grant types in the middle of the continuum. For example, some block grants have characteristics normally associated with formula categorical grants. This overlap, and the variation in characteristics among block grants, helps to explain why there is some disagreement concerning precisely what is a block grant, and how many of them exist. This report provides an overview of the six grant types, provides criteria for defining a block grant and uses those criteria to provide a list of current block grants, examines competing perspectives concerning the use of block grants versus other grant mechanisms to achieve national goals, provides an historical overview of the role of block grants in American federalism, and examines recent changes to existing block grants and proposals to create new ones.
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RS21812 -- March 11 Terrorist Attacks in Madrid and Spain's Elections: Implications for U.S.Policy October 5, 2004 Summary This report discusses the March 11, 2004 terrorist attacks in Madrid,Spain and their impact on Spain's March 14 parliamentary elections, which resulted in the surprise victory of theSocialist Party over the ruling right-of-center Popular Party. The report also examines some of the possibleimplications of the attacks and the elections for the U.S.-led coalition in Iraq, the war on terrorism and U.S.-Spainrelations. This report will be updated as warranted. See also CRS Report RS21794 , Iraq Coalition: PublicOpinionIndicators in Selected European Countries , by [author name scrubbed]. During the morning rush hour of March 11, 2004, bombs hidden in 10 backpacks exploded within 15 minutesof eachother on four trains along a nine-mile stretch of a commuter line from the suburb of Santa Eugenia to the busyAtocharail terminal in Madrid. Three other backpack bombs were defused by police. The explosions killed 191 personsandwounded over 1800 others. The death toll was by far the largest ever for a terrorist attack in Spain and was thelargestin Europe since the 1988 bombing of a Pan Am airliner over Lockerbie, Scotland. The attacks took place exactlytwoand one-half years after the terrorist attacks on the United States on September 11, 2001. The Spanish government, led by Prime Minister Jose Maria Aznar of the right-of-center Popular Party (PP), quicklyinsisted that the attacks were the work of the Basque terrorist group ETA and downplayed any suggestion thatIslamicextremists could be involved. In justifying their view, Spanish officials noted that they had stopped an ETA efforttoplace bombs on trains on Christmas Eve 2003 and had intercepted on February 29 a Madrid-bound van loaded bytheETA with one thousand pounds of explosives. On the day of the attack, at Spain's urging, the U.N. Security Councilpassed Resolution 1530, which condemned ETA's alleged role in the bombing. However, skeptics noted that thescope of the attacks, the detailed planning and precision needed to carry them out, and above all, the huge casualtytollwere more likely to be hallmarks of Al Qaeda or an Al Qaeda-like organization, not ETA. The credibility of the government began to crumble quickly as indications emerged of the possible involvement ofIslamic extremists in the bombings. Less than four hours after the attacks, police found several detonators and anaudiotape of verses from the Koran in an abandoned van in the town of Alcala de Henares, through which thebombedtrains had passed. About 12 hours after the attacks, police found a cellphone from an unexploded backpack bomb. They traced it to a business owned by a Moroccan immigrant named Jamal Zougam, who was suspected of havinglinks to Al Qaeda. Despite these discoveries on the day of the attacks, the government continued to insist publiclythatETA was responsible until hours before the polls opened on March 14, when police arrested Zougam as well as twoother Moroccans and two Indians suspected of involvement in the attacks. (1) The government's perceived mishandling of the crisis sparked outrage among many Spaniards. Critics of the government charged that it had deliberately tried to focus blame on ETA rather than Al Qaeda, knowing that if thepublic believed that ETA had committed the attacks, the government's popularity could be enhanced, due to thebroadpublic support for its hard-line stance against ETA. On the other hand, if Al Qaeda or an affiliated group wasresponsible, critics asserted, the government feared that it would lose support because many voters would believethatit had brought the attacks on Spain by its highly unpopular support for the war in Iraq. Spanish police have made progress in breaking up the terrorist cell responsible for the attack. On March 30, SpanishInterior Minister Angel Acebes said that the government suspected the Al Qaeda-linked Moroccan IslamicCombatantGroup with involvement in the attacks. Spanish and Moroccan officials believe the group was also involved in May2003 suicide bombing attacks in Casablanca, Morocco which killed 45 people, including several Spaniards. OnApril2, an unexploded bomb was found on railroad tracks between Madrid and Seville. On April 3, seven men suspectedofinvolvement in the Madrid attacks were killed when they blew themselves up after they were surrounded by police.The dead included the alleged leader of the terrorists, Serhane ben Abdelmajid Farkhet, known as "the Tunisian." Police found evidence that the group was ready to commit additional attacks. Police have said that the groupfinancedits activities through drug trafficking and other crimes. In June 2004, Italian police arrested Rabei Osman SayedAhmed, known as 'Mohammed the Egyptian." Ahmed, a former explosives instructor in Al Qaeda training camps,was one of the principal planners of the March 11 attacks, according to police. By September 2004, nearly twodozenpersons charged with involvement in the attacks were in police custody. A parliamentary commission began aninvestigation into the March 11 attacks and the government's response to them in June 2004. The terrorist attacks took place just before Spain's March 14 parliamentary elections, leading some observerstoconclude that they may have been intended to influence the vote. In a public opinion poll taken in February 2004,two-thirds of those polled said that the war in Iraq had increased the threat of terrorism, and 85% were concernedabout a possible terrorist strike against Spain. (2) Nevertheless, although the opposition Socialist Party (PSOE) led byJose Luis Rodriguez Zapatero campaigned in part on the strong public opposition to the government's Iraq policy,theruling PP appeared to be poised for a narrow victory, based on its record of a largely successful economic policyandits tough stand against ETA. The PP campaign was led not by Aznar, who is retiring from politics at the end of histerm, but by his successor as PP leader, Mariano Rajoy. Although the PP held a lead in opinion polls in the weeks prior to the election, its projected margin of victory shranksteadily. According to the final opinion polls published on March 7 (Spanish law imposes a blackout on public pollsfive days before an election), PP was expected to win 42% of the vote and the PSOE 38%. These totals would havemeant that the PP would likely have lost its absolute majority in parliament, but would have likely stayed in powerincoalition with smaller regional parties. Another late poll taken before the bombings put the PP's lead at 2.5%. Internal polls of both parties on the day before the attacks reportedly had the two parties in a virtual dead heat. (3) The results of the election surprised many observers. The Socialist Party of Spain (PSOE) won 42.5% of thevote tothe PP's 37.6%. The Socialists won 164 seats in the Congress of Deputies, up from 125 in the previous parliament. The PP won 148 seats, down from its previous total of 183 seats. The Socialists fell short of an absolute majority,sothey will have to form a coalition, perhaps among the United Left, a tiny, hard-line Communist party, and severalregional parties. The PP maintained control of the Senate, the regionally-based house of the parliament. Turnout for the vote was 77.2%, up from 68.7% in the 2000 elections. It should be noted that this turnout, while high,is not unprecedented in Spain's recent electoral history, and is often associated with changes in government. Turnoutin 1996 was 77.38% and 79.97% in 1982, each case corresponding to a victory by the opposition of the time. (4) SomeSpanish observers attributed a large part of the PSOE's success to the votes of about 2 million young, first-timevoters. Madrid-based observers noted that the news of the arrest of Al Qaeda-linked figures on the evening ofMarch13 was transmitted rapidly among young people by cellphone, as was the exhortation, perhaps encouraged bySocialistsupporters, to punish the government at the polls. (5) After the elections, a delicate issue raised by political leaders and analysts in Spain and throughout the world has been:did Al Qaeda "win" this election by intimidating the Spanish electorate (thereby perhaps setting a troublingprecedentfor other countries), or did the election result demonstrate the strength of Spain's democracy? Some Spaniards,especially supporters of the Socialists, said that the result did not reflect a desire to appease terrorists, but was duetopublic anger at an allegedly arrogant government that had made decisions on Iraq and other issues without thesupportof the Spanish public. They note that public opinion polls had shown that up to 90% of the public was opposed tothegovernment's support for the war in Iraq and rejected a link between the war on terrorism and the war in Iraq. Theeffort to blame ETA for the March 11 bombing was the final straw for many voters, they assert. As for the chargethatthe terrorist attacks had determined the outcome, Zapatero's supporters point to a post-election poll in which only8.8% of those polled said that the terrorist attacks had affected their vote. (6) Those critical of the election result note that the government appeared to be headed for a narrow victory just daysbefore the attack, appearing to make the attack the decisive factor in the result. Some observers, including somein theUnited States, have criticized the election results as dangerous appeasement of terrorists. On March 17, HouseSpeaker Dennis Hastert said, "Here's a country that stood against terrorism and had a huge terrorist act within theircountry, and they chose to change their government and to, in a sense, appease terrorists." Representative HenryHyde,chairman of the House International Relations Committee, said "the vote in Spain was a great victory for AlQaeda." (7) Administration officials have avoided making statements directly critical of the election results, perhaps fearing theirimpact on relations with the new government. Like their Socialist adversaries, Spanish conservatives reject any implication that the election result revealed cowardice by the Spanish people, noting Spain's struggle of more than three decades against ETA and its continuedcommitment to the deployment in Afghanistan after a May 2003 plane crash that killed 62 Spanish soldiers returningfrom the country. However, according to one view, some Spaniards may be laboring under a delusion that they canopt out of the dangers of globalization, while enjoying the benefits. According to this interpretation, many in Spainmay believe that their country is a secondary player in world affairs and should not get mixed up in great powerpolitics. This supposed attitude is said to be a result of Spain's historical development, which has included acenturies-long decline from great power status and international isolation under the Franco regime. These observersbelieve that this attitude may be bolstered by perceptions among some Spaniards that the United States, includingtheBush Administration, knows little about Spain, and is insensitive to Spanish concerns. (8) On April 18, 2004, the day after the new Spanish government took office, Zapatero announced the immediate withdrawal of the 1,300 Spanish troops in Iraq. The suddenness of the move came as a surprise to many observers,because during the campaign Zapatero had left open at least the possibility that the troops could stay, if certainconditions were met. In a five-minute phone call to Zapatero, President Bush expressed regret about the "abrupt"Spanish decision and warned against taking actions that would give "false comfort to terrorists." All Spanishcombattroops left Iraq by April 27. Unnamed U.S. officials sharply criticized the way the withdrawal was planned, sayingitwas done without proper coordination and in an "unprofessional" way that could unnecessarily jeopardize operationsand lives. (9) Given that Spain's troops made up lessthan 1% of coalition forces in Iraq, it may be argued that thelong-term military impact of a Spanish withdrawal may not be dramatic. However, some observers are concernedthatthe Spanish withdrawal could be part of a trend of declining public support for the Iraq mission in Europeanmembers,which could undermine the coalition in the long run. (10) Zapatero has stressed that his first priority is the fight against terrorism, and has called for closer cooperation amongEU police and intelligence services. In September 2004, French and Spanish officials announced a joint unit ofpoliceand judges to combat terrorist groups, including ETA and Islamic extremists. However, the new government'scommitment to use military force to fight terror may be less certain. Zapatero has said that military force shouldbe a"last resort' in the war against terrorism, claiming that it "can never be an effective method for eliminating orfightingfanatic, radical and criminal groups." (11) Nevertheless, as a signal that it is still committed to the global war on terror, Spain expanded its contribution to theInternational Security Assistance Force (ISAF) in Afghanistan from 137 to 1,040 in August 2004, in order to provideadditional security for Afghanistan's October 2004 elections. However, Spain plans to withdraw 500 of the troopsafter the elections, despite Afghan pleas to extend the deployment of the entire contingent. The change in government in Spain may have a significant effect on U.S.-Spanish relations. The close, personal relationship that developed between President Bush and Aznar is unlikely to be repeated with Zapatero. Aznarforgeda close relationship with the United States in part because he believed that a partnership with the world's onlysuperpower would enhance Spain's role in the world, making it a major international player. A close alliance withtheUnited States also secured U.S. support and aid for Aznar's tough stance against ETA and Basque separatism. Aznar's critics said that the Spanish leader was motivated by a desire to enhance his own personal prestige ratherthanto serve Spain's real interests. In contrast to Aznar's closeness to the Administration, Zapatero appeared to beunconcerned that some of his initial remarks might be taken as insults by the White House. For example, he assertedthat President Bush had based his Iraq policy on "lies" and suggested that the American people should vote him outofoffice in November 2004. (12) More recently, hesuggested that the chances for peace in Iraq would enhanced if morecountries followed Spain's example and pulled their forces out of Iraq, causing the United States to seek aclarification of his remarks. (13) According to Zapatero, the current focus of Spain's foreign policy is building closer ties to its European Union partners, particularly France and Germany, while still retaining good relations with the United States. Spain's newleaders say they will push forward more vigorously with EU integration. Zapatero's supporters say this policy willbein line with the foreign policy pursued by Spain in the post-Franco era, which they view as being based on a broadpublic consensus, as opposed to the allegedly autocratic style of Aznar. On the other hand, as in the cases of France and Germany, which have also had difficulties with Washington,damageto U.S.-Spanish relations may be limited by common interests, including the fight against terrorism. In September2004, Spain's attorney general announced that Spain and the United States plan to sign an agreement by the end of2004 under which prosecutors from both countries could share information about Islamic militants. Both theNationalIntelligence Reform Act ( S. 2845 ) and the 9/11 Recommendations Appropriations Act ( H.R. 10 ) call for closer international cooperation in the fight against terrorism, including by eliminating terroristsanctuariesand curtailing terrorist financing. A question for the future is the use of U.S. military bases in Spain. The Administration was easily able to secure theuse of U.S. bases in Spain for the Iraq operation. The bases played a significant role in the delivery of men andmateriel to the Iraqi theater. Given the criticisms by Spain's new leaders of the concept of what they view as a U.S.policy of "preventive war," it might be more difficult to secure Spanish permission to use the bases in futureoperations, especially if the action did not have prior U.N. Security Council approval. 1. (back) Leslie Crawford and Joshua Levitt, "APlace in the History of Infamy -- How the Government's Assumption andMisjudgement Shook Spain," Financial Times , March 26, 2004, 15. 2. (back) AP/Ipsos poll, March 5, 2004. 3. (back) Lizette Alvarez and Elaine Sciolino,"Parsing Spain's Result: Many Voters Felt Misled," New York Times , March18, 2004, 1. 4. (back) El Pais newspaper website, http://www.elpais.es . 5. (back) Neomi Ramirez and Luis F. Fidalgo,Elecciones Generales 14-M. Resultados. Evolucion del Voto, El Mundo ,March 16, 2004, p. 17. 6. (back) "Spanish Socialists Ten Points Ahead inFirst Post-Election Poll," Agence France Presse , March 22, 2004. 7. (back) "Spanish Politicians Rebuff U.S.Accusations of Appeasement," Associated Press , March 18, 2004. 8. (back) Pablo Pardo, "The Spanish Disposition," The Weekly Standard , March 29, 2004. 9. (back) Robin Wright and Bradley Graham, "SpainPlans to Hasten Withdrawal of Troops," Washington Post, April 22,1004, 25. 10. (back) For more on this issue see CRS Report RS21794 , Iraq Coalition: Public Opinion Indicators in Selected EuropeanCountries , by [author name scrubbed]. 11. (back) John Diamond, "Zapatero Wants toAlter War on Terror," USA Today , March 22, 2004, 13. 12. (back) Keith Richburg, "Spain's Next PrimeMinister Says U.S. Should Dump Bush," Washington Post , March 18, 2004,23. 13. (back) "Zapatero Comments on Iraq DrawU.S. Demand for Clarification," Agence France Presse , September 14, 2004.
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This report discusses the March 11, 2004 terrorist attacks in Madrid,Spain and their impact on Spain's March 14 parliamentary elections, which resulted in the surprise victory of theSocialist Party over the ruling right-of-center Popular Party. The report also examines some of the possibleimplications of the attacks and the elections for the U.S.-led coalition in Iraq, the war on terrorism and U.S.-Spainrelations. This report will be updated as warranted. See also CRS Report RS21794 , Iraq Coalition: PublicOpinionIndicators in Selected European Countries , by [author name scrubbed].
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Under CSRS, the surviving spouse of a federal employee who dies after having completed at least 18 months of service is eligible for an annuity, provided that the couple had been married for at least nine months or that the survivor is the parent of a child born of the marriage. The nine-month requirement is waived if the worker's death was accidental. A divorced spouse of a federal employee may be eligible for a survivor benefit if the employee elected a survivor annuity for the former spouse or under a state court decree of divorce, annulment, or separation. The survivor annuity under CSRS is 55% of the retirement benefit that the deceased employee had accrued at the time of death, but without any reduction for being under the age of 55. The annuity is guaranteed to be no smaller than 55% of the lesser of (1) 40% of the average of the employee's highest three consecutive years of pay or (2) the annuity that would result from projecting the employee's years of service to age 60. If an employee participating in FERS dies after having completed at least 18 months of service, but fewer than 10 years of service, his or her spouse is eligible for a lump-sum survivor benefit equal to one-half of the employee's annual basic pay plus a lump sum payment (approximately $31,768 in 2014). This benefit can be paid as a single lump-sum, or in equal installments over 36 months (with interest) at the option of the surviving spouse. If the employee had at least 10 years of service, the spouse receives a lump sum and an annuity equal to 50% of the retirement annuity that the deceased employee had earned at the time of his or her death. Survivor annuities under CSRS and FERS terminate if the surviving spouse remarries before the age of 55 (unless the marriage to the federal employee lasted at least 30 years). If the subsequent remarriage ends in death, divorce, or annulment, the annuity restarts in the same amount. Under CSRS, a monthly annuity is paid to the surviving children of a deceased employee, as long as they are under the age of 18 and not married, or under age 22 if still in school. A child survivor enrolled full-time in school and whose 22 nd birthday occurs before July 1 or after August 31 can continue to receive benefits while enrolled as a student through the following July 1. A surviving child is eligible for benefits regardless of age if he or she is incapable of self-support because of a physical or mental disability incurred before the age of 18. If a deceased federal employee is survived by a spouse or former spouse who is the biological or adoptive parent of the employee's surviving child(ren), each child receives the smallest of these three annual amounts: 60% of the employee's high-3 average pay, divided by the number of children, $6,024 (in 2014, indexed annually to the Consumer Price Index), or $18,072 (in 2014, also indexed to the CPI) divided by the number of children. In most cases, the benefit will be $6,024 per year (indexed to the CPI). If the deceased employee is not survived by a spouse or former spouse who is the biological or adoptive parent of the surviving child(ren), then each child receives the smallest of these amounts: 75% of the employee's high-3 average pay, divided by the number of children, $7,224 (in 2014, indexed annually to the Consumer Price Index), or $21,684 (in 2014, also indexed to the CPI) divided by the number of children. In most cases, the benefit will be $7,224. If a married couple dies, both of whom were federal employees covered by CSRS, each child is eligible for two survivor annuities. Children of deceased federal employees who were covered by FERS may be eligible for Social Security benefits, according to the laws governing that program. If the benefit that the children would have received under CSRS would have been greater than the Social Security benefit alone, FERS will pay a monthly benefit that in combination with Social Security will equal the CSRS benefit. In most cases, however, the Social Security benefit alone will exceed the benefit that would have been payable under CSRS. Nevertheless, because Social Security survivor benefits end when a child reaches the age of 18 (or 19 if the child is still in high school), FERS pays a benefit equal to a CSRS benefit for as long as the child is unmarried, under age 22, and enrolled full-time in post-secondary education. Widows, widowers, and unmarried dependent children under the age of 22 who survive a deceased federal employee who was enrolled in the Federal Employees' Health Benefits Program (FEHBP) may continue to participate in that program at the same cost as a federal employee if, prior to the employee's death, these individuals were covered as family members under the plan. If the employee's death resulted from an injury sustained in the performance of duty, the employee's surviving spouse and children are eligible for compensation equal to a percentage of the employee's monthly pay. This compensation is not payable concurrently with a survivor annuity under either CSRS or FERS. A survivor who is entitled to both an annuity under CSRS or FERS and to survivor compensation must elect one of the two benefits. The compensation payable to a surviving spouse if there are no children is equal to 50% of the deceased employee's final pay. If there are surviving children in addition to the spouse, the compensation is equal to 60% of pay if there is one child and 75% of pay if there are two or more children. If there are surviving children but no surviving spouse, the compensation is equal to 40% of pay for one child plus 15% of pay for each additional child, not to exceed 75% of pay. If an employee who was killed while performing his or her duty left no surviving spouse or children, compensation equal to 25% of pay may be paid to one parent if he or she was wholly dependent on the employee. Compensation of 20% of pay may be paid to each parent if both were wholly dependent on the employee. If the employee is survived by a spouse or children, then benefits are paid to the parents on a pro-rated basis so that the total does not exceed 75% of pay. If an employee who was killed while performing his or her duty left no surviving spouse, children, or dependent parents, compensation equal to 20% of pay may be paid to a brother, sister, grandparent, or grandchild who was wholly dependent on the employee. If more than one such person was dependent, compensation of 30% of pay may be paid and divided equally among them. If one or more were partly dependent on the employee, compensation equal to 10% of pay may be paid and divided equally among them. If the employee is survived by a spouse, children, or dependent parent, then benefits are paid to the brothers, sisters, grandparents, or grandchildren on a pro-rated basis so that the total does not exceed 75% of pay. The compensation for a surviving spouse is paid for life, unless he or she remarries before the age of 55. The compensation paid to a surviving child, brother, sister, or grandchild is paid until the individual marries, reaches age 18 (unless he or she is a full-time student), or if over age 18 and incapable of self-support, until the person is no longer incapable of self-support. The compensation paid to a parent or grandparent is paid for life, or until the individual marries or ceases to be dependent. The maximum monthly pay on which survivor compensation is based cannot exceed 75% of the maximum basic pay for level GS-15 of the general schedule. The government may pay this compensation as a lump-sum equal to the present value of all future payments if the monthly payment would be less than $50, if the beneficiary is about to become a nonresident of the United States, or if the Secretary of Labor deems it to be in the best interest of the beneficiary to do so. The surviving spouse or representative of an employee killed in the performance of his or her duty will be paid the sum of $200 as reimbursement for the costs of terminating the decedent's status as a federal employee and a sum not to exceed $800 for funeral and burial expenses. If the employee's death occurred away from home, the Federal Employees' Compensation Fund will pay the expenses related to transporting the decedent's body to his or her last place of residence. Section 651 of P.L. 104-208 authorizes payment of up to $10,000 to be made by the head of a federal agency at his or her discretion to the executor of the estate of a federal employee who dies as the result of an injury sustained while on active duty on or after August 2, 1990. The $200 payment for administrative expenses and the $800 payment for funeral expenses described above count against the $10,000 payment authorized by P.L. 104-208 . Married federal employees who retire under either CSRS or FERS automatically receive a joint and survivor annuity unless both husband and wife decline it in writing, in which case the worker will receive a single-life annuity . Under CSRS, if a worker receives a joint and survivor annuity, the annual benefit is reduced by an amount equal to 2.5% of the first $3,600 plus 10% of the annuity above that amount. In return for this reduction, the worker's spouse is entitled to a survivor annuity equal to 55% of the worker's full annuity before the reduction is taken into account. Alternatively, a worker retiring under CSRS and his or her spouse can elect a smaller survivor annuity, in which case the worker's annuity is reduced by 2.5% of the first $3,600 and 10% of the annuity above this amount, up to the limit that he or she specifies as the base upon which the survivor benefit is to be calculated. Under FERS, if a worker receives a joint and survivor annuity, the retiree's annual benefit is reduced by an amount equal to 10% of the annuity that would otherwise be paid. In return for this reduction, the worker's spouse is entitled to a survivor annuity equal to 50% of the worker's full annuity before the reduction is taken into account. Alternatively, the couple may elect that the survivor benefit is to be based on one-half of the retiree's annuity, in which case the retired worker's annuity is reduced by 5% and the survivor benefit would be equal to 25% of the retiree's unreduced annuity. The reduction in the benefits of workers who elect a joint and survivor annuity is sufficient to cover only about half of the cost of the FERS survivor annuity and less than half of the cost of the CSRS survivor annuity. Consequently, survivor benefits under both CSRS and FERS are partially subsidized by the federal government. If the marriage of a retiree who had elected a joint and survivor annuity ends, his or her annuity is increased to the full amount payable under a single-life annuity. If the retired worker marries or remarries after retirement, he or she has a maximum of two years during which to elect survivor coverage for a new spouse, and the retiree's annuity is reduced accordingly. The election for a joint and survivor annuity must be made within two years of the date of marriage. To elect survivor coverage for a spouse married after the date of retirement, a lump-sum payment (plus 6% interest) must be made to cover the period preceding the post-retirement marriage during which no survivor reduction was in effect. This payment is necessary to preserve equity between couples who are married continuously throughout retirement and those who marry after retiring, because in both cases the survivor benefit is the same percentage of the retired worker's annuity. Under both CSRS and FERS, survivor benefits are paid to children of deceased federal retirees in the same amounts and under the same eligibility criteria as apply to the children of deceased federal employees. Retired workers who are the parents of unmarried dependent children who might qualify for child survivor benefits are not required to take a reduction in their retirement annuities. A widow or widower of a deceased retiree who is eligible for a survivor annuity under either CSRS or FERS and who was covered under the FEHBP at the time of the retiree's death can continue to participate in the program at the same cost as applies to workers and retirees. The survivor is eligible even if the amount of the survivor annuity is less than the monthly FEHBP premium, in which case the individual must remit the difference directly to OPM. A retiree who marries or remarries after retirement can assure that his or her surviving spouse will be eligible for FEHBP coverage by electing a minimal survivor annuity. If a retired federal employee has a former spouse to whom a full survivor annuity was awarded through a state court order, the worker can at retirement (or at the time of remarriage, if later) entitle his or her current spouse to continue participating in the FEHBP after the retiree's death by electing survivor coverage for that spouse even though the current spouse might receive no survivor annuity as long as the former spouse is living and receiving the survivor annuity. Unmarried dependent children of a deceased retiree can continue to participate in the FEHBP until age 22, regardless of student status, provided that they were covered as family members by the retiree. In certain cases, coverage can continue for up to 36 months beyond the child's 22 nd birthday. Both CSRS and FERS allow a retiring employee to provide survivor benefits to an individual who has an "insurable interest" in the retiree. An insurable interest exists if the person may reasonably expect to benefit financially from the retiree continuing to live. For example, a former spouse or a current spouse can be named as having an insurable interest if a spouse survivor benefit has been provided for one or the other. A retiree who provides survivor benefits for someone with an insurable interest has his or her annuity reduced by 10% plus 5% for each full five years by which the named beneficiary is younger than the retiree. The total reduction may not exceed 40%. Under both CSRS and FERS, the survivor benefit paid to the named beneficiary is 55% of the retiree's reduced annuity, payable upon the death of the retiree. Federal employees are fully "vested" in (entitled to) a retirement annuity after completing five years of service. Vested employees who resign from federal employment before they are eligible to retire can defer receipt of their benefits until they reach the age of eligibility. Under CSRS, a deferred annuity can begin no earlier than the age of 62. Under FERS, an unreduced deferred annuity can start at the age of 62 for those with 5 to 19 years of service, at 60 for those with 20 to 29 years of service, or at 56 (increasing to 57 for employees born in 1970 or later) for those with 30 or more years of service. A reduced deferred FERS annuity is available at the age of 55 for those with 10 or more years of service. If the former employee dies after having begun to receive a retirement annuity, the surviving spouse is eligible for a survivor annuity under the rules applicable to CSRS or FERS, as described above. If a former employee who had been covered under CSRS dies before reaching the age of 62 and commencing his or her deferred annuity, no survivor benefit is paid. Instead, the surviving spouse receives a refund of the employee's contributions to the Civil Service Retirement and Disability Fund. If the former employee was covered under FERS, the surviving spouse may elect to receive an annuity or a lump-sum payment. If a former employee dies before having begun to receive a deferred annuity, no child survivor benefits are payable (although they may be payable under Social Security). If the employee dies after beginning to receive a deferred annuity, the surviving dependent children are eligible for survivor benefits under CSRS or FERS, as described above. A cost-of-living adjustment (COLA) is made once each year in January to benefits paid under CSRS and FERS. Under CSRS, the COLA is equal to the percentage change in the Consumer Price Index in the calendar quarter ending in the previous September compared with the same quarter one year earlier. Under FERS, however, COLAs are limited any time that the annual increase in the CPI exceeds 2.0%. If the CPI rises by 2% or less, the FERS COLA is equal to the increase in the CPI. If the CPI rises by 2% to 3%, the FERS COLA is 2%. If the CPI rises by more than 3%, the FERS COLA is equal to the increase in the CPI minus one percentage point. By filing Form TSP-3, a participant in the Thrift Savings Plan (TSP) can designate a beneficiary or beneficiaries to whom the balance in his or her account will be distributed in the event of the employee's death. If no Form TSP-3 has been filed, the account balance will be distributed in order of precedence to (1) to a widow or widower, (2) to a child or children, (3) to a grandchild or grandchildren, (4) to surviving parents, (5) to an executor previously appointed by the employee, and finally to the next of kin according to the laws of the state in which the employee resided. Division B, Title I, Section 109 of P.L. 111-31 provides that, subject to certain limitations, the surviving spouse of a deceased Thrift Savings Plan participant can maintain in the TSP the portion of the decedent's account to which the surviving spouse is entitled.
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Federal employees with permanent appointments may be eligible for retirement and disability benefits under either the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). Most federal employees initially hired into permanent federal employment on or after January 1, 1984, are covered by FERS. Employees hired before January 1, 1984, are covered by CSRS unless they chose to switch to FERS during open seasons held in 1987 and 1998. Both FERS and CSRS provide survivor benefits for spouses and dependent children of employees and retirees. Survivors who had been participating in the Federal Employees' Health Benefits Program (FEHBP) can continue to do so. The federal government pays compensation to dependent survivors of federal civilian employees who are killed while performing their duties; however, a survivor eligible for both an annuity under CSRS or FERS and for survivor compensation cannot receive both.
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Some 19 million Americans use illicit drugs at least once per month, spending by most conservative estimates over $60 billion annually in a diverse and fragmented criminal market. Such drugs are to varying degrees injurious to the health, judgment, productivity and general well-being of their users. Additionally, the U.S. illicit drug market generates billions of dollars in profits. Such profits provide international drug trafficking organizations with the resources to evade and compete with law enforcement agencies, to penetrate legitimate economic structures, and, in some instances, to challenge the authority of national governments. Calculated in dollar value terms, at least four-fifths of all the illicit drugs consumed in the United States are of foreign origin, including virtually all the cocaine and heroin and most of the marijuana. According to the Drug Enforcement Administration (DEA), the methamphetamine market is supplied predominantly from laboratories in both the United States and Mexico while most of the hallucinogens and illegally marketed psychotherapeutic drugs and "designer" drugs are of domestic U.S. origin. Drugs are a lucrative business and a mainspring of global criminal activity. Knowledge is incomplete about the distribution of revenues from illicit drug sales, but foreign supply cartels exercise considerable control over wholesale distribution in the United States and illicit proceeds are often laundered and invested through foreign banks and financial institutions. The federal anti-drug initiative has two major elements: (1) reduction of demand and (2) reduction of supply. Reduction of demand is sought through education to prevent dependence, through treatment to cure addiction and through measures to increase prices and risk of apprehension at the consumer level. Reduction of supply, which currently accounts for about 64.5% of the federal anti-drug control budget, is sought by programs aimed at destabilizing the operations of illicit drug cartels at all levels and severing their links to political power, and by seizing their products, businesses, and financial assets. As most illicit drugs are imported, a major interdiction campaign is being conducted on the U.S. borders, at ports of entry, on the high seas, and along major foreign transshipment routes and at production sites. An international program of source crop eradication is also being pursued. Approximately 24.6% of the requested federal drug control budget of $12.6 billion for FY2007 is for interdiction and 11.5% is for international assistance programs. These ratios continue to remain relatively constant. The major international components of federal policies for the reduction of illicit supply are discussed below. On March 1, 2006, the State Department released its annual International Narcotics Control Strategy Report (INCSR) , a congressionally-mandated comprehensive assessment of the efforts of foreign nations to combat the illicit drug trade and drug related money laundering. The primary stated goal of U.S. international drug policy is to reduce the supply of illicit narcotics flowing into the United States. A second and supporting goal is to reduce the amount of illicit drugs cultivated, processed, and consumed worldwide. U.S. international drug control policy is implemented by a multifaceted strategy that includes the following elements: eradication of narcotic crops; interdiction and law enforcement activities in drug-producing and drug-transiting countries; international cooperation; sanctions/economic assistance; and institutional development. The U.S. State Department's Bureau of International Narcotics and Law Enforcement (INL) has the lead role in coordinating U.S. international drug intervention and suppression activities. A long-standing U.S. policy regarding international drug control is to reduce cultivation and production of illicit narcotics through eradication. The United States supports programs to eradicate coca, opium, and marijuana in a number of countries. These efforts are conducted by a number of U.S. government agencies administering several types of programs. The United States supports eradication by providing producer countries with chemical herbicides, technical assistance and specialized equipment, and spray aircraft. The U.S. Agency for International Development (AID) funds programs designed to promote economic growth and to provide alternative sources of employment for the people currently growing, producing, or processing illicit drugs. U.S. eradication policy receives informational support from the State Department's Office of Public Diplomacy and Public Affairs, which publicizes the dangers of drug abuse and trafficker violence. In addition, AID sponsors drug education and awareness programs in 33 Latin American, Asian, and East European countries. On January 2, 2005, the Los Angeles Times reported a Bush Administration split over how to respond to Afghanistan's skyrocketing opium poppy production. Central to the debate is what some view as potentially competing U.S. policy objectives in the war-torn nation, i.e., counterterrorism, counter-narcotics, and political stability. A second element of U.S. international narcotics control strategy is to help host governments seize illicit narcotics before they reach America's borders. A related imperative is to attack and disrupt large aggregates of criminal power, to immobilize their top leaders and to sever drug traffickers' ties to the economy and to the political hierarchy. Training of foreign law enforcement personnel constitutes a major part of such endeavors. The Department of State funds anti-narcotics law enforcement training programs for foreign personnel from more than 70 countries. In addition, the Department of State provides host country anti-narcotics personnel with a wide range of equipment, and DEA agents regularly assist foreign police forces in their efforts to destabilize trafficking networks. U.S. efforts to promote effective law enforcement against drug traffickers also include suggestions to nations on means to strengthen their legal and judicial systems. Finally, an important judicial tool against drug dealers is extradition. A November 2005 report released by the Government Accountability Office argues for the development of better counter-drug performance measures by government agencies and warns that the commitment of military assets to Iraq and Afghanistan is likely to hamper the ability of U.S. law enforcement to intercept drug shipments in the future. Proponents of strong drug interdiction policies have long been concerned that the nation's focus on anti-terror objectives will detract from resources and political will needed to combat foreign illicit drug production and trafficking. A major challenge facing the counter-drug law enforcement and intelligence community is how best to target criminal facilitators who may be working both for drug organizations and terrorist groups. As links between terrorist organizations and criminal groups appear to be a growing phenomenon, development of new mechanisms to collect and effectively share "targeting information" may warrant attention. A related issue involves deciding which agency/agencies should take action when suspects are involved in "dual use" (crime/terror) criminal support activity. Essentially all elements of U.S. international narcotics control strategy require international cooperation. By use of diplomatic initiatives, both bilateral and multilateral, the Department of State encourages and assists nations to reduce cultivation, production, and trafficking in illicit drugs. These bilateral agreements and international conventions have been seen thus far as largely ineffective in reversing the growth of international narcotics trafficking, in part because they lack strong enforcement mechanisms and are not uniformly interpreted by member nations. U.S. international narcotics control strategy also requires cooperation among governments to coordinate their border operations to interdict traffickers. To this end, the U.S. government has provided technical assistance for anti-drug programs in other countries. For FY2006, the State Department's international narcotics control budget appropriations totaled $1.2 billion to assist programs globally, including $79.2 million for Bolivia, $106.9 million for Peru, $464.8 million for Colombia, and $19.88 million for Ecuador. For FY2007, the State Department's international drug control budget request totaled $1.5 billion to assist programs globally, including $66 million for Bolivia, $98.5 million for Peru, $465 million for Colombia, and $17.3 million for Ecuador. Also requested was $65.5 million for interregional aviation support to provide aircraft for anti-drug programs in other countries, a slight increase from FY2006 appropriations levels of $62.9 million. The United States also participates in multilateral assistance programs through the U.N. International Drug Control Program and actively enlists the aid and support of other governments for narcotics control projects. The U.N. currently assists some 67 developing countries through development, law enforcement, education, treatment, and rehabilitation programs. For FY2007, the Bush Administration requested $14.5 million for general anticrime/anticorruption programs and $5.4 million for narcotics control-related contributions to international organizations; the majority of the latter would constitute the U.S. voluntary contribution to the U.N. drug control program. A fourth element of U.S. international narcotics control strategy involves the threat of, or application of, sanctions against drug producer or trafficker nations. These range from suspension of U.S. foreign assistance to curtailment of air transportation. Current law on International Drug Control Certification Procedures ( P.L. 107-228 , Section 706) requires the President to submit to Congress not later than September 15 of the preceding fiscal year a report identifying each country determined to be a major drug transit or drug producing country as defined in section 481(e) of the Foreign Assistance Act of 1961. In the report the President must designate each country that has "failed demonstrably" to meet its counternarcotics obligations. Designated countries would be ineligible for foreign assistance unless the President determined that that assistance was vital to the U.S. national interest or that the country had made "substantial efforts" to improve its counternarcotics performance. A second certification process was enacted by Congress as part of the USA Patriot Improvement and Reauthorization Act of 2005 , P.L. 109-177 , 120 Stat. 256 (March 9, 2006). Title VII, the "Combat Methamphetamine Epidemic Act of 2005" requires the Secretary of State to complete a report not later than March 2007 that identifies the nations that are the top five world exporters and importers of ephedrine and related precursor chemicals used for the production of methamphetamine. The Secretary of State must then certify, under current drug certification procedures, that such nations are "fully cooperating" with the United States to restrict the ephedrine trade to the legitimate market. Nations deemed not to be fully cooperating face withholding of U.S. bilateral assistance and U.S. opposition to multilateral assistance from the multilateral development banks. However, the President can issue a waiver if national security interests warrant. A multilateral [drug performance] evaluation mechanism (MEM) has also been established under the auspices of the Organization of American States (OAS). This mechanism is seen by many as a vehicle to undermine and facilitate abolishment of the existing U.S. sanctions-oriented unilateral certification process, which is often viewed as an irritant to major illicit drug-producing countries, and which, opponents argue, does little to promote anti-drug cooperation. U.S. sanctions policy has been augmented with programs of economic assistance to major coca producing countries (see " Use of Sanctions or Positive Incentives " and " The George W. Bush Administration's Anti-Drug Strategy ," below). For FY2007, the State Department requested funds for drug related alternative development, including approximately $125 million for Colombia, $42.5 million for Peru, $31 million for Bolivia and $8.4 million for Ecuador. On June 2, 2003, President Bush submitted to Congress a list of foreign drug kingpins subject to U.S. legislative efforts to deny such individuals and entities access to U.S. financial systems and to prohibit U.S. individuals and companies from doing business with these kingpins. For the first time, foreign "entities" such as Colombia's Revolutionary Armed Forces (FARC) and United Self-Defense Forces (AUC) are included in the list. A fifth element of U.S. international narcotics control strategy increasingly involves institutional development, such as strengthening judicial and law enforcement institutions, boosting governing capacity, and assisting in developing host nation administrative infrastructures conducive to combating the illicit drug trade. Institution development includes such programs as corruption prevention, training to support the administration of justice, and financial crimes enforcement assistance. The primary goal of U.S. international narcotics control policy is to stem the flow of foreign drugs into the United States. A number of approaches have been proposed to reshape U.S. international narcotics control policy and implement it more effectively. It is estimated that the illicit drug trade generates as much as half of the approximately $750 billion in illegal funds laundered internationally each year. Policymakers face the challenge of deciding the appropriate level of funding required for the nation's international narcotics control efforts within the context of competing budgetary priorities. Another challenge facing the U.S. international drug control efforts concerns how to implement policy most effectively. Some observers argue that current U.S. policy is fragmented and overly bilateral in nature. These analysts suggest that to achieve success, policy options must be pursued within the context of a comprehensive plan with a multilateral emphasis on implementation. For example, they point out that some studies indicate that interdiction can actually increase the economic rewards to drug traffickers by raising prices for the products they sell. They agree, however, that interdiction as part of a coordinated plan can have a strong disrupting and destabilizing effect on trafficker operations. Some analysts suggest that bilateral or unilateral U.S. policies are ill-suited for solving what is in effect a multilateral problem. They cite the need for enhancing the United Nations' ability to deal effectively with the narcotics problem and for more international and regional cooperation and consultation on international narcotics issues. Proponents of bilateral policy do not necessarily reject a more multilateral approach. They point out, however, that such multinational endeavors are intrinsically difficult to arrange, coordinate, and implement effectively. Four major approaches to reduce demand for illicit drugs and the foreign source supply of illicit drugs to the United States are set out below. This option involves expanding efforts to reduce the volume of narcotic plants and crops produced in foreign countries before the crops' conversion into processed drugs. Illicit crops may either be eradicated, or purchased or seized (and then destroyed). Eradication of illicit crops may be accomplished by physically uprooting the plants, or by chemical or biological control agents. Development of alternative sources of income to replace peasant income lost by nonproduction of narcotic crops may be an important element of this option. Proponents of expanded efforts to stop the production of illicit drug crops and substances at the source believe that reduction of the foreign supply of drugs available is an effective means to lower levels of drug use in the United States. They argue that reduction of the supply of cocaine—arguably, the nation's top drug control priority—is a realistically achievable option. Proponents of vastly expanded supply reduction options, and specifically of herbicidal crop eradication, argue that this method is the most cost-effective and efficient means of eliminating illicit drug producing crops. They maintain that, coupled with intensified law enforcement, such programs will succeed since it is easier to locate and destroy crops in the field than to locate subsequently processed drugs on smuggling routes or on the streets of U.S. cities. Put differently, a kilogram of cocaine hydrochloride is far more difficult to detect than the 300 to 500 kilograms of coca leaf that are required to make that same kilogram. Also, because crops constitute the cheapest link in the narcotics chain, producers will devote fewer economic resources to prevent their detection than to concealing more expensive and refined forms of the product. In addition, eradication successes have been recorded in individual countries, such as in Colombia for the period 2004/2005. Opponents of expanded supply reduction policy generally question whether reduction of the foreign supply of narcotic drugs is achievable and whether it would have a meaningful impact on levels of illicit drug use in the United States. They argue that aerial spraying in Colombia has failed to contain the spread of coca cultivation and point to drug syndicates' moving into opium poppy cultivation in Colombia and (more recently) Peru. Total Andean cultivation has remained relatively stable in the past decade despite U.S. efforts, and because farmers are finding ways to increase productivity per unit of land according to State Department figures. Critics also suggest that even if the supply of foreign drugs destined for the U.S. market could be dramatically reduced, U.S. consumers would simply switch to consumption of domestically-grown and/or synthetic drug substitutes. Thus, they maintain, the ultimate solution to the U.S. drug problem is wiping out the domestic market for illicit drugs, not trying to eliminate the supply in source countries. Some also fear that environmental damage will result from herbicides. As an alternative, they urge development, research, and funding of programs designed to develop and employ biological control agents such as coca-destroying insects and fungi that do not harm other plants. Others argue that intensified eradication will push the drug crop frontier and the attendant polluting effects of narcotics industries farther into ecologically sensitive jungle areas, with little or no decrease in net cultivation. In addition, reports have surfaced in Colombia of toxic effects of herbicides on legal crops and on the health of animals and humans, although the veracity of such accounts is debated. Others question whether a global policy of simultaneous crop control is politically feasible since many areas in the world will always be beyond U.S. control and influence. Such critics refer to continuously shifting sources of supply, or the so-called "balloon effect": when squeezed in one place, it pops up in another. Nevertheless, many point out that the number of large suitable growth areas is finite, and by focusing simultaneously on major production areas, substantial reductions can be achieved if adequate funding is provided. Some also question the value of supply reduction measures since world production and supply of illicit drugs vastly exceeds world demand, making it unlikely that the supply surplus could be reduced sufficiently to affect the ready availability of illicit narcotics in the U.S. market. Such analysts also suggest that even if worldwide supply were reduced dramatically, the effects would be felt primarily in other nations' drug markets. The U.S. market, they argue, would be the last to experience supply shortfalls, because U.S. consumers pay higher prices and because U.S. dollars are a preferred narco-currency. Some suggest that expanded and effective efforts to reduce production of illicit narcotics at the source will be met by active and violent opposition from a combination of trafficker, political, and economic groups. In some nations, such as Colombia, traffickers have achieved a status comparable to "a state within a state." In others, allegations of drug-related corruption have focused on high-level officials in the military and federal police, as well as heads of state. In Mexico, according to a Washington Times report, smugglers often are protected by heavily-armed Mexican military troops and police who "have been paid handsomely to escort the drug traffickers and their illicit shipments across the border and into the United States." In addition, some traffickers have aligned themselves with terrorist and insurgent groups, and have reportedly funded political candidates and parties, pro-narcotic peasant workers and trade union groups, and high visibility popular public works projects to cultivate public support through a "Robin Hood" image. Because some constituencies that benefit economically from coca are well armed, if the United States were successful in urging foreign governments to institute widespread use of chemical/biological control agents, cooperating host governments could well face strong domestic political challenge and violent opposition from affected groups. Heavy military protection, at a minimum, might be required for those spraying or otherwise eradicating drug crops. Some critics have argued that an important tradeoff with respect to Colombia is that eradication campaigns can have the unintended effect of aggravating the country's ongoing civil conflict. Since Colombia's guerrilla groups pose as advocates of growers, spraying may broaden support for such groups, thereby contradicting the objectives of the government's counterinsurgency efforts in the affected zones. These observers believe that Colombia's enforcement priorities should shift to targeting critical nodes in transportation and refining and, to the extent possible, sealing off traffic routes to and from the main coca producing zones. The argument is made that interdiction can disrupt internal markets for coca derivatives and that, compared to eradication, it imposes fewer direct costs on peasant producers and generates less political unrest. For some countries, production of illicit narcotics and the narcotics trade have become an economic way of life that provides a subsistence level of income to large numbers of people from whom those who rule draw their legitimacy. Crop reduction campaigns seek to displace such income and those workers engaged in its production. In this regard, these campaigns may threaten real economic and political dangers for the governments of nations with marginal economic growth. Consequently, some analysts argue that the governments of such low-income countries cannot be expected to launch major crop reduction programs without the substitute income to sustain those whose income depends on drug production. Those promoting expansion of efforts to reduce production at the source face the challenge of instituting programs that effectively reduce production of narcotic crops and production of refined narcotics without creating unmanageable economic and political crises for target countries. A major area of concern of such policymakers is to achieve an effective balance between the "carrot" and the "stick" approach in U.S. relations with major illicit narcotics-producing and transit countries. Proponents of a sanctions policy linking foreign aid and trade benefits to U.S. international narcotics objectives argue against "business as usual" with countries that permit illicit drug trafficking, production, or laundering of drug profits. They assert that this policy includes a moral dimension and that drug production and trafficking is wrong, and that the United States should not associate with countries involved in it. Such analysts maintain that U.S. aid and trade sanctions can provide the needed leverage for nations to reduce production of illicit crops and their involvement in other drug related activities. They argue that both the moral stigma of being branded as uncooperative and the threat of economic sanctions prod many otherwise uncooperative nations into action. They further stress that trade sanctions would be likely to provide a highly effective lever as most developing countries depend on access to U.S. markets. Opponents of a sanctions policy linking aid and trade to U.S. international narcotics objectives argue that sanctions may have an undesirable effect on the political and economic stability of target countries, making them all the more dependent on the drug trade for income; that sanctions have little impact because many countries are not dependent on U.S. aid; that sanctions historically have little effect unless they are multilaterally imposed; and that sanctions are arbitrary in nature, hurt national pride in the foreign country, and are seen in many countries as an ugly manifestation of "Yankee imperialism." Finally, an increasing number of analysts suggest that if sanctions are to be fully effective, they should be used in conjunction with additional positive incentives (subject perhaps to an expanded certification/approval process) to foster anti-drug cooperation. Alternatively, some suggest positive incentives instead of sanctions. They believe that illicit drug producing countries must be motivated either to refrain from growing illicit crops, or to permit the purchase or destruction of these crops by government authorities. Many argue that since short term economic stability of nations supplying illegal drugs may depend upon the production and sale of illicit substances, it is unrealistic to expect such nations to limit their drug-related activities meaningfully without an alternative source of income. It has been suggested by some analysts that a massive foreign aid effort—a so-called "mini-Marshall Plan"—is the only feasible method of persuading developing nations to curb their production of illicit drugs. Such a plan would involve a multilateral effort with the participation of the United States, Europe, Japan, Australia, other industrialized nations susceptible to the drug problem, and the rich oil producing nations. The thrust of such a plan would be to promote economic development, replacing illicit cash crops with other marketable alternatives. Within the framework of such a plan, crops could be purchased or else destroyed by herbicidal spraying or biological control agents while substitute crops and markets are developed and assured. In this view, any such program would be coupled with rigid domestic law enforcement and penalties for non-compliance. Thus, it could require a U.S. commitment of substantially increased enforcement assets to be used against both growers and traffickers, and some observers assert it might require direct U.S. military involvement at the request of the host country. Significant coercion might be required, since drug crops typically produce a better cash flow than licit crops grown in the same region. For example, in Afghanistan a hectare of opium might earn 30 to 45 times as much as a hectare of wheat at prevailing prices ($13,000 compared to $300 to $400). Even if the international community bought up the entire Afghan opium crop, the temptation to plant new opium could prove irresistible to farmers. Critics have concerns regarding positive incentive concepts. They warn of the precedent of appearing to pay "protection" compensation, that is, providing an incentive for economically disadvantaged countries to go into the drug export business. They also warn of the open-ended cost of agricultural development programs and of extraterritorial police intervention. Finding markets for viable alternative crops is yet another major constraint. Some experts argue that typical conditions of drug crop zones, such as geographical remoteness, marginal soils and, in certain countries, extreme insecurity, tend to limit prospects for legal commercial agriculture. According to one report, the soils in Colombia's Putumayo Department, an important center of coca cultivation, are simply too poor to support the number of people currently farming in the province if all converted to growing legal crops. Such observers believe that a more promising strategy is to foster development of the legal economy in other locales, including urban settings, in order to attract people away from areas that have a comparative advantage in coca or opium production. In the view of these analysts, the best "substitute crop" for coca or opium could well be an assembly plant producing electronic goods or automobiles for the international market. Drug supply line interdiction is both a foreign and domestic issue. Many argue that the United States should intensify law enforcement activities designed to disrupt the transit of illicit narcotics as early in the production/transit chain as possible—well before the drugs reach the streets of the United States. This task is conceded to be very difficult because the United States is the world's greatest trading nation with vast volumes of imports daily flowing in through hundreds of sea, air, and land entry facilities, and its systems have been designed to facilitate human and materials exchange. This has led some analysts to suggest that the military should assume a more active role in anti-drug activities. Some in Congress, in the late 1980s and prior to appropriations for FY1994, had urged an expanded role for the military in the "war on drugs." The idea of using the military is not novel. Outside the United States, U.S. military personnel have been involved in training and transporting foreign anti-narcotics personnel since 1983. Periodically, there have also been calls for multilateral military strikes against trafficking operations, as well as increased use of U.S. elite forces in preemptive strikes against drug fields and trafficker enclaves overseas. The military's role in narcotics interdiction was expanded by the FY1990-1991 National Defense Authorization Act. The conference report (H.Rept. 100-989) concluded that the Department of Defense (DOD) can and should play a major role in narcotics interdiction. Congress, in FY1989 and FY1990-1991 authorization acts, required DOD to promptly provide civilian law enforcement agencies with relevant drug-related intelligence; charged the President to direct that command, control, communications, and intelligence networks dedicated to drug control be integrated by DOD into an effective network; restricted direct participation by military personnel in civilian law enforcement activities to those authorized by law; permitted the military to transport civilian law enforcement personnel outside the U.S. land area, and expanded the National Guard's role in drug interdiction activities. DOD's requested drug budget total for FY2007 was $926.9 million as compared to $936.1 million appropriated for FY2006. Despite the military's obvious ability to support drug law enforcement organizations, questions remain as to the overall effectiveness of a major military role in narcotics interdiction. Proponents of substantially increasing the military's role in supporting civilian law enforcement narcotics interdiction activity argue that narcotics trafficking poses a national security threat to the United States; that only the military is equipped and has the resources to counter powerful trafficking organizations; and that counter drug support provides the military with beneficial, realistic training. In contrast, opponents argue that drug interdiction is a law enforcement mission, it is not a military mission; that drug enforcement is an unconventional war that the military is ill-equipped to fight; that a drug enforcement role detracts from readiness; that a drug enforcement role exposes the military to corruption; that it is unwise public policy to require the U.S. military to operate against U.S. citizens; and that the use of the military may have serious political and diplomatic repercussions overseas. Moreover, some in the military remain concerned about an expanded role, seeing themselves as possible scapegoats for policies that have failed, or are likely to fail. Another commonly proposed option is to increase policy emphasis on development and implementation of programs worldwide that aim at increasing public intolerance for illicit drug use. Such programs, through information, technical assistance, and training in prevention and treatment, would emphasize the health dangers of drug use, as well as the danger to regional and national stability. The State Department's Office of Public Diplomacy and Public Affairs and AID currently support modest efforts in this area. Some believe these programs should be increased and call for a more active role for the United Nations and other international agencies in development and implementation of such demand reduction programs. Proponents of this approach say that the major factor in the international drug market is not the product, but the profit. Thus, they stress, international efforts to reduce the flow of drugs into the United States must identify means to seize and otherwise reduce assets and profits generated by the drug trade. Some critics point out the challenges of tracking, separating out and confiscating criminal assets. These include the huge volume of all international electronic transfers—more than $2 trillion each day—and the movement of much illegal money outside of formal banking channels such as hawala-type chains of money brokers. Policymakers pursuing this option must decide whether laws in countries where they exert influence are too lenient on financial institutions, such as banks and brokerage houses, that knowingly facilitate financial transactions of traffickers. If the answer is "yes," national leaders might then take concerted action to promote harsher criminal sanctions penalizing the movement of money generated by drug sales, including revocation of licenses of institutions regularly engaging in such practices. Finally, those supporting this option favor increased efforts to secure greater international cooperation on financial investigations related to money laundering of narcotics profits, including negotiation of mutual legal assistance treaties (MLATs). Arguably, such an approach would not only assist in combating illicit drugs, but also in combating other forms of criminal activity as well as terrorism. Three major ongoing policy initiatives that are prominent components of U.S. international drug control efforts are described below. They are: (1) Plan Colombia/the Andean Counterdrug Initiative; (2) programs to counter illicit poppy cultivation and opium production in Afghanistan; and (3) the drug certification process. On July 13, 2000, U.S. legislation was signed into law ( P.L. 106-246 ). A section provided support for Plan Colombia—a six-year plan for helping then-President Pastrana to rid the country of drug trafficking, promote economic development, and restore peace. Included was $1.3 billion in emergency supplemental appropriations for equipment, supplies, and other counter narcotics aid primarily for the Colombian military. The Plan aimed to curb trafficking activity and reduce coca cultivation in Colombia by 50% over five years. Though focused on military and law enforcement initiatives, plan components included helping the Colombian Government control its territory; strengthening democratic institutions; promoting economic development; protecting human rights; and providing humanitarian assistance. Funding for Andean regional drug interdiction and alternative development programs was provided as well. Supporters of the Plan argued that without enhanced U.S. aid, Colombia risks disintegration into smaller autonomous political units—some controlled by leftist or rightist guerrilla groups that are heavily involved in drug trafficking and violent crime for profit activity. Other observers cautioned that narcotics-related assistance to Colombia can, at best, produce serious reductions in illicit drug production only within a multi-year timeframe. They warned against enhanced U.S. involvement in a conflict where clear-cut victory is elusive and to a large degree dependent on reduction of the so far intractable U.S. domestic appetite for illicit drugs. Still others warned of the so-called "spillover" effect of Plan Colombia on neighboring nations such as Ecuador where narco-linked insurgents and paramilitaries increasingly operate. In April 2001, the Bush Administration unveiled an Andean Counterdrug Initiative (ACI) to support Plan Colombia, requesting $882 million for the program. Of these funds approximately 45% percent were intended for Colombia and the remainder for six regional neighbors of Colombia (Bolivia, Brazil, Ecuador, Panama, Peru, and Venezuela) affected by drug trafficking and drug-related violence. In December 2001, Congress passed the Foreign Operations Appropriations bill for FY2002, allocating $783 million to the ACI. Of the $783 million, 49% were provided to Colombia and the rest to the other six countries. Of the Colombia funds, 36% were earmarked for economic and social and governance purposes and 64% for counternarcotics and security, a ratio largely reflecting the enforcement orientation of Plan Colombia. In the case of Peru and Bolivia, the economic and social share was significantly higher—61% in both countries. For FY2003, the Bush Administration requested $980 million in ACI funding, of which 55% was for Colombia. The ACI request for FY2004 totaled $990.7 million of which $463 million was for State Department Andean Counterdrug Initiative (ACI) programs for Colombia. For FY2005, Congress appropriated $731 million for the ACI (of which $466.5 was for Colombia) and an additional $106.5 million for Foreign Military Financing (FMF) funding. For FY2006, Congress appropriated $727.2 million for the ACI (of which $464.8 million was for Colombia) and an additional $89.1 million for Foreign Military Financing (FMF) funding. For FY2007, the Administration has requested $721 million for the ACI (of which $465 million was for Colombia) and an additional $90 million for Foreign Military Financing (FMF) funding. The evolving counter-narcotics policy initiative developed for Afghanistan by U.S. agencies consists of five key elements, or pillars, that mirror Afghan initiatives and call for increased interagency and international cooperation. The five pillars of the U.S. initiative are public information, judicial reform, alternative livelihood development, interdiction, and eradication. New initiatives in these areas are building upon a range of preexisting policy initiatives being implemented by U.S., Afghan, and coalition authorities. The Department of State (INL) budget request for counternarcotics programs in Afghanistan for FY2007 is $297.4 million, up from FY2006 appropriations levels of $232.6 million. Western European countries are a large consumer of Afghanistan source opium, and increasingly other nations, notably the United Kingdom, are playing a prominent role in supporting Afghan counter-narcotics efforts. Opium poppy cultivation and production of opium have become significant factors in Afghanistan's fragile political and economic order and are exacerbated by a persistent insurgency waged by the ousted Taliban regime. According to the 2005 Afghanistan Opium Survey conducted by the United Nations Office on Drugs and Crime (UNODC) and the Afghan Ministry of Counternarcotics (MCN), Afghanistan remained the source of 87% of the world's illicit opium in 2005, in spite of ongoing efforts by the Afghan government, the United States, and their international partners to combat poppy cultivation and drug trafficking. U.N. officials estimate that the $2.7 billion of in-country illicit profits from the 2005 opium poppy crop were equivalent in value to 50% of the country's legitimate GDP, sustaining fears that Afghanistan's economic recovery continues to be underwritten by drug profits. According to the State Department's March 2006 International Narcotics Control Strategy Report [INCSR], Afghanistan experienced a 48% decline in the area of opium poppy cultivation during 2005. However, production of opium during this period fell only by 10%, reportedly because production yields were sharply higher due to favorable weather. Press reports from November 2006 suggest that yields from the 2006-2007 crop of opium poppy are likely to rival the record high level of opium production (6,100 tons) achieved during the 2005-2006 growing season. In December 2001, legislation on "Modifications to the Annual Drug Certification Procedures" in the Foreign Operations, Export Financing and Related Programs Appropriations Act ( P.L. 107-115 , Section 591) was enacted that effectively waived the drug certification requirements for FY2002. It required the President to withhold assistance from the countries most remiss in meeting their international drug-fighting obligations, but permitted the President to determine what countries to put in the "worst offending" category and (under specified conditions) to provide U.S. foreign assistance to a designated country. Legislation on "International Drug Control Certification Procedures" in the Foreign Relations Authorization Act of September 2002 ( P.L. 107-228 ) extended the waiver to FY2003, and subsequently provided for a de facto ongoing waiver. Such changes may reflect the fact that spokesmen from many countries have complained for years about the unilateral and non-cooperative nature of the drug certification requirements, and have urged the United States to end the process or at least to replace it with multilateral evaluation mechanisms. Acting under this legislation, President Bush made designations on a transitional basis for FY2002 and FY2003, and then continued such designations on a yearly basis. On September 15, 2006, President Bush issued the annual determination that lists major illicit drug producing or drug transit countries. The President identified 20 countries to be included on the so-called "majors list": Afghanistan, The Bahamas, Bolivia, Brazil, Burma (Myanmar), Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, India, Jamaica, Laos, Mexico, Nigeria, Pakistan, Panama, Paraguay, Peru, and Venezuela. Burma was again singled out as a county that had "failed demonstrably" to adhere to its obligations under international counternarcotics agreements. Venezuela was singled out as well as having failed demonstrably, but was granted a national interest waiver exempting it from U.S. aid and trade sanctions and possible access to loans from international financial institutions. The direction of drug policy does not appear to be an immediate top foreign policy priority for the George W. Bush Administration. To date, pressing concern over issues such as terrorism and homeland security appear to command more attention. This does not mean that international drug policy has been neglected by the Administration, or given a lower priority than by preceding administrations. For example, in addition to fine-tuning the nation's annual national drug control strategy, the Administration has crafted and published the nation's first-ever synthetic drug control strategy. In February 2006 , the White House released its annual National Drug Control Strategy. Central to the international component of the strategy is disrupting the operations of drug traffickers including destroying the economic basis of the cocaine production business in South America by fumigating the coca crop, seizing enormous amounts of cocaine from transporters, and selectively targeting major drug organization heads for law enforcement action and, ultimately, extradition and prosecution in the United States. On June 1, 2006 the Bush Administration released its synthetic drug control strategy. A central goal of the strategy is to curb the diversion of ephedrine, pseudoephedrine, and phenylpropanolamine, precursor chemicals commonly used in the production of methamphetamine, from legitimate pharmaceutical markets into illicit drug production through better control of the international market for these precursor chemicals. The United Nations Commission on Narcotic Drugs is seen as playing a central role in implementing the strategy by collecting, sharing, and analyzing data on the trade in such precursors. A primary and immediate concern of the strategy is the growing presence of illicit methamphetamine super labs in Mexico and the growing control of the U.S. methamphetamine market by Mexican drug organizations. Possible issues of concern to Congress relating to international drug control policy and strategy implementation include the following: (1) Can Plan Colombia and the Andean Counterdrug Initiative as currently envisioned have a meaningful impact on reducing drug shipments to the United States and in reducing the current level of violence and instability in Colombia? To what degree can a counter-drug plan which does not aim to deal a decisive blow to insurgent operations in Colombia be expected to meaningfully curb drug production and violence there? (2) How does U.S. involvement in anti-drug efforts in the Andean nations affect other aspects of American foreign policy in the region, and in Latin America generally? Does a concentration on drug-related issues obscure more fundamental issues of stability, governance, poverty, and democracy (i.e., to what degree are drugs a major cause, or result, of the internal problems of certain Latin American countries)? Might U.S. pursuit of drug control objectives conflict in certain ways with efforts to resolve Colombia's ongoing civil conflict, for instance by alienating large rural constituencies in contested regions of the country? (3) In the case of Colombia and other nations where insurgents are heavily involved in the drug trade, how can the United States ensure that U.S. military aid and equipment are in fact used to combat drug traffickers and cartels, rather than diverted for use against domestic political opposition or used as an instrument of human rights violations? How great is the risk that such diversions could take place, and is the degree of risk worth the possible gains to be made against drug production and trafficking? (4) How extensive is drug-related corruption in the armed forces and police of the Andean nations? What impact might such corruption have on the effectiveness of U.S. training and assistance to these forces? (5) Will the evolving strategy under the Bush Administration produce better results than previous strategies in reducing illicit drug use in the United States and in supporting U.S. narcotics and other foreign policy goals overseas? Is a proper balance of resources being devoted to domestic (the demand side) vs. foreign (the supply side) components of an overall national anti-drug strategy? Are efforts to reduce the foreign supply level futile while domestic U.S. demand remains high? Are efforts to reduce domestic demand fruitless as long as foreign supplies can enter the country with what some see as relative impunity? (6) To what extent will the Administration's current priority in fighting terrorism affect implementation of antidrug policy? Has repositioning of equipment and resources to improve U.S. defenses against acts of terrorism, for example the shift of Coast Guard vessels from the eastern Pacific and the Caribbean to perform coastal patrols and port security functions, lowered defenses with respect to curbing drug flows? On the other side of the issue, to what degree has committing anti-drug resources to support anti-terrorism objectives significantly enhanced, or could significantly enhance, the effectiveness of counterterrorism efforts? (7) To what extent should U.S. military assistance programs in Colombia target groups that use narcotics operations to finance terrorist activities (including leftist guerrillas and paramilitaries), as opposed to the narcotics trafficking infrastructure itself? (8) As links between terrorist organizations and criminal groups appear to be a growing phenomenon, how does one effectively use the law enforcement community—especially the drug law enforcement community—to target criminal facilitators who may be working both for drug organizations and terrorist groups? Through what mechanisms does one effectively share "targeting information" and how does one decide which agency/agencies take action? (9) Are U.S. counterdrug policy and drug related foreign assistance over-focused on Colombia and Afghanistan and if so, how might policy focus and resource allocation be realigned? (10) How do, or should, anti-drug goals dovetail with anti-terrorism goals in Afghanistan and what programs there, if any, are likely to best serve U.S. policy goals? For example, should the U.S. continue to press for aerial crop eradication in Afghanistan against the wishes of the local Afghan leadership, even if this means alienating and losing their support for counterterror goals and objectives?
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Efforts to significantly reduce the flow of illicit drugs from abroad into the United States have so far not succeeded. Moreover, over the past decade, worldwide production of illicit drugs has risen dramatically: opium and marijuana production has roughly doubled and coca production tripled. The effectiveness of international narcotics control programs in reducing consumption is a matter of ongoing concern. Despite apparent national political resolve to deal with the drug problem, inherent contradictions regularly appear between U.S. anti-drug policy and other national policy goals and concerns. Pursuit of drug control policies can sometimes affect foreign policy interests and bring political instability and economic dislocation to countries where narcotics production has become entrenched economically and socially. Drug supply interdiction programs and U.S. systems to facilitate the international movement of goods, people, and wealth are often at odds. U.S. international narcotics policy requires cooperative efforts by many nations that may have domestic and foreign policy goals that compete with the requirements of drug control. One contentious issue has been the congressionally-mandated certification process, an instrument designed to induce specified drug-exporting countries to prioritize or pay more attention to the fight against narcotics businesses. Current law requires the President, with certain exceptions, to designate and withhold assistance from countries that have failed demonstrably to meet their counternarcotics obligations. P.L. 106-246, commonly referred to as "Plan Colombia," a $1.3 billion military assistance-focused initiative to provide emergency supplemental narcotics assistance to Colombia, was signed into law July 13, 2000. Recently, U.S. policy toward Colombia has focused increasingly on containing the terrorist threat to that country's security posed by groups engaged in drug trafficking. The high national priority given to terrorism has resulted in enhanced focus on links between drug and terror groups. A challenge facing policymakers is not to divert counter-drug resources for anti-terror ends in areas of potentially low payoff. An issue likely to receive continued attention in the 109th Congress is that of skyrocketing opium poppy cultivation in Afghanistan and whether to press for aerial crop eradication against the wishes of the local Afghan leadership. This report replaces IB10150, International Narcotics Policy: Overview and Analysis, by [author name scrubbed]. It will be updated periodically.
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Four decades have passed since the first trans-oceanic supersonic passenger flight took off from London Heathrow Airport in 1976. Subsequently, more than 2.5 million passengers flew supersonically until British Airways and Air France took the Concorde out of service in 2003. Although no su personic passenger aircraft have flown since then, aviation enthusiasts, aircraft and parts manufacturers, airlines, and some Members of Congress have expressed interest in restarting supersonic air travel. Several U.S. startup companies are now developing supersonic commercial and business jets. The major issues affecting the introduction of supersonic aircraft appear to remain the same as in the Concorde era—how to translate technological advances into commercial ventures that are economically viable and acceptable to regulators and the public. Gaining international consensus and approvals to fly supersonically over other countries besides the United States may be a critical element in determining the market viability of future civil supersonic aircraft designs. International agreements would also need to address permissible conditions for supersonic flight operations over water and over polar regions that have opened up to civil aircraft operations over the past decade and offer shorter flights between the United States and Asia. Supersonic flight means flight that is faster than the speed of sound. The speed of sound in Earth's atmosphere varies depending on temperature and other atmospheric conditions. Near sea level, it is typically about 760 miles per hour (mph). At the cruising altitude of commercial aircraft, where the air is much colder, it is often less than 700 mph. The ratio of an aircraft's speed divided by the speed of sound is known as its Mach number All current commercial aircraft are subsonic, with Mach number less than 1. For example, the typical cruising speed of a Boeing 777 airliner is Mach 0.84. Flight near Mach 1 is called transonic. Aircraft typically fly at such speeds only briefly while they accelerate from subsonic to supersonic or vice versa. They do not cruise near Mach 1 because they would experience high drag. Supersonic flight is faster than Mach 1. The Concorde cruised at about Mach 2.02 (roughly twice the speed of sound) when not over land. Some military aircraft fly at even higher supersonic speeds. Flight faster than Mach 5 is known as hypersonic. Hypersonic flight is currently limited to experimental aircraft and missiles as well as spacecraft reentering the atmosphere from orbit (the space shuttle during reentry flew at about Mach 25). As an aircraft flies, it disturbs the air through which it moves. The disturbance includes air flow around the aircraft as well as traveling pressure waves that humans perceive as sound. In subsonic flight, sound waves may be emitted in all directions. In supersonic flight, because the aircraft is flying faster than sound travels, all disturbances are behind the aircraft. Instead of sound waves, the pressure waves combine to form a shock wave, which people on the ground perceive as a sudden sonic boom after the aircraft passes (see Figure 1 ). Boom-related environmental impacts and community objections have been major issues for supersonic flight. Companies and government research programs are attempting to address these concerns by designing aircraft so that the shock waves produced by different components (such as the nose, wings, and engine) spread out in space and time, producing a longer but quieter "thump" rather than combining into a single loud boom. Flying faster than the speed of sound is not a novel concept. In 1947, a U.S. Air Force experimental aircraft became the first manned aircraft to exceed Mach 1, breaking the "sound barrier." This represented an important milestone for the burgeoning post-World War II aviation industry and set the stage for fierce international competition for speed and prestige. Notable supersonic developments include the Mach 2 British/Franco Concorde supersonic aircraft and the Mach 3.3 Lockheed SR-71 reconnaissance aircraft. While early research and development focused on military aircraft, by the early 1960s interest in developing supersonic civil aircraft grew worldwide. The Soviet Union became the first country to fly a supersonic passenger plane, the Tupolev TU-144, in 1968. The aircraft, which was designed to fly at Mach 2.2 and carry 140 passengers, went into production in 1972. However, a fatal crash at the 1973 Paris Air Show ended the Soviet Union's supersonic passenger ambition. In the United States, the supersonic technology developed in military aircraft programs led to interest in developing a supersonic transport for civilian applications. In June 1963, the government announced a major program to develop a supersonic passenger aircraft under the direction of the Federal Aviation Administration (FAA). However, several serious problems soon surfaced, including the need for considerable federal funding because of a development cost beyond the capabilities of any aircraft manufacturer, the lack of interest by the airlines due to their heavy investment in subsonic jets and their doubts about the financial viability of supersonic passenger aircraft, and the major challenges of addressing environmental concerns. The FAA program was eventually terminated by Congress in 1971, amid delays in prototype development and opposition on cost and environmental grounds. The Franco-British Concorde was the product of a costly joint project of the British and the French governments. In January 1976, the first flight of the Concorde, also the world's first trans-oceanic supersonic passenger flight, took off from London Heathrow to Bahrain. More than 2.5 million passengers flew supersonically before Concorde was taken out of service in 2003. With a cruising altitude of about 65,000 feet (nearly twice as high as subsonic airliners) and a speed of over twice the speed of sound, a typical journey between London and New York on the Concorde took about three and a half hours, as opposed to about seven hours on a subsonic nonstop flight. Although the Concorde was considered an aeronautical achievement and a symbol of national prestige by many, it did not turn out to be a commercial success for a variety of reasons. As a government endeavor, the Concorde was a very costly project. Although there has not been an accurate accounting of the costs, it was argued in 1976 that the official figure of £1.46 billion had been a drastic underestimate, and that the program cost of Concorde was nearly £4.26 billion. This was approximately £29.15 billion in 2017 pounds, equivalent to about $37.52 billion in U.S. dollars. Concorde aircraft were also expensive to operate, reportedly using almost three times as much fuel per passenger mile as subsonic aircraft. This drove up operating costs considerably, especially during the period of high oil prices in the 1970s and early 1980s. High subsonic noise levels during takeoffs and landings and sonic boom impacts from cruise flight generated considerable concern. Many countries banned Concorde flights from their airspace—it was reported that nearly half the planned routes, especially those over land, were prohibited. U.S. civil aviation regulations did and still do prohibit overland supersonic flights in the continental United States. This contributed to Concorde's low utilization rate and effectively limited its flights to a limited number of oceanic routes between big cities, including scheduled trans-Atlantic flights between London and New York. Providing premium air travel on selected routes, however, failed to make Concorde flights a sustainable business. Even as the development costs of the Concorde were written off by the British and French governments, few airlines were interested in purchasing a Concorde aircraft. Of the 20 Concordes ever manufactured, 14 were sold to the state-owned carriers of the two countries involved in building the planes: seven to British Airways and seven to Air France. The remainder were built as prototypes and flight test aircraft. All other orders for the Concorde were canceled. Filling the seats on Concorde flights with paying customers was not easy. Concorde tickets were generally priced at about twice the regular first-class airfare on a comparable subsonic flight. For example, in 2003, a round trip across the Atlantic on the Concorde cost £8,000, equivalent to about $15,475 in 2017 U.S. dollars, almost twice the first-class ticket price on a Boeing 747. Once the attraction of novelty wore off, the airlines found it difficult to fill the seats, often flying at less than half capacity. The plane was also impractical for carrying cargo or mail, given the limited cargo space on the Concorde. The airlines were therefore unable to generate additional revenue from these sources, which are important supplemental revenue streams for subsonic transoceanic passenger flights. According to figures from the British government, during the first five years of Concorde operations, British Airways recorded a loss of £10.4 million and Air France a loss of £36.7 million. However, the airlines claimed that in some years the SST operations were profitable. This occasional profitability was based on the fact that Concorde's development and capital costs were absorbed by the British and the French governments. In essence, the Concorde was too expensive for the airlines to operate and maintain with consistent profitability, even though they bore none of the cost of designing and building it. On July 25, 2000, Air France New York-bound flight 4590 took off from Charles de Gaulle airport in Paris. During the take-off acceleration, one of the tires ran over a strip of metal on the runway that had fallen from a previous aircraft. The metal strip shredded the tire. Part of the rubber hit a fuel tank, sending shock waves that burst a valve. Fuel started to pour out and was ignited by sparks from the landing gear damaged by the debris. The aircraft crashed into a hotel in the village of Gonesse, five miles from the runway. All 100 passengers and nine crew members were killed, along with four hotel employees on the ground. This sole fatal accident in the Concorde's operational history generated significant media coverage and damaged the Concorde's reputation for safety. Following the crash, safety modifications were made. The first test flight of a modified aircraft was completed successfully in July 2001. The first regular Concorde passenger flight after the accident soon followed, on September 11, 2001. That was also the day that terrorist hijackers used civilian aircraft to attack the Pentagon and the World Trade Center. The 9/11 terrorist attacks caused a significant drop in demand for air travel in general and for premium air travel in particular amid a global economic downturn. In 2003 all Concorde flights were discontinued due to financial losses. The Concorde demonstrated that supersonic passenger travel was technically achievable. But it was not financially successful. A new SST will be commercially viable only if it can offer transportation services at reasonably competitive prices in addition to reducing travel time for passengers over long routes. A supersonic aircraft may gain some advantage from its so-called "speed dividend"—commercial airlines with scheduled flights, charter carriers, and operators of on-demand and business jets would be able to get more trips out of the aircraft, and hence greater asset utilization. However, the speed dividend can be achieved only if the airline can maintain a high load factor while keeping maintenance and ground turnaround time brief. A supersonic airplane designed for commercial passenger service would face competition from subsonic planes. Modern subsonic widebody aircraft such as the Airbus A 350 and Boeing 787 are able to fly very long distances nonstop, such as the Singapore-Newark route spanning 8,285 nautical miles (about 9,534 miles, or 15,343 kilometers), which Singapore Airlines inaugurated in October 2018. An airline offering SST service would need to identify a city pair between which there are enough passengers willing to pay a high enough fare to turn a profit. It will need to convince its customers that the fare premiums are worth the time saved and worth sacrificing the presumed comfort in premium cabins on competing subsonic flights. On the other hand, the fact that modern subsonic aircraft are able fly very long distances means flight time gets extended as well, suggesting there could be demand for higher-priced flights offering much shortened travel time. As air travel becomes increasingly commoditized and generic, supersonic flights could be a unique service that would enable an airline to differentiate itself from the crowd. There may be an entirely separate market for supersonic business jets. Many large corporations fly their top executives aboard private aircraft for security reasons and to minimize wasted time. Supersonic planes could be attractive for this purpose. Several companies (such as NetJets and Flexjet ) offer fractional ownership of general aviation aircraft, a shared-ownership model similar to the time-share model in real estate, which would allow potential users to gain access to supersonic flights at considerably lower cost than full ownership. Speed is the main attraction of supersonic flight. Due to air traffic constraints, supersonic aircraft would not likely be able to achieve meaningful time savings for flights less than about 800 nautical miles (roughly the distance between New York and Orlando, FL). However, if supersonic flights over land are allowed, flying supersonically could save travelers about one hour on a flight between New York and Los Angeles, for example. Even greater time savings can be achieved on longer flights, but this is constrained by the range of the aircraft (see Figure 2 ). Companies currently developing SSTs have stated that they envision flight ranges of about 4,000 to 6,000 nautical miles. These ranges would comfortably allow for flights between much of the east coast of the United States and key European destinations like London and Paris, with typical time savings of around two hours. However, several trans-Pacific routes, routes from western U.S. cities to Europe, and flights from the United States to Africa or the Middle East would require refueling stops. Developers envision that, even with hour-long service stops to take on fuel, the time savings could be substantial, typically cutting about one-third off of total travel time. The revival of interest in supersonic aircraft is the result of technological advances in materials, airframe and engine designs, and aircraft manufacturing that would be able to give the aircraft longer range through improved fuel efficiency and substantial weight savings with advanced composites and aerodynamics. Denver-based Boom Technology has announced plans to test a supersonic 2-seat demonstrator by the end of 2019, and aims to deliver its first supersonic aircraft to an airline as early as 2025. In November 2016, Virgin Group, an airline operator, took purchase options for 10 of Boom's proposed Mach 2.2 aircraft. Japan Airlines (JAL) invested $10 million in Boom and took purchase options on 20 planes in December 2017. In early 2018, Qatar Airways reportedly expressed interest in supersonic airliners and said it "would not hesitate to be the launch customer." Nevada-based Aerion Supersonic and Boston-based Spike Aerospace are focusing on smaller jets for private use. In December 2017, Aerion announced a joint venture with Lockheed Martin and GE Aviation, an engine manufacturer, to develop a supersonic business jet, the AS2. The development of supersonic aircraft faces considerable regulatory uncertainty. Because the commercial viability of SSTs will depend on their ability to fly internationally, production of supersonic planes for passenger service is unlikely until the United States and other countries have adopted similar standards. Two types of standards are at issue Certification standards pertain to the aircraft itself. At present, there are no agreed-upon international standards for next-generation supersonic aircraft. Current noise standards applicable to new civil aircraft have evolved over the years to reflect existing technology used by subsonic aircraft. Existing standards applicable to supersonic aircraft, however, are now obsolete because they apply only to the Concorde or aircraft with Concorde-type design. The International Civil Aviation Organization (ICAO) Committee on Aviation Environmental Protection is presently seeking to develop international noise and emissions standards for future supersonic aircraft. ICAO has indicated that it anticipates reaching a standard for certifying supersonic aircraft in the 2020-2025 timeframe. Operational standards pertain to the way an aircraft may be used. Noise standards in the United States and other countries, dating to the early years of the Concorde, prohibit supersonic flight over land. FAA standards prohibit the operation of an aircraft at supersonic speed unless the aircraft is entering or leaving the United States and will not cause a sonic boom to reach the surface, or unless the operation involves a test flight authorized by FAA. Similarly, Japanese law prohibits "extremely high speed flights" over densely populated areas and around airports without specific permission. Aviation authorities will also need to address operational parameters for supersonic flight over water and polar regions on an international basis. Provisions in the FAA Reauthorization Act of 2018 ( P.L. 115-254 ) require FAA, within one year of the bill's enactment (October 5, 2018), to submit a report to Congress with recommended regulatory changes on a timeline that would permit overland supersonic flights. The FAA Reauthorization Act of 2018 directs FAA to take a leadership role in creating federal and international policies, regulations, and standards to certify safe and efficient civil supersonic aircraft operations within U.S. airspace. The legislation requires FAA to consult with industry stakeholders on noise-certification issues, including operational differences between subsonic and supersonic aircraft. It requires FAA to issue a notice of proposed rulemaking (NPRM), no later than December 31, 2019, to revise Part 91 Appendix B regulations to modernize the process for applying to operate civil aircraft at supersonic speeds for flight testing. It further requires FAA to issue an NPRM, no later than March 31, 2020, to develop noise standards for sonic boom over the United States and for takeoff and landing and noise test requirements applicable to civil supersonic aircraft, and to publish the final rule within 18 months after the public comment period closes. However, FAA may have to move more quickly: if an application for Part 21 certification of a supersonic aircraft is received before the final rule is promulgated, FAA must issue an NPRM no later than 18 months after the submission applicable solely to type certification of that aircraft and its engine. Furthermore, beginning December 31, 2020, and every two years thereafter, FAA would be required to review available aircraft noise and performance measurements to determine if federal regulations should be amended to remove the current ban on civil supersonic flight over land. The principal regulatory concern surrounding supersonic aircraft is the sonic boom, a shock wave of pressure created by compression of sound waves as the air is displaced by the airframe traveling at or above Mach 1.0. The compressed air molecules form a cone that spreads out from the aircraft and can reach the ground. If these sudden pressure changes reach the ear they will be perceived as booms, similar to the clap of thunder. The intensity of the boom will depend on the shape, size, and weight of the aircraft, as well as atmospheric factors such as wind, temperature, and humidity. Like explosions and other impulsive sounds, sonic booms are measured in terms of the increase in pressure (or "overpressure") they produce compared to normal pressure of the atmosphere (nominally 14.7 pounds per square inch, or 2,116 pounds per square foot). Humans may tend to find sonic boom overpressures above 1 pound per square foot to be objectionable. Overpressures of 1 to 2 pounds at the surface are typical of current-day supersonic aircraft, including military fighter jets and the retired Concorde supersonic jetliner, flying at typical cruise altitudes of 30,000 to 50,000 feet. Maneuvering during supersonic flight or rare atmospheric anomalies may cause higher boom overpressures to reach the surface. Higher overpressures may increase the likelihood of public reaction and, in very rare instances, may cause physical discomfort and break windows. Current regulations prohibit civil aircraft from operating at speeds greater than the speed of sound in U.S. airspace. Exceptions can be authorized on a case-by-case basis, and are generally requested for flight testing of military aircraft types by manufacturers and other civilian organizations supporting Department of Defense flight testing programs. In addition, manufacturers of certain civilian aircraft may petition FAA to obtain authorization to exceed the speed of sound in flight testing. In such a petition, applicants must specify a designated test area, usually over sparsely populated lands, and must demonstrate that the purpose of the flights is for testing to show compliance with aircraft certification requirements, to determine the sonic boom characteristics of the aircraft or establish means to reduce or eliminate the effects of sonic boom, or to establish the parameters under which the aircraft's supersonic flight will not cause measurable sonic boom impacts on the ground. In rare cases, FAA may approve supersonic flights outside of a designated test area if the petitioner can demonstrate that the flights will not produce measurable sonic boom overpressures that reach the ground under all foreseeable operating conditions. Manufacturers are likely to seek authorization to operate at supersonic speeds over land. The Federal Interagency Committee on Aviation Noise (FICAN) has indicated that, in order to obtain such authorization, a manufacturer will need to demonstrate either that the aircraft is capable of flying at supersonic speeds without its sonic boom reaching the ground (a capability known as Mach cut-off flight) or that the sonic boom impact on the ground is significantly attenuated compared to existing supersonic aircraft designs. The companies now developing supersonic aircraft believe that they will be able to demonstrate Mach cut-off capabilities or sonic boom signatures that are much quieter and much more acceptable to the public than existing supersonic aircraft. Aerion Supersonic claims its plane will demonstrate a "boomless cruise" at speeds approaching Mach 1.2, depending on atmospheric conditions. The company expects that cruise speeds over land will initially be restricted to below Mach 1.0, and advertises that its plane's envisioned subsonic cruise speed of Mach 0.95 will be faster than current commercial jets and will not produce a sonic boom. The projected maximum speed over water is Mach 1.4, about 65% faster than a typical long-range jet airliner. Aerion has had to throttle back on its speed expectations due to noise and heat limitations of existing engine designs. Spike Aerospace anticipates that its Spike S-512 will be able to achieve a supersonic cruise speed of Mach 1.6 with a sonic boom having a perceived loudness of less than 75 decibels (dB) at ground level. Boom Technology seeks to produce a three-engine airliner that will be capable of cruise speeds of Mach 2.2 but will be 30 times quieter than the Concorde at supersonic speed. None of the companies has publicly disclosed the designs and materials that would allow their planes to operate at supersonic speeds with relatively low noise levels. The National Aeronautics and Space Administration (NASA) Low Boom Flight Demonstrator program is developing the experimental X-59 QueSST (Quiet Supersonic Transport). Delivery of the X-59 is expected in 2021, with test flights planned during 2022. The aircraft is designed to fly at Mach 1.42 while producing a sonic boom with a perceived loudness of 75 dB Comparable to a domestic vacuum cleaner, this would be much less than the Concorde's perceived loudness of 105 dB (comparable to a thunderclap or a loud sports stadium). The nose, wings, engine, and other components of the X-59 will be shaped and positioned so that the individual shock waves they produce do not combine to produce a single loud boom. Instead, they will be spread out in space and time to produce a longer but quieter "thump." A ground-level sonic boom measurement of 75 dB perceived noise level (PNLdB) has been suggested by some NASA researchers as a potentially acceptable level for unrestricted supersonic flight over land. However, no standard has been established, either in the United States or internationally, and FAA has noted that its ongoing rulemaking efforts to address subsonic noise limits for supersonic aircraft would not rescind the prohibition of flights in excess of Mach 1 over land. However, language in P.L. 115-254 will require FAA to periodically review existing restrictions on supersonic flight of civil aircraft over land in the United States every two years, starting December 31, 2020. The reviews are to determine whether these restrictions may be eased to permit supersonic flight of civil aircraft over land. Controlling noise generated by supersonic jets during takeoffs and landings raises complex design tradeoffs, because making aircraft engines quieter at subsonic speeds may impact speed and efficiency in supersonic flight. Applying current subsonic noise standards to future supersonic aircraft could affect speed and range as well as aircraft emissions during supersonic phases of flight. FAA gave the Concorde special consideration with respect to noise certification, so long as developers demonstrated that the subsonic noise levels generated by the aircraft had been "reduced to the lowest levels that are economically reasonable, technologically practicable, and appropriate for the Concorde type design." The Concorde was noticeably louder during takeoff and landing than aircraft meeting ICAO's Stage 2 standards, which were established in 1971 as the original international limits for permissible aircraft noise. Only Concorde airplanes with flight time prior to January 1, 1980, were granted this special exception. However, as it turned out, no Concorde aircraft were produced after 1979. In 1976, the Port Authority of New York and New Jersey attempted to ban the Concorde from landing or taking off at John F. Kennedy International Airport (JFK), but a court found that this was preempted by an FAA decision allowing limited Concorde operations in the United States. While a complete ban against the Concorde was struck down by the court's decision, a curfew prohibiting scheduled Concorde flights between 10 p.m. and 7 a.m. was allowed. The United States completely phased out Stage 2 jets at the end of 2015, and those aircraft can no longer operate in U.S. airspace without special permission. Most jets today meet either Stage 3 or Stage 4 standards, which require much quieter engines. These standards, which vary based on aircraft weight, are known internationally as Chapter 3 and Chapter 4 noise standards in reference to the applicable chapters in ICAO Annex 16 (Environmental Protection), Volume 1 (Aircraft Noise). Newly designed aircraft certified after December 31, 2017, must meet U.S. "Stage 5" standards (internationally known as Chapter 14 standards, in reference to Chapter 14 of ICAO Annex 16). Stage 5 standards require aircraft to be at least 7 dB quieter than required by the previous Stage 4 noise standards, or 17 dB less than required by Stage 3 standards, cumulatively across three noise measurements (flyover, sideline, and approach). The sound produced by aircraft under the new standard will be on the order of one-fourth of the sound intensity of aircraft operating in the 1970s under Stage 2 noise limits. Many recent commercial jet models already meet the Stage 5 requirements, and in general, the subsonic commercial aircraft fleet is considered to be 75% quieter overall than aircraft produced in the 1970s. The Stage 5 standards apply to both commercial aircraft and general aviation aircraft such as business and private jets. Supersonic aircraft developers argue that the Stage 5 standard was finalized after significant design work on some new supersonic designs had already been completed, and, consequently, significant design changes may be required to pass noise certification tests, including changes that may substantially limit aircraft characteristics such as payload capacity and range. Some critics assert that requiring compliance with stringent Stage 5 noise standards may put supersonic designs at a competitive disadvantage while having little effect on reducing community noise around airports, as SSTs are likely to be produced in comparatively small numbers and subsonic Stage 3 and Stage 4 aircraft will continue to make up most of the air traffic around airports. At this point, aircraft manufacturers are generally employing higher bypass engines to achieve Stage 5 standards. These engines have large diameters, which can significantly increase drag and reduce fuel efficiency during supersonic flight. According to some studies, these engine designs could increase fuel consumption and carbon emissions by about 20% during supersonic flight. In addition, the increased wave drag of higher bypass engine designs is anticipated to reduce supersonic cruise speeds and aircraft range. FAA reauthorization language offered in the Senate ( S. 1405 , 115 th Congress) would have required that noise certification standards for future supersonic aircraft be no more stringent than standards that were in place for large subsonic aircraft on January 1, 2017. This would have had the effect of applying the Stage 4 noise standards in place on that date, and not the more stringent Stage 5 standards, to supersonic aircraft in development. This language was not included in the enacted FAA Reauthorization Act, thus leaving it to FAA to set appropriate noise limits as part of its mandated rulemaking activities to address noise certification of supersonic aircraft. U.S.-registered civil aircraft are required to meet airworthiness requirements that include, among other criteria, the FAA noise standards in 14 C.F.R. Part 36. FAA established Part 36, as well as additional operating standards applicable to aircraft noise, pursuant to the Control and Abatement of Aircraft Noise and Sonic Boom Act of 1968 (P.L. 90-411, as amended). That act required the FAA Administrator to prescribe standards and regulations to "afford present and future relief and protection to the public from unnecessary aircraft noise and sonic boom." FAA prohibited supersonic flights over land in 1973, based on the expectation that such flights would cause a sonic boom to reach the ground. FAA amended its operating standards in 1989 to allow for the authorization of supersonic flights in a designated test area if the flight is necessary to determine the sonic boom characteristics of an airplane or to establish means of reducing or eliminating the effects of sonic boom; or to demonstrate the conditions and limitations under which flight at supersonic speeds will not cause a measurable sonic boom overpressure to reach the surface. In 2008, FAA issued a statement updating its policy on noise limits for future civil supersonic aircraft to reflect then-current noise limits. The statement acknowledged that designers and prospective manufacturers of supersonic aircraft had approached FAA and ICAO for guidance on the feasibility of changing operational limitations that prohibited civil supersonic aircraft flight over land. In response, the agency stated, in part, Before the FAA can address a change in operational restrictions, it needs thorough research to serve as a basis for any regulatory decisions. Public involvement will be essential in defining an acceptable sonic boom requirement, and public participation would be part of any potential rulemaking process. While technological advances in supersonic aircraft technology continue, many factors still will need to be addressed. At present, the FAA's guidance for supersonic aircraft is the same as for subsonic, that the same noise certification limits apply for supersonic aircraft when flown in subsonic flight configurations . [Emphasis added.] The final policy statement notes FAA's expectation that any rulemaking affecting noise operating rules would propose that any future supersonic airplane produce no greater noise impact on a community than a subsonic airplane. Further, FAA stated that "noise standards for supersonic operation will be developed as the unique operational flight characteristics of supersonic designs become known and the noise impacts of supersonic flight are shown to be acceptable." Between 2009 and 2011, FAA held public meetings and solicited technical information from other federal agencies, industries, universities, and other interested parties on the mitigation of sonic boom from supersonic aircraft. According to FAA, it did so in an effort to determine whether there are sufficient new data supported by flight over land. On October 10, 2018, FAA announced it is initiating two rulemakings relevant to supersonic flights, one to amend domestic noise certification standards for supersonic aircraft and the other to update the operating standards applicable to supersonic flight testing. FAA anticipates issuing both proposed rules in 2019. FAA stated that the proposals are intended to streamline and clarify the procedures to obtain FAA authorization. According to FAA, neither of these two rulemaking activities would rescind the prohibition of flight in excess of Mach 1 over land. The potential success of supersonic aircraft likely hinges not only on U.S. certification and the ability to operate in U.S. airspace, but also on certification and operational acceptance of supersonic flight internationally. Noise certification standards and sonic boom are reportedly both points of contention between the United States and Europe. Following the legislative mandate in P.L. 115-254 requiring FAA to periodically review and amend as appropriate existing restrictions on supersonic flights over land beginning by 2021, there is likely to be mounting international pressure to develop consensus sonic boom standards through ICAO in a timely manner. Reportedly, "[t]here are concerns that a U.S.-only standard for sonic boom could be higher than NASA's 75 PNLdB target, which compares to the Concordes's 110 PNLdB, and could jeopardize public acceptance of supersonic travel." If other countries insist that supersonic aircraft meet Chapter 14/Stage 5 subsonic noise standards, engine options may be more limited, potentially impacting speed, range, and emissions characteristics of supersonic designs. Reportedly, efforts to move forward with international certification standards for supersonic aircraft are facing resistance from European nations that want the aircraft to adhere to strict noise guidelines, particularly for landing and takeoff phases of flight. Developers of supersonic aircraft have cautioned that a protracted debate to set international standards could delay progress on development, and FAA has urged agreement on standards as soon as practicable so that manufacturers can have certainty regarding certification requirements. Gaining international consensus and approvals to fly supersonically over other countries besides the United States may be a critical element in determining the market viability of future civil supersonic aircraft designs. International agreements would also need to address permissible conditions for supersonic flight operations over water and over polar regions. Polar flights may be a first step for future supersonic aircraft operations if supersonic flight over land is not immediately authorized. Polar airspace has become increasingly important to aviation as polar routes offering shorter flights between the United States and Asia have opened up to civil aircraft operations over the past decade. Approvals to fly at supersonic speeds along these polar routes and along transoceanic routes would generally fall under the purview of countries' delegated authority to oversee the management of airspace in these regions, pursuant to ICAO standards and guidelines. The United States has been delegated authority to oversee air traffic over large areas of the northern Pacific and northern Atlantic oceans and portions of the Arctic, while Canada, Iceland, and Russia control much of the airspace overlying the polar regions of the Arctic Circle under international agreement. As the main selling point of supersonic flight is speed, access to these time-saving international routes could be a critical factor in the potential commercial success of future civil supersonic aircraft.
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It has been over 40 years since British Airways' first Concorde passenger flight took off in 1976. So far the Concorde is the only commercial supersonic passenger aircraft to travel at more than twice the speed of sound. It was a technological accomplishment but not a commercial success. In 2003, all Concorde aircraft were taken out of service. Recent years have seen a revival of interest in supersonic aircraft. Several startup companies are developing new supersonic commercial and business jets, hoping technological advances in materials, design, and engine efficiency will make it possible to produce commercially viable aircraft. The main regulatory issues related to supersonic flight remain unchanged from the Concorde era: limiting ground-level noise during subsonic flight and sonic booms during supersonic flight. Aircraft noise standards have become much stricter since the Concorde entered service, and the commercial aircraft fleet is considered to be 75% quieter overall than during the 1970s. However, some of the technical approaches used to reduce noise during subsonic flight may hinder efforts to reduce the magnitude of sonic booms in future supersonic aircraft. In the United States, the FAA Reauthorization Act of 2018 (P.L. 115-254) directs the Federal Aviation Administration (FAA) to take a leadership role in creating federal and international policies, regulations, and standards to certify safe and efficient civil supersonic aircraft operations. It requires FAA to consult with industry stakeholders on noise-certification issues, including operational differences between subsonic and supersonic aircraft. It also requires FAA to develop and issue noise standards for sonic boom over the United States and for takeoff and landing and noise test requirements applicable to civil supersonic aircraft. Furthermore, beginning December 31, 2020, and every two years thereafter, FAA will be required to review available aircraft noise and performance measurements to determine if federal regulations should be amended to remove the current ban on civil supersonic flight over land. Since new supersonic aircraft are expected to operate internationally, the lack of agreed-upon international standards or agreements is likely to hinder production as well as operations. FAA is already engaged with the International Civil Aviation Organization (ICAO) to develop certification standards for future supersonic aircraft, but this process to produce an international standard may not be completed until 2025. In addition, the United States and other countries prohibit supersonic flights over land except in limited circumstances, and changes in those restrictions may be necessary for supersonic aircraft to be commercially viable.
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Under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ( P.L. 93-288 ) there are two principal forms of presidential action to authorize federal supplemental assistance: emergency declarations and major disaster declarations. Emergency declarations are made to protect property and public health and safety and to lessen or avert the threat of a major disaster or catastrophe. Emergency declarations are often made when a threat is recognized (such as the emergency declarations for Hurricane Katrina which were made prior to landfall) and are intended to supplement and coordinate local and state efforts prior to the event such as evacuations and protection of public assets. In contrast, a major disaster declaration is made as a result of a disaster or catastrophic event and constitutes a broader authority that helps states and local communities, as well as families and individuals, recover from the damage caused by the event. The differences between the two forms of declarations remain an area of study regarding what events, and specifically what types of incidents may or may not qualify for the respective declarations. Federal disaster assistance has served as the impetus for many supplemental appropriations bills over the last several decades, and has accounted for presidential declarations in every state and territory. The supplemental funds are placed in the Disaster Relief Fund (DRF) which is a "no-year" fund managed by the Federal Emergency Management Agency (FEMA) and used only for spending related to presidentially declared disasters. Major disasters can be a dominant story in the mass media that captures attention both for the devastation that results as well as the potential help that is expected. As one observer noted: Disaster assistance is an almost perfect political currency. It serves humanitarian purposes that only the cynical academic could question. It is largely funded out of supplemental appropriations and thus does not officially add to the budget deficit. It promotes the local economy of the area where the building process occurs. While disaster assistance may be good "political currency," a disaster declaration is generally the result of a tragic and devastating incident that disrupts (and sometimes takes) the lives of hundreds or thousands of families and individuals and the communities and states or tribal lands where they reside. The long-term economic and environmental impact of a disaster can be severe. The assistance offered from federal and private sources may or may not be commensurate with the damage inflicted by a natural or man-made event. Following a disaster, years of rebuilding and recovery work may lie ahead for communities, tribes, and states. It is the declaration process that sets the federal recovery help in motion. The trigger for federal disaster assistance is contained in a relatively short statutory provision. P.L. 93-288 (the Stafford Act) includes one brief section that establishes the legal requirements for a major disaster declaration which has now been amended to include tribal requests: Section 401. (a) In general. Procedures for Declaration. All requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected state. Such a request shall be based on a finding that the disaster is of such severity and magnitude that effective response is beyond the capabilities of the state and the affected local governments and that the federal assistance is necessary. As a part of such request, and as a prerequisite to major disaster assistance under this Act, the Governor shall take appropriate response action under state law and direct execution of the state's emergency plan. The Governor shall furnish information on the nature and amount of State and local resources which have been or will be committed to alleviating the results of the disaster and shall certify that, for the current disaster, state and local government obligations and expenditures (of which state commitments must be a significant proportion) will comply with all applicable cost-sharing requirements of this Act. Based on the request of a Governor under this section, the President may declare under this Act that a major disaster or emergency exists. (b) Indian tribal government requests (1) In general. The Chief Executive of an affected Indian tribal government may submit a request for a declaration by the President that a major disaster exists consistent with the requirements of subsection (a). (2) References. In implementing assistance authorized by the President under this chapter in response to a request of the Chief Executive of an affected Indian tribal government for a major disaster declaration, any reference in this subchapter or subchapter III (except sections 5153 and 5165d of this title) to a State or the Governor of a State is deemed to refer to an affected Indian tribal government or the Chief Executive of an affected Indian tribal government, as appropriate. (3) Savings provision. Nothing in this subsection shall prohibit an Indian tribal government from receiving assistance under this subchapter through a declaration made by the President at the request of a State under subsection (a) if the President does not make a declaration under this subsection for the same incident. (c) Cost share adjustments for Indian tribal governments (1) In general. In providing assistance to an Indian tribal government under this subchapter, the President may waive or adjust any payment of a non-Federal contribution with respect to the assistance if— (A) the President has the authority to waive or adjust the payment under another provision of this subchapter; and (B) the President determines that the waiver or adjustment is necessary and appropriate. (2) Criteria for making determinations The President shall establish criteria for making determinations under paragraph (1)(B). The process for an emergency declaration is also contained in the Stafford Act. In part it is similar to a major disaster declaration in finding and process, but the actual authorities are limited. In addition, section (b) provides for a special authority for the President to exercise his discretion for events that have a distinctly federal character: Sec. 5191. Procedure for declaration. (a) Request and declaration. All requests for a declaration by the President that an emergency exists shall be made by the Governor of the affected State. Such a request shall be based on a finding that the situation is of such severity and magnitude that effective response is beyond the capabilities of the State and the affected local governments and that Federal assistance is necessary. As a part of such request, and as a prerequisite to emergency assistance under this chapter, the Governor shall take appropriate action under State law and direct execution of the State's emergency plan. The Governor shall furnish information describing the State and local efforts and resources which have been or will be used to alleviate the emergency, and will define the type and extent of Federal aid required. Based upon such Governor's request, the President may declare that an emergency exists. (b) Certain emergencies involving Federal primary responsibility. The President may exercise any authority vested in him by section 5192 of this title or section 5193 of this title with respect to an emergency when he determines that an emergency exists for which the primary responsibility for response rests with the United States because the emergency involves a subject area for which, under the Constitution or laws of the United States, the United States exercises exclusive or preeminent responsibility and authority. In determining whether or not such an emergency exists, the President shall consult the Governor of any affected State, if practicable. The President's determination may be made without regard to subsection (a) of this section. (c) Indian tribal government requests (1) In general. The Chief Executive of an affected Indian tribal government may submit a request for a declaration by the President that an emergency exists consistent with the requirements of subsection (a). (2) References. In implementing assistance authorized by the President under this subchapter in response to a request of the Chief Executive of an affected Indian tribal government for an emergency declaration, any reference in this subchapter or subchapter III (except sections 5153 and 5165d of this title) to a State or the Governor of a State is deemed to refer to an affected Indian tribal government or the Chief Executive of an affected Indian tribal government, as appropriate. (3) Savings provision. Nothing in this subsection shall prohibit an Indian tribal government from receiving assistance under this subchapter through a declaration made by the President at the request of a State under subsection (a) if the President does not make a declaration under this subsection for the same incident. The declaration process is elaborated upon in regulations, specifically in Subpart B of 44 C.F.R. 206. While these regulations have been adjusted through the regulatory process during the past three decades, since 1974 the procedures have undergone little significant change until the inclusion of tribal groups in P.L. 113-2 . The process itself is representative of the historical progression of federal disaster relief from being of an episodic nature to the current commonplace disaster declaration, now occurring on a weekly basis. The context in which disaster relief has grown has been in keeping with the growth of government and its concerns. Federal disaster relief has a long history in the U.S. dating back to the last years of the eighteenth century and arguably provided much of the political genesis for the New Deal social welfare programs (Landis 1999; Landis 1998; Moss 1999). As Michele Landis argues, social and political construction of claimants for relief as helpless victims of external forces beyond their control ("Acts of God") have exerted an enduring influence on American political discourse, which has manifested itself in heavy reliance on prior political precedents and analogies in constructing responses to current disasters. Policy makers have found it difficult to achieve equity in the treatment of disparate natural disaster events. The events can vary widely in their type, scope, duration, and impact. Perhaps the greatest variables are the states and tribal groups they affect. Each state or tribe has a different topography, a different history, and different capacities to respond and recover based on their own authorities, resources, and choices in what they will do following a disaster. Given those variations, including social and economic differences as well, it is a daunting task to construct a uniform process that can account for the range of natural and governmental circumstances that are a part of the nation's potential disaster landscape. The process begins with a decision by the governor or tribal head on whether to conduct a Preliminary Damage Assessment (PDA) to consider whether a request for supplemental assistance is warranted. Information contained in the PDAs, along with the summaries prepared by FEMA regional offices that accompany gubernatorial requests, were long considered "pre-decisional and deliberative information" by the executive branch because they are part of the package that is developed and sent to the White House for the President's review and ultimate decision. These materials have generally not been available under the Freedom of Information Act process. However, during 2008, at the direction of Congress, FEMA began to list the results of the PDAs on its website. While the summaries of FEMA recommendations are still not available, the agreed-upon figures from the PDAs are now available to the public for review. In the 113 th Congress, following Hurricane Sandy, Congress passed the Sandy Recovery Improvement Act of 2013 (SRIA), P.L. 113-2 . The act made one significant change to the Stafford Act declaration process. That significant change was one that Native Americans had long sought: the ability to directly request assistance from the federal government during times of disaster, rather than having to submit any requests through the governors of the affected tribal areas. Section 1110 of the SRIA amends Sections 401 and 501 of the Stafford Act that contain the procedures for requesting types of disaster declarations. Previously, tribal groups were treated as local governments and thus not permitted to directly request disaster declarations from the federal government. As with local governments, the tribes were dependent on a request being made by the governor of the state where their territory is located. Tribal governments argued that the previous provision in the Stafford Act undermined their independence and sovereignty. This change in declaration policy for tribal groups had also been sought by FEMA to strengthen its government-to-government relationships with tribal groups and improve emergency management in those areas. As FEMA Administrator Craig Fugate stated in post-SRIA testimony before the Senate Indian Affairs Committee: The updated policy reiterates the Agency's view of tribal governments as inherently sovereign nations and not political subdivisions of states. To this end, and to the extent permitted by law, FEMA consults with tribal governments and addresses any concerns before taking actions that may affect those nations. In addition, the new policy expressly states that FEMA will identify and take reasonable, appropriate steps to eliminate or diminish procedural impediments to working directly and effectively with tribal governments. In particular, the policy states that FEMA will review portions of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, and other laws, policies, and administrative rules in emergency management activities to determine how FEMA may work more directly with local tribal communities. Previously, the Stafford Act included the description of "an Indian tribe or authorized tribal organization, or Alaska Native village or organization" in the definition of local governments. With this amendment, tribes are now equivalent to states in their ability to request a major disaster declaration or an emergency declaration from the President. Tribes had sought this authority for various reasons. While tribes and Native Americans have long received assistance under Stafford Act declarations, working through the state government for all assistance has been viewed as an issue of tribal sovereignty. States might at times be reluctant to make a request on behalf of a tribe when the damage was localized on tribal property. Other challenges to administering disaster relief involved language barriers and the physical isolation of some tribal lands. Also, the tribes wished to have the same ability as states to help manage the response and recovery from a disaster. All of these factors created challenges for emergency management following disaster events in tribal areas. Under the SRIA amendment (Sec. 1110) to the Stafford Act, the "Chief Executive of an Indian Tribal Government" is able to submit a request for a declaration by the President. In addition, the "Savings provision" of this section ensures that a tribal government is not prohibited from receiving assistance under a declaration made by the President at the request of the governor, if the President has not made a separate declaration for the tribal government. In effect, a tribal government will retain the ability to be treated as a local government in those situations. In implementing this new provision, FEMA sent out guidance, along with a "Frequently Asked Questions" document and related information to assist tribes in participating in this process. FEMA also provided tribes with the FEMA template that is used by governors to generate and submit their requests for either a major disaster or an emergency declaration. In addition, FEMA reports that both headquarters and regional staff are involved in extensive outreach efforts across the nation to meet with tribes and discuss processes and other considerations as these new partnerships are established. In the time since the passage of this authority in the SRIA legislation, there have been six major disaster declarations by the President made to five separate tribal authorities. The broader question of how the federal disaster declaration process should work has come to the attention of Congress from time to time. Congress has requested reports from its investigative arms and investigated the process through panels that have, at various times, considered aspects of the disaster relief process. Various Administrations have also considered the process and FEMA's role in it. In 1981, and again in 2001, GAO issued reports on the declaration process that questioned the quality and consistency of FEMA's assessment criteria, as well as the agency's ability to produce valid recommendations to the President based on a governor's request for supplemental aid. As the most recent report (2001) concluded: These criteria are not necessarily indicative of a state's ability to pay for the damage because they do not consider the substantial differences in states' financial capacities to respond when disasters occur. As a result, federal funds may be provided for some disasters when they are not needed—a result that would be inconsistent with the Stafford Act's intent. Congressional interest in the declaration process is derived, in part, from the increased cost in emergency spending—a recurring subject for the appropriations committees when considering supplemental spending legislation. One review of disaster funding, particularly supplemental appropriations, found that the great majority of DRF spending is related to the large, catastrophic events that meet the criteria established in the Stafford Act. These supplementals have been "driven" by the urgency of large natural disasters. As one report explains, In the past, funds in the DRF were often depleted before the end of the fiscal year due to disaster assistance needs. When the account nears depletion, Congress usually provides additional funding through one or more supplemental appropriations. The need for additional funds is generally caused by a large-scale, major disaster such as Hurricanes Katrina or Sandy. In recent years, however, the need for assistance has been increasingly tied to a string of incidents as opposed to a single, large event. A review of data for a seven-year period from 1988 to 1995 revealed that large expenditures, as funded by supplemental bills, relate to declarations issued for the largest events. During this time period, disaster declarations were made for Hurricane Hugo, the Loma Prieta earthquake, Hurricane Andrew, the Midwest floods of 1993, and the Northridge earthquake. This trend continued with large supplemental funding bills for Hurricanes Katrina and Sandy. However, these were not the only events deemed worthy of presidential action and of cost to the federal treasury. As summarized by one author: But like the tail of a comet, over 200 other declarations accounted for one quarter of such outlays, many of them of relatively minute cost and extent. While of lesser impact on the national treasury, such "low end" declarations have become, to some observers, new sources of federal spending at the local level, long referred to in other contexts as "pork barrel spending." Congress has taken a significant step to address disaster funding and establish a reliable budgetary process for it through the Budget Control Act (BCA). The BCA has put annual appropriations for the DRF at a higher level and also established a process that would permit allowable budget adjustments for disaster spending. But the Sandy experience also demonstrated that Congress was still willing to place some spending for catastrophic events outside of the budget process. But regardless of the DRF's budget at any given time, an interest remains in how the declaration process works: its pace, its thoroughness, and its fairness. During early 2001, the term "entitlement" was beginning to be used in describing federal disaster spending by the new Bush Administration. Underlining this thinking in his first appearance before the Senate Appropriations Committee, FEMA Director Joe M. Allbaugh explained: FEMA is looking at ways to develop a meaningful and objective criteria for disaster declarations that can be applied consistently. These criteria will not preclude the President's discretion but will help states better understand when they can reasonably turn to the federal government for assistance and when it would be more appropriate for the state to handle the disaster itself. During the 110 th Congress, attention was given to the disaster declaration process and what states and local governments can reasonably expect from that process. During the early spring of 2007, there were tornadoes that had an impact on Arkansas, Alabama, and Georgia. The latter two states received disaster declarations while the damage in Arkansas was deemed insufficient to warrant federal assistance. Following these actions, Chairman Bennie Thompson of the House Homeland Security Committee scheduled a hearing to review FEMA's procedures. Representative Thompson set the context as follows: As Members representing real communities back home, we want to understand just how FEMA makes determinations regarding what is a disaster deserving of attention and when folks have to fend for themselves. Quite simply, we must have a serious discussion on what our expectations are of our federal government and what should remain a state and local responsibility. In order to examine the process and the financial projections of disaster spending in particular, Congress mandated in P.L. 110-28 , a 2007 supplemental appropriations bill, that GAO study how FEMA develops its estimates for supplemental funding that may be needed. Report language detailed these instructions for the review: The Committee continues to be concerned with FEMA's ability to manage resources in a manner that maximizes its ability to effectively and efficiently deal with disasters. One aspect of particular concern is how FEMA makes projections of funding needed in response to any given disaster or to meet future disasters. A recent Government Accountability Office (GAO) report raised concerns about FEMA's ability to manage its day-to-day resources and the lack of information on how FEMA's resources are aligned with its operations. As a follow-up to this report, the Committee requests that within six months of enactment GAO review how FEMA develops its estimates of the funds needed to respond to any given disaster. Such review should include how FEMA makes initial estimates, how FEMA refines those estimates within the first few months of a disaster, and how closely FEMA's estimates predict actual costs. The review should also include additional analysis and recommendations regarding FEMA's ability to manage disaster-related resources in a manner that maximizes effective execution of its mission. The study parameters mandated by Congress were broader than the declaration process, placing its emphasis on ongoing FEMA spending, including the refinement and revision of early estimates as well as the general management of spending projections for the Disaster Relief Fund (DRF). But the report language recognized the importance of the initial estimates in decision-making, and that the declaration process represents the fundamental decision to both establish federal participation following a disaster, and provide the initial estimated amount of resources needed that informs that decision. GAO's eventual report in response to this request suggested that FEMA's estimates for disaster costs have improved but could use additional refinement; for example some of the factors that can lead to changes in FEMA's cost estimates are beyond its control, such as the discovery of hidden damage. Others are not, such as its management of mission assignments. Sensitivity analyses to identify the marginal effect of key cost drivers could provide FEMA a way to isolate and mitigate the effect of these factors on its early estimates. To better predict applicant costs for the Individual Assistance program, FEMA could substitute or add more geographically specific indicators for its national average. During the 111 th Congress, a hearing before the House Homeland Security Committee focused on FEMA's regional offices and also elicited comments regarding the relative speed, and perceived lack of transparency, of the declaration process. The comments came from both a committee member and a state official closely involved in the process. Ranking Republican Mike D. Rogers of Alabama questioned the timeliness of FEMA's disaster declarations. Declarations that should take a few days often take a month or longer, and a lack of available information on the status of requests only adds to state officials' frustration, said Brock Long, director of Alabama's Emergency Management Agency. "When we make phone calls to the region or to headquarters, a lot of time the answer we get is 'the declaration request is in process' and that's it," Long said. Recent articles have noted the increase in disaster declarations and have suggested that it may be a political decision that is placing more responsibility for response and recovery on the federal government while minimizing state responsibility. As one report noted: FEMA spends too much time responding to routine natural disasters and not enough time preparing for catastrophic natural disasters, such as hurricanes, earthquakes, and volcanic eruptions, which could have a national impact. This is increasing the likelihood that the federal response to the next catastrophic event will be insufficient. Congress should reduce the cost-share provision for all FEMA declarations to no more than 25 percent of the costs. This will help to ensure that at least three-fourths of the costs of a disaster are borne by the taxpayers living in the state where the disaster took place. One difficulty in addressing such a recommendation is defining "routine natural disasters." The nature of the disaster can depend on the location. From afar, the incident may seem marginal but up close it may appear catastrophic. The notion of "routine natural disasters" is also dependent on state and local resources and capacities. While the devolution of responsibility to state governments may prove effective in some states, it also may not be consistent. As one expert noted, some consistency in approach from the federal government is desirable. Federal guidance, technical assistance and incentives aim at addressing these disparities. How would the public feel about having an uneven patchwork of state policies, practices and capabilities? Under state control and with all the financial pressures experienced by states, would we see a "race to the bottom" in disaster loss reduction programs? The following section discusses similar proposals as the one mentioned above regarding FEMA disaster cost-shares, including one made by FEMA, and the reaction of Congress to that approach. There have been several proposals to impose more stringent regulations on the declaration process in an attempt to more precisely assess disaster impacts, calculate eligible damage, and incorporate some measure of suffering and loss. Differing perceptions of the declaration process resulted in different reactions to these proposed reforms. The history of the disaster declaration process is rife with reform efforts that were perceived by some not as reform but as punitive measures directed at certain constituencies. Some of those differing perceptions were held by those closest to the event at the local level that had experienced a disaster. A different perception was also often held by governors who wanted to protect their option to request federal help. These perceptions were also shared, in some instances, by Members of Congress representing affected areas. All elected officials argued, in various forms, that reform should not impede the delivery of needed federal aid. One example, now in law, of the desire to reform but not obstruct the declaration process is in the Post-Katrina Emergency Management Reform Act (PKEMRA) of October of 2006. That statute created a new position at FEMA: the Small State and Rural Advocate. One of the principal duties of the advocate is to ensure that the needs of smaller states and rural communities will be "met in the declaration process"; the advocate is also directed to "help small states prepare declaration requests, among other duties." Another example was FEMA's response to recommendations from GAO's 1981 report. FEMA drafted regulations in 1986 that would have been more certain in their delineation of state requirements prior to a declaration, reduced overall federal contributions, and would have installed a formula to determine whether a state would receive a presidential disaster declaration for repairs to state and local infrastructure (known as "public assistance" in the Stafford Act). As the congressional report on the initiative summarized the FEMA draft: The proposal would have limited the number of future presidential declarations by establishing a "state deductible" based on a per capita minimum dollar amount adjusted by the ratio of the state/local price index to the national index. Of 111 declarations issued in prior years, 61 would have been ineligible for any public assistance. FEMA also proposed to decrease the federal share for disaster costs from 75 percent to 50 percent and to exclude aid to special districts. The FEMA proposal of over 25 years ago addressed some of the problems identified by current critics of the declaration process. However, some Members of Congress viewed this proposal as a means of removing the power of discretion from elected leadership. Rather than apply the empirical solution suggested by FEMA to perceived problems in the declaration process, Congress instead legislated a provision to explicitly forbid the primacy of any "arithmetic formula." In place of agreeing to the regulatory changes in the formula proposed by FEMA and the Administration, Congress added the following section to the Stafford Act: Limitation on the Use of Sliding Scales. Section 320. No geographic area shall be precluded from receiving assistance under this Act solely by virtue of an arithmetic formula or sliding scale based on income or population. While enactment of this legislation halted FEMA's efforts, the issue did not disappear. As discussed below, FEMA has since adopted regulations that use, but not "solely," arithmetic formulae in determining need for assistance. While some public discussion involves consideration of ways to reduce the number of declarations it should also be noted that there are also some legislative initiatives that could increase the number of declarations while seeking more equity in the process. (See " Localized Impacts " in this report.) The declaration process contains many factors for consideration and, for all but the most catastrophic events, the process moves at a deliberate speed accumulating information from several sources. While the process is informed by that information and its relationship to potential assistance programs, the information that is gathered at the state and local level does not preclude the exercise of judgment by the tribal leader, governor, or the President. Actions by a governor or tribal leader are a driving constant in this process. Both major disaster and emergency declarations must be triggered by a request to the President from the governor of the affected state or the tribal leader of the lands affected. The President cannot issue either an emergency or a major disaster declaration without a gubernatorial or tribal request. The only exception to this rule is the authority given to the President to declare an emergency when "he determines that an emergency exists for which the primary responsibility for response rests with the United States because the emergency involves a subject area for which, under the Constitution or laws of the United States, the United States can exercise exclusive or preeminent responsibility and authority." The Stafford Act stipulates several procedural actions a governor or tribal leader must take prior to requesting federal disaster assistance (including the execution within the state of the state emergency plan and its tribal equivalent, and an agreement to accept cost-share provisions and related information-sharing). Still, the process leaves broad discretion with the tribal leader or the governor if he or she determines that a situation is "beyond the capabilities of the state." The concession that a state or tribe can no longer respond on its own is difficult to quantify. It is the governor or tribal leader who makes that assessment, based on his or her knowledge of state or tribal resources and capabilities. The importance of governors or tribal leaders in the process is not lost on, nor would it likely be diminished by, Presidents who were formerly governors. Over the last three decades of Stafford Act implementation, four of the Presidents during this period were former governors who had worked through the disaster declaration process from both the state and the federal level. Also, when considering the declaration process it should also be considered that tribes and state are responding to emergency and disaster events on a daily basis. Figures provided by the National Emergency Management Association (NEMA) show that states responded to 205 gubernatorial emergencies during FY2013 and 250 such events in FY2011. Those numbers are far in excess of the 62 federal major disaster declarations in 2013 and 99 declarations in 2011. Having that experience may have left the Presidents, and their staffs and appointees, with an appreciation of the discretionary authority inherent in the process. While there are some established standards in the law, the factors that are to be weighed in considering the impact of a disaster on the need for assistance for families and individuals are general considerations that underscore the judgment required to reach a decision. As one observer noted of the decision for general, flexible considerations: In other words, Congress likes to keep the process imprecise, even if benefits occasionally go to the undeserving. The absence of objective criteria preserves wide political discretion to the president. Congress also has among its number former governors who have exercised this discretion at the state level. Still, despite the interest some may have in keeping "the process imprecise," some Members of Congress express disappointment at times with the exercise of the discretion and the general nature of the considerations. As noted previously in this report, that disappointment has been reflected in hearings that have focused on how the disaster declaration process works in practice. In the declaration process, FEMA develops a recommendation that is sent to the White House for action. However, as implied, it is a recommendation from FEMA and the Department of Homeland Security (DHS). The final action, as stated in law and defined in the regulations of the process, is a "Presidential determination." Just as the governor or tribal leader retains the discretion to request federal assistance regardless of thresholds or indicators, the President retains the discretion to make a decision that may be counter to recommendations he receives. The number of major disaster declarations on average has been increasing over the last several decades. Between 1990 and 1999 there were 460 major disaster declarations. The next decade, from 2000 to 2009, the number of declarations increased to 568. Now, just four years into the next decade there have already been 307 declarations. It is of interest that even during an era of constant public discussion of climate change and its impact and repercussions, often times the increased number of declarations is attributed to raw politics. As one expert opined Politics appears to make a difference at the margins. Large disasters always receive federal aid, but political interests determine whether smaller states receive federal dollars or have to make due on their own. For example, in 1994, Bill Clinton refused to provide aid for recovery for floods that caused $6.7 million damage on the South Side of Chicago. A year later, Clinton did provide aid to New Orleans, when a flood caused $10 million in damage. The difference was that Illinois was considered a solidly democratic state and therefore not valuable to Clinton's re-election efforts, whereas Louisiana was deemed a competitive state. Because natural disasters are so frequent, politicians in every part of the country use them to deliver federal aid. Several points are interesting in the assumptions made referenced above. This assessment of how declarations are made does not include the various factors that are considered for either Public Assistance or Individual Assistance. These factors have been in regulation since 1999 and are discussed in more detail later in this report. Those factors, at base, consider the size and relative capacity of a state and local area. Rather than reviewing regulatory frameworks for disaster recommendations, the default assumption appears to be the primacy of politics. Similar suggestions of political influence have been suggested by others. Two researchers asserted that presidential and congressional influence have an impact on the decisions for declarations and spending. We find that presidential and congressional influences affect the rate of disaster declaration and allocation of FEMA disaster expenditures across states. States politically important to the President have a higher rate of disaster declaration by the President, and disaster expenditures are higher in states having congressional representation on FEMA oversight committees. While those findings comported with suspicions or assumptions of political corruption of the disaster declaration process and disaster spending, follow-up studies have questioned those assumptions. As two other researches have noted: There was no statistical evidence to suggest that gubernatorial and presidential party similarity, U.S. House of Representatives and presidential party similarity, FEMA congressional oversight committee membership, electoral votes, or FEMA regional office location influenced success in securing emergency or major disaster declarations. Another researcher who has closely followed disaster declaration activity noted the declining rate of turn-downs for governors' requests and concluded: Since 1989, following adoption of the Stafford Act, the odds that the president will approve a governor's request have risen to about four in five (80.3 percent) chance. Certainly the broader authority to judge what is or is not a disaster under the Stafford Act has provided presidents since 1988 with more latitude to approve unusual or "marginal" events as disasters or emergencies. This may be one reason for the higher rate of gubernatorial request approvals since 1988. An additional reason for the increase in approvals may also rest with the increasing capacity of states to make effective requests; states continue to better understand FEMA's review process, based on regulations in place, and can anticipate what would likely constitute a request that would result in a declaration. This is in part a testament to the growing maturity and sophistication of the emergency management area as a field of study and profession. It may also be a reflection of the ongoing relationship between state and tribal emergency management offices and FEMA regional offices that may provide states and tribes with a better understanding of what may or may not constitute a successful request. Although not explicitly mentioned in the Stafford Act, Preliminary Damage Assessments (PDAs) are a crucial part of the process of determining if an event may be declared a major disaster by the President. The minimal discussion of PDAs in the public record stands in inverse proportion to their impact on disaster decisions and subsequent expenditures from the Disaster Relief Fund (DRF). When a PDA is conducted after an event it is the "mechanism used to determine the impact and magnitude of damage and the resulting unmet needs of individuals, businesses, the public sector, and the community as a whole." The most "preliminary" part of a PDA may be an abbreviated one completed only by the state to determine if the situation merits development of a complete PDA with federal participation. Based on their previous experience, states may determine that the event will not reach the level where a federal disaster declaration is likely. However, despite findings that federal aid may not be needed, there may be political considerations that could lead to a gubernatorial request. As one author points out in his study of the process: Governors also feel the heat of media coverage of incidents in their states, and they too appreciate the importance of exhibiting political responsiveness. Governors also appreciate that their future political fortunes may be influenced by how they handle their disaster and emergency incidents. As a consequence, the hypothesis assumes that governors are the pivotal and decisive players in securing presidential disaster declarations and that they have a tendency to request declarations for even marginal events. While media and political pressure may have some influence on the outcome of some requests, governors may exercise caution since they are reluctant to be turned down when requesting aid. Though it may be possible, from a denial of assistance, to project on to the federal government a callousness or lack of understanding of the situation there are still negative connotations for governors as well. A denial of the request could also be perceived by some to reflect adversely on a governor's decision-making skills and judgment under pressure. Unlike the procedures of the federal process, a governor's decision to request a declaration can be a public and often newsworthy action. Regardless of any question regarding motivation, the governor's or tribal officials' first decision is whether the incident is severe enough to assemble a traditional PDA team to survey the damaged area. The traditional PDA team includes a state official, representatives from the appropriate FEMA regional office, a local official familiar with the area, and, in some instances, representatives from the American Red Cross and/or the Small Business Administration. The FEMA representatives have the responsibility of briefing the team on the factors to be considered, the information that will be helpful in the assessment, and how the information should be reported. One significant improvement in this process is that the regulations now require that the participants reconcile any differences in their findings. FEMA also makes available the template that is used in assessing disaster damage. (See the Appendix of this report.) Another factor is the quality of the PDA team and its findings. PDAs are ordered up quickly after an event. FEMA's 10 regional offices are often engaged in multiple disasters and have to rely on temporary employees (albeit, usually experienced ones) to staff the PDA team. Also, given the variables among regions in interpreting policy and guidance, consistency of approach may also be a question. This became a significant issue during the hurricane season of 2004 in Florida, where questions were raised regarding the designations of some counties. When working openly and with federal and state cooperation, the PDA can be an effective and inclusive process. As former Washington State Emergency Management Director Jim Mullen, and then-FEMA Region X Director Susan Reinertson, explained the process for a survey of flood damage in November of 2006: 'Joint PDA teams will visit and inspect damaged areas, document damage and talk, as needed, with homeowners and local officials,' said Mullen. 'It's a partnership effort designed to provide a clear picture of the extent and locations of damage in counties that have reported the most substantial damage to primary homes and businesses.' 'The PDA teams look at the total scope of damage to establish if recovery is beyond the capabilities and resources of the state and local governments. The PDA doesn't determine the total cost of recovery, nor does it guarantee a presidential declaration for individual assistance,' said FEMA Regional Director Susan Reinertson. PDA teams often face challenges in the collection of data. Some information may be observable in a survey of the area, such as the number of bridges damaged or the number of culverts washed out. But other necessary information, such as the percentage of elderly residents in an area, or the amount of insurance coverage for all homeowners or renters, may be more difficult to obtain quickly. Also, the geographic span of the damage can create complications as the PDA team struggles to cover all of the affected area in a limited time. Further complications may then ensue based on how much of the area that the PDA teams have visited (generally counties but other subdivisions may be used) are included in the governor's or tribal leader's request. Another challenge noted by FEMA is the tendency of some states to suspend the PDA when the state believes they have documented the necessary amount of damage to warrant a declaration. Such a finding may lead to a declaration but also provides an incomplete portrait of the extent of damages and arguably of the types of assistance needed for the response and recovery process. Although PDAs are the usual way damages are assessed, there are exceptions to this rule. Some incidents are so massive in their scale and impact that the actual declaration is not in doubt. This would include events such as Hurricanes Katrina and Sandy, the Loma Prieta and Northridge earthquakes, the Mount St. Helens volcanic eruption, and the September 11 terrorist attacks. In these instances, the decision is not whether a declaration will be made, but how broad the coverage will be, both geographic and programmatic. In such cases the President, in accordance with the regulations, can waive the PDA requirement. But as the regulations note, a PDA may still be needed "to determine unmet needs for managerial response purposes." This means the PDA helps to identify a specific, potential need for certain programs, such as crisis counseling or disaster unemployment assistance during the disaster recovery period. It is this identification of discrete need that helps the governor decide on which assistance programs will be requested. The PDA is a "bottom up" process as information gradually rises up for decision-makers to consider. Multiple pressure points, including affected citizens, elected officials, and professionals in various fields, may all urge PDA team members to reach certain conclusions. As one author suggests: The president, motivated by the need to appear highly politically responsive, solicits and encourages a gubernatorial request for a presidential disaster declaration. Publicity is a factor in that CNN and other news organizations help to promote nationally what would otherwise be a local incident addressed by subnational authorities. The president may also be influenced by the electoral importance of the state that experiences the incident. It is difficult to overstate the importance of the media context as noted above. Depending on the news of the day, the disaster event in question may be the biggest national story and thus create momentum for action that is difficult to assuage with explanations of traditional administrative procedures. But regardless of the perceptions of political motivation, or intense media scrutiny, there are actual factors listed in regulations for assessing whether a state should receive a major disaster declaration. Public Assistance (PA) refers to various categories of assistance to state and local governments and non-profit organizations. Principally, PA covers the repairs or replacement of infrastructure (roads, bridges, public buildings, etc.) but also includes debris removal and emergency protective measures which may cover additional costs for local public safety groups incurred by their actions in responding to the disaster. In assessing the degree of PA damage, FEMA considers six general areas: Estimated cost of the assistance; Localized impacts; Insurance coverage; Hazard mitigation; Recent multiple disasters; and Programs of other federal assistance. Although all of these factors are considered, the estimated cost of the assistance is a key component and may be "more equal" than other factors since it contains a threshold figure. What is especially noteworthy about the cost estimates is that they could be interpreted as an example of the "arithmetic formula" that was precluded from use in Section 320 of the Stafford Act. However, that section states that a formula cannot be "solely" determinative of the fate of a governor's request. Use of the other factors listed arguably justifies FEMA's consideration of the threshold figure of $1 million in PA damage—the first number FEMA expects to see in a request that includes PA as an area of needed assistance. In addition, FEMA also considers a state-wide threshold of $1.39 per capita in estimated eligible disaster costs before it will approve a request for PA help. Depending on the state's population, the per capita threshold may be difficult to reach. For example, the 2010 Census estimated California's population at just under 38 million people. Applying the $1.39 per capita figure, it would require eligible PA damage in California to be close to $48 million before federal supplemental assistance would be available through a declaration. California is a large state with a budget and tax base commensurate with its size. Expecting a large state to be able to respond on its own is equating such help, and such amounts, to be within "the capabilities of the state" That is the prime Stafford Act definition of when federal help is necessary. Compare that level of eligible damage for California ($48 million) with Nevada, a small population state according to FEMA regulations. For Nevada, with a population of about 2.7 million people according to the 2010 Census, eligible PA damage of about $3.5 million would make the state potentially eligible for supplemental federal assistance. There are obvious differences in the populations of these two states; however, both have substantial industries and are growing areas. They are states that border one another and both are subject to the threat of earthquake damage. Different measurements have been suggested to try to capture a state's capacity to respond to disaster events more accurately. Some of these measurements are discussed in the " Congressional Considerations for the Declaration Process " section of this report. The next factor used by FEMA to consider a declaration that may include PA help focuses on localized impacts . FEMA generally looks for a minimum of $3.50 per capita in infrastructure damage in a county before designating it for PA funding. While such a per capita amount would likely ensure that the local entity (almost always a county) would be included in the list of jurisdictions designated for PA assistance should a declaration be issued, high local levels of damage per capita would not supersede a finding that damages state-wide fell below the state-wide threshold amount. However, knowledge of a very large localized impact could weigh on the President's discretion and raise the importance of the localized impact factor. This issue has been addressed by recent legislation introduced in the House and Senate in the 113 th Congress. These bills seek to make localized impact "more equal" than other factors similar to the position now occupied by state per capita "Estimated Cost of Assistance." The legislation suggests assigning a percentage weight to each factor considered. While six other factors in the proposed legislation receive 10% consideration, the "Localized Impact" factor is worth 40% when determining whether a disaster declaration for Public Assistance is warranted. This would be particularly helpful to local communities in large states where it is difficult to meet the "estimated cost" threshold. By shifting the greater consideration to localized damage amounts, those areas could potentially bolster a state or tribal request. Similarly, other legislation ( H.R. 1859 ) has been introduced that would direct FEMA to consider all factors as equal to the cost-estimate information. This legislation would also direct FEMA to develop regulations which would not consider the state threshold amount when a disaster event occurs within a smaller jurisdiction with significant per capita damage. Reflecting this interest in localized impacts, the report accompanying the House Appropriations Committee legislation for DHS for FY2015 notes: Although FEMA may consider the localized impacts of a disaster when recommending a disaster declaration to the President, the Committee is aware of concerns that, in practice, FEMA primarily relies on the state-wide damage threshold, which will be higher for more populous states even if the local impacts of a disaster may be relatively severe. To address these concerns, the Committee directs FEMA to review its disaster declaration recommendation process, including a review of how to more deliberately incorporate into the process the ''localized impacts'' factor outlined under Title 44, Part 206.48 of the Code of Federal Regulations. Insurance coverage also is considered in assessing damage. Officials preparing PA estimates deduct the amount of insurance that should have been held by units of governments and non-profit organizations from the total eligible damage amount. However, this is a complicated assessment with several caveats. A considerable number of states and local governments "self-insure" their investments against some types of disasters and may argue that they would have total liability absent a federal disaster declaration. Also, in the event of some disasters (earthquakes being a prime example), the state insurance commissioner must certify that hazard insurance is both available and affordable. If it is not available, deducting an amount of coverage not realistically available would not be a practical consideration. In the case of a flood event, it is much simpler for FEMA to access information available on whether flood insurance was available, given that FEMA administers the National Flood Insurance Program (NFIP) and there are program staff in each FEMA region that monitor NFIP participation. This knowledge of flood insurance availability and costs makes it a simpler process for FEMA to deduct the amount of flood insurance that should have been in place from the total potential award for a public structure. Hazard mitigation presents a challenging and different type of consideration for Public Assistance disaster declaration requests. If the requesting state can prove that their per capita amount of infrastructure damage falls short due to mitigation measures that lessened the disaster's impact, FEMA will consider that favorably in its recommendation to the President. Calculations of savings would be dependent on cost-benefit analysis and other related estimates of damages that were avoided. This factor is intended to encourage mitigation projects by states to lessen the risks of future natural disasters. Some might consider this practice to be one where "a good deed should go unpunished." However, another factor to be considered is that the mitigation work that is credited to the state may have, in fact, been principally financed (up to 75% of the costs) with previous FEMA disaster assistance funding through the Hazard Mitigation Grant Program (HMGP) or through the Pre-Disaster Mitigation (PDM) program. Recent multiple disasters is the factor FEMA considers when a state has been repeatedly hit by disaster events (either presidential declarations or events within the state that were not declared) within the previous 12 months. FEMA evaluates the amount of funds that the state has committed to these recent events and their impact on the state and its residents. For example, a request from a state that has responded on its own to a series of tornadoes may receive a more favorable consideration, even if the catalyst for the request was arguably not as destructive as others. This factor was used in FEMA's assessment of the multiple hurricanes that struck Florida during the 2004 hurricane season. (The frequency of such events is discussed in the " Presidential, Gubernatorial, and Tribal Discretion " section of this report.) When FEMA is reviewing a governor's request it is also considering whether other federal programs are available. One example might be if a large amount of the reported damage occurred to federal-aid-system roads. The Federal Highway Administration (FHWA) is a more appropriate agency to handle such an event, and administers programs that address this specific type of damage. The bridge collapse in Minnesota in August of 2007 was a dramatic example of this type of event that would warrant significant, non-FEMA, federal aid. Similarly, other federal programs may be more responsive to certain types of natural events and the problems they create. For example, oceanic bacteria could cause harmful failures for the fishing and hatcheries industry. Should such outbreaks occur, the Magnuson-Stevens Fisheries Act ( P.L. 94-265 ) authorizes programs under the Commerce Department that would have more appropriate forms of emergency assistance for commercial fishermen than FEMA through the Stafford Act. Also, while drought is a type of disaster that could result in a major disaster, such catastrophes usually result in program assistance from the U.S. Department of Agriculture rather than presidential declarations. In summary, all of these factors are used by FEMA to determine whether a major disaster declaration will be recommended and whether PA aid will be extended as a part of that potential declaration. The assistance to repair public infrastructure is based on the amount of eligible damage caused by the disaster event. Unlike aid to households, there is no cap, and the sums can be in the billions of dollars. The restraint on PA spending is that all repairs or rebuilding projects must be due to damage caused by the particular disaster event. Additionally, the state, tribe, or local government must be able to pay its 25% share of the costs. Individual Assistance (IA) includes various forms of help for families and individuals following a disaster event. The assistance authorized by the Stafford Act can include housing assistance, disaster unemployment assistance, crisis counseling, and other programs intended to address the needs of people. In seeking to assess the impact of a disaster on families and individuals, the factors FEMA considers include: Concentration of damages; Trauma; Special populations; Voluntary agency assistance; Insurance coverage; and Average amount of Individual Assistance by state. The SRIA included specific instructions to FEMA to update the factors considered for Individual Assistance. One significant argument for manda ting such a review of I A factors is that these factors have not been adjusted since they first appeared in regulation in 1999. FEMA is to undertake this review in cooperation with representatives of state, tribal, and local emergency management agencies. The intent of the section is to speed up the declaration process through this review. As of this date, FEMA has noted that it expects to begin the rulemaking process, regarding IA factors, during 2014. Concentration of damages looks at the density of the damage in individual communities. FEMA's regulations state that highly concentrated damages "generally indicate a greater need for federal assistance than widespread and scattered damages throughout a state." Concentrated damages are far more visible and may be an indication of significant damage to infrastructure supporting neighborhoods and communities, thereby increasing the needs of individuals and families. However, the dispersion of damage is not necessarily an indication that individual and family needs are non-existent. Damage in rural states, almost by definition, is far less concentrated and could arguably be more difficult for a PDA team to view and assess. Congress has sought to address this challenge through the creation of the Rural and Small State advocate position at FEMA. Another consideration is that given the legislation that has attempted to give more weight to "Localized Impacts" under Public Assistance, this factor may take on increased importance. Trauma is defined in three ways in FEMA's regulations: the loss of life and injuries, the disruption of normal community functions, and emergency needs that could include an extended loss of power or water. Despite their prominence and importance to victims, families and communities, the loss of life and injuries have relatively little bearing on a declaration decision, but they would greatly influence media coverage that can influence the decision-making process. An extreme amount of losses would be traumatic and considered in the evaluation of the governor's request. But the actual help available from FEMA in response to such losses is limited. The Other Needs Assistance (ONA) program, a part of the Individuals and Households Program (IHP), may provide assistance for uninsured funeral expenses and medical help. As noted, the extreme loss of life or many injuries will likely influence the amount of media coverage for the event. As previously explained in the " Presidential, Gubernatorial, and Tribal Discretion " section of this report, the media coverage can influence not merely the pace of the decision, but the actual decision itself. The other areas (disruption of functions and loss of utilities) in the trauma rubric can be a point of dispute in declaration decisions. What constitutes a disruption of normal community functions? Do road closures that result in the closing of schools equate to a disruption? Another consideration is how long the disruption remains and how, or even if, federal help can alleviate the disruption. Similarly, the emergency needs due to the loss of utilities are defined by the length of time the power or water are not in service. Because characteristics of these factors are not defined in regulations, discretionary judgments are significant aspects of the evaluation of IA needs. As noted previously, the Sandy Recovery Improvement Act directed FEMA to update its IA factors. That provision, Section 1109, directed FEMA to give special attention to the second factor, Trauma, when considering the "severity, magnitude, and impact of a disaster." This gives added significance to this factor and to FEMA's treatment of it when updating the IA factors. FEMA's report on the status of the update is that it "is drafting regulatory text for a Notice of Proposed Rulemaking with anticipated publication no earlier than 2014." Special populations are considered by FEMA in assessing a request for Individual Assistance. FEMA attempts to ascertain information about the demographics of an area affected by a disaster event. Those demographics include the age and income of residents, the amount of home ownership in an area, the effect on Native American tribal groups, and other related considerations to be taken into account. The knowledge of the demographics within the affected area gives FEMA added information to consider regarding trauma and community disruption. Special populations are a factor in the consideration of a governor or tribal leader's request, but the total number of households affected that would be eligible for Stafford Act programs remains the prime consideration. Voluntary agency assistance involves an evaluation of what the volunteer and charitable groups and state, tribal, and local governments have already done to assist disaster victims as well as the potential help they can offer in the recovery period. FEMA also considers whether state, tribal, or local programs "can meet the needs of disaster victims." This factor is among the most contentious in the disaster declaration process due to the subjectivity of the assessment. FEMA's evaluation of local and state capabilities, and the capabilities of the local voluntary community, may vary greatly among catastrophes. There is an expectation that the FEMA regional office's relationship and history with the state or tribe could provide some of this information. But a cursory look at state programs available to "meet the needs of disaster victims" suggests that few resources are comparable to federal help in intent or in scope. A National Emergency Management Association (NEMA) survey of its members for state-funded disaster assistance showed that relatively few states provide assistance beyond that authorized in the Stafford Act. Table 1 summarizes data from that survey. Since 2010 five fewer states have a PA program in place but one additional state provides a form of IA assistance. NEMA noted that the "other" category can include varied forms of state contingency funds and authorities. The small numbers of programs directed at IA suggests that FEMA officials evaluate this area carefully given the lack of information regarding available resources for these programs and the extent of their coverage. In the same vein, attempts to assess the capacity of local voluntary and charitable groups to handle "unmet needs" caused by a disaster can be challenging and problematic. Part of the challenge is discerning the assistance available from the non-profit, voluntary sector, and if that aid meets the needs created by the disaster event. A problematic aspect of the assessment is similar to the "good deeds" concept addressed in the "hazard mitigation" factor in PA. In that instance, the criteria reward the mitigation work that communities and states or tribes had undertaken to lessen the impact of a disaster. Similarly, a strong and efficient charitable sector at the local level that is equipped and funded to address the remaining needs could result in a disaster not being declared and federal supplemental funding not being made available. Arguably, a community does not base all of its preparedness decisions on the potential of FEMA funding in an extraordinary situation. However, it has been argued that some aspects of the FEMA declaration process could be viewed as disincentives for a sound, local capacity to deliver such assistance. One analyst believed that this problem underlines the need for clear criteria for smaller disaster events: Too low a threshold reinforces the perception that the federal government will always come like the cavalry to rescue states and local governments from their improvident failure to prepare for routine disasters. Lapses in preparedness, response, recovery, and mitigation (to cite the disaster management litany) should not be encouraged by a too readily available bailout by the federal government and taxpayers. In evaluating the capabilities of local organizations, FEMA seeks to determine the help that actually exists, rather than assistance that might be expected to be in place. As noted earlier in the PA section, insurance coverage is also an important consideration when FEMA considers a request for Individual Assistance. This is in part derived from the general prohibition in the statute of the duplication of benefits, as follows: ... each federal agency administering any program providing financial assistance to persons, business concerns, or other entities suffering losses as a result of a major disaster or emergency, shall assure that no such person, business concern or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program or from insurance or any other source. This provision does not necessarily result in delayed assistance. FEMA is able to provide help to individuals and households that have disaster damages but are waiting on insurance or other assistance for help. Those applicants can receive FEMA help as long as they agree to reimburse FEMA when they receive their other assistance. If a disaster occurred where almost all of the damaged dwellings were fully insured for the damage that was sustained, FEMA could conclude that a disaster declaration by the President was not necessary. Among the types of disasters FEMA frequently responds to, tornado disasters particularly reflect this challenge since tornado coverage is a part of most homeowners insurance policies. Since the NFIP is administered by FEMA, officials can quickly determine the status of flood insurance in communities and the number of policies in place in the affected area. Additionally, knowledge of the income of the area's residents, as suggested in the special populations factor, allows the agency to make some projections regarding the likelihood of insurance coverage, particularly special hazard insurance such as flood or earthquake insurance, which are potentially expensive additions to a homeowners policy. As one analyst has noted: The good news is that most individuals are very likely insured against many natural disasters already just by owning a homeowners insurance policy. The bad news is that if the home is located in a flood prone area or in an area of the country where earthquakes are relatively common, then purchasing insurance against these disasters is necessary. The last factor FEMA considers in assessing IA needs is the average amount of Individual Assistance by state. FEMA has issued statistics on average losses but notes that the average numbers used are not a threshold (see Table 2 ). The agency does suggest that the "following averages may prove useful to states and voluntary agencies as they develop plans and programs to meet the needs of disaster victims." The inference is that the levels listed generally are what would be expected in damage to dwellings. It is based on the age of these averages that SRIA directed FEMA to update the factors. The average numbers that follow are based on disasters that occurred between July of 1995 and July of 1999; the data are 10 years old and of questionable use today. The table divides states into three categories: small states (under 2 million in population), medium states (2 to 10 million in population) and large states (over 10 million in population). The population amounts are based on the 1990 Census. Although FEMA's regulations stress that these are not thresholds, they are considered by agency officials in determining whether IA will be provided. Presumably states may consider that FEMA help could be forthcoming if damage reaches the state indicator levels. However, since the amounts have not been updated in fifteen years and are based on 1990 census data, it is difficult to determine the degree to which these numbers are considered. Given Congress's mandate in Section 320 of the Stafford Act, this cannot be an arithmetic formula that solely determines whether assistance is provided. But the presentation of loss indicators may guide states when considering whether to request assistance. In addition to the issue of the data's currency, a larger and more compelling question is whether the numbers in the chart match up to the Preliminary Damage Assessments (PDAs) for those events. Absent an existing review of detailed information in PDA forms, it is not possible to determine the usefulness of the data in Table 2 . Still, with the level of experience in this field following literally thousands of disaster declarations over the last 30 years, it could be argued that the numbers of eligible households assisted may reflect the estimated damage upon which the decision for a disaster declaration was made. While Congress reviews the mandated GAO reports, the instructions in the SRIA legislation and other commentary on the declaration process, there are some considerations that Members may wish to review when assessing the current declaration process. One area of consideration is the composition of Preliminary Damage Assessment teams. Team members are involved throughout the process and include local officials guiding the team, state, or tribal personnel who assist the governor or tribal leader in requesting assistance, and FEMA staff who work on the disaster, if one is declared. While FEMA staff have the opportunity at several levels to refine the information the team gathers on damages and to ask additional questions, the process could be approached in other ways. Some FEMA staff have suggested the formation of several permanent teams that would have PDAs as their prime job task without continuing involvement in particular disasters. This could result in more consistent assessments with the bonus of added perspective of team members with exposure to various disasters in many regions of the country. The PDA is an important part of the declaration process. While it can be subject to challenge, it is also the assessment closest to the event. Given its vital role in the process the PDA deserves close attention to determine if these on-site assessments are accurately reflecting the character of an event and the likely eligible damages following a disaster event. As previously noted, the averages that appear in FEMA's declaration process regulations for Individual Assistance (IA) to states are derived from experiences from July 1995 to July 1999. Based on the post-Hurricane Sandy legislation (SRIA), FEMA was instructed to update IA factors so it is likely that these figures will be updated based on FEMA's more recent experience in delivering this type of assistance. While the IA averages are separated by state population size, there does not appear to be a threshold number equivalent to the PA figure of $1 million in eligible damage. In the case of IA help, a dollar figure may not be desirable; however, numbers of families and households affected, or a minimum number of homes with major damage, could potentially be a starting point in establishing a base IA threshold for consideration of requests. The current per capita indicator based on state population according to the U.S. Census is clear, but some observers believe it lacks precision. For example, the earlier discussion on PA indicators pointed out the commonality between California and Nevada regarding earthquake risk as well as the growth of the states. Their population sizes are very different but the per capita indicator alone does not necessarily measure a state's fiscal capacity. The GAO report in 2001 noted that per capita personal income measures do not take into account the taxable income a state may enjoy from businesses or corporations that may have considerable taxable profits. GAO did suggest a different indicator: We have previously reported that Total Taxable Resources (TTR), a measure developed by the U.S. Department of Treasury, is a better measure of state funding capacity in that it provides a more comprehensive measure of the resources that are potentially subject to state taxation. FEMA's response to this suggestion questioned whether the use of TTR would be in violation of the legislative prohibition against arithmetic formulas. The TTR does have very specific information and also tracks growth within a state. However, this appears to make it a more accurate measurement. The degree of detail in the measurement would not necessarily make it the "sole" determinant of disaster aid. It could remain an indicator and one among several factors to be considered in the declaration process. The disaster declaration process, though subject to inquiry, argument, hearings, studies, and recommendations, has changed very little over time. It remains a process that can be observed and evaluated as it occurs in the area affected by the disaster, and grows opaque as it moves up through layers of FEMA and DHS management to the White House. By making PDA information available, FEMA has begun to lift the veil on the decisions that are made. Congress has demonstrated an interest in this process and has sought to understand its limits and its effectiveness. "From the Government Accountability Office in 1981 to Vice President Gore's National Performance Review in 1994," one student of the process noted, "countless policy critiques have called for more objective criteria for presidential disaster declarations." But those calls can be muted when a disaster occurs in a particular place that has particular importance to actors in the process, whether in Congress or the executive branch. While criteria have been established to create a relatively uniform and knowable process, these criteria may not be determinative of the most critical elements considered. An emphasis on victims of unexpected natural disaster events will likely always have a compelling influence on the disaster declaration process. But since disaster relief does have a political element, at many levels, precedent arguably can have value in improving the declaration process so that it can be applied broadly and fairly. But precedent can also be problematic when discussing events of very different size and impact. During the last Congress, attention was directed to the nature of the disaster declaration process. The 113 th Congress has seen legislation introduced that has focused on local impacts over state capacity. In considering such legislation, Congress may choose to engage a broad review of the process that might include the consistency of FEMA's approach across the nation in making damage assessments, other potential indicators of state capabilities and capacities, and the currency of the factors it employs to evaluate those assessments of disaster damage and the state requests on which they are based. Preliminary Damage Assessment Report (All of the PDA Information comes from FEMA's Preliminary Damage Assessment Report to Congress, 2013) ////////// - ///Incident Type/// FEMA-////-DR Declared Month //, 20// On //////////, Governor (first name, middle initial if applicable, last name/Tribal Executive Title) requested a major disaster declaration due to /////// during the period of ///(incident date) or beginning on (incident date), and continuing///. The Governor/Tribal Executive Title requested a declaration for ///(programs) for ///(number) counties and ////Hazard Mitigation for the entire State of ///(or as it states in the Memo/ Tribe name ). During the period of /// (date of PDA)/////, joint federal, state ( delete for Tribe ), and local government (or tribal) Preliminary Damage Assessments (PDAs) were conducted in the requested counties/areas ( for tribe ) and are summarized below. PDAs estimate damages immediately after an event and are considered, along with several other factors, in determining whether a disaster is of such severity and magnitude that effective response is beyond the capabilities of the state (tribe) and the affected local governments, and that Federal assistance is necessary. On //////////////////, President Obama declared that a major disaster exists in the State of /////// (for the Tribe name ). This declaration made ///Individual Assistance if granted//// requested by the Governor available to affected individuals and households in //////////// Counties/Areas. This declaration also made / //Public Assistance if granted//// requested by the Governor/Tribal Executive available to state/the Tribe name and eligible local governments/ associated lands and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the //incident type// in ///////////////// Counties. //// if granted// Direct Federal assistance was also authorized./// Finally, this declaration (or if HM and one other) // This declaration also // made Hazard Mitigation Grant Program //// if granted//// assistance requested by the Governor/Tribal Executive available for hazard mitigation measures ///statewide or list specific counties//(for the Tribe name ). Summary of Damage Assessment Information Used in Determining Whether to Declare a Major Disaster Individual Assistance - (Not requested) *delete if requested Total Number of Residences Impacted: ///// Destroyed - /// Major Damage - ///// Minor Damage -//////// Affected -/////// Percentage of insured residences: (///%) Percentage of low income households: (///%) Percentage of elderly households: (///%) Total Individual Assistance cost estimate:$////////////////////// Public Assistance - (Not requested) *delete if requested Primary Impact:///List Primary Infrastructure Impact/// Total Public Assistance cost estimate:$/////////////////// Statewide per capita impact: $///////// (Delete statewide title for tribe) Statewide per capita impact indicator: $1.39 (Delete statewide title for tribe) Countywide per capita impact://///// County ($//////) //////// County ($//////) //////// County ($//////) //////// County ($//////)(Delete for tribe) Countywide per capita impact indicator: $3.50(Delete for tribe)
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The Robert T. Stafford Disaster Relief and Emergency Assistance Act (referred to as the Stafford Act—42 U.S.C. 5721 et seq.) authorizes the President to issue "major disaster" or "emergency" declarations before or after catastrophes occur. Emergency declarations trigger aid that protects property, public health, and safety and lessens or averts the threat of an incident becoming a catastrophic event. Given their purpose, the emergency declarations may precede an event. A major disaster declaration is generally issued after catastrophes occur, and constitutes broader authority for federal agencies to provide supplemental assistance to help state and local governments, families and individuals, and certain nonprofit organizations recover from the incident. The end result of a presidential disaster declaration is well known, if not entirely understood. Various forms of assistance are provided, including aid to families and individuals for uninsured needs; and assistance to state and local governments, and to certain non-profits for rebuilding or replacing damaged infrastructure. Over the last quarter century, the amount of federal assistance provided through presidential disaster declarations has exceeded $150 billion. Often, in recent years, Congress has enacted supplemental appropriations legislation to cover unanticipated costs. While the amounts spent by the federal government on different programs may be reported, and the progress of the recovery can be observed, much less is known about the process that initiates all of this activity. Yet, it is a process that has resulted in an average of more than one disaster declaration a week over the last decade. The disaster declaration procedure is foremost a process that preserves the discretion of the governor or tribal leader to request assistance and the President to decide to grant, or not to grant, supplemental help. The process employs some measurable criteria for evaluating disaster damage in two broad areas: Individual Assistance that aids families and individuals and Public Assistance that is mainly for emergency work such as debris removal and permanent repairs to infrastructure. The criteria, however, also consider many other factors, in each category of assistance, that help decision makers assess the impact of an event on communities and states. Under current law while a governor or a tribal leader may make a request, the decision to issue a declaration rests solely with the President. Congress has no formal role, but has taken actions to adjust the terms of the process. For example, the Post-Katrina Emergency Management Reform Act of 2006, P.L. 109-295, established an advocate to help small states with the declaration process. More recently, Congress passed the Hurricane Sandy Recovery Improvement Act, P.L. 113-2, which had two potentially major impacts on the declaration process. First, the act authorized Native American tribal groups to directly request disaster assistance from the President rather than only requesting through a state governor. The second potential major impact in the act was that FEMA was directed to update its criteria for considering whether to make a recommendation to the President for Individual Assistance declarations. Since the decision for a declaration is at the discretion of the President, there has been some speculation regarding the influence of political favor in these decisions. Some have posited various connections between the political party of the governor requesting or the prominence of some state's congressional delegation on committee's important to FEMA. While of interest, those theories are usually not connected to, or at least fail to consider, the natural events that were the impetus for both the request and the decision. Given the importance of the decision, and the size of the overall spending involved, hearings have been held to review the declaration process so as to ensure fairness and equity in the process and its results. Congress continues to examine the process and several pieces of legislation have been introduced during the 113th Congress to adjust the factors considered for a major disaster declaration. This report discusses the evolution of this process, how it is administered and recent changes enacted in law as well as amending legislation that has been introduced. This report will be updated as warranted by events.
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Originally enacted in 1965, the Older Americans Act (OAA) supports a wide range of social services and programs for individuals aged 60 years or older. These services and programs include supportive services, congregate nutrition services (i.e., meals served at group sites such as senior centers, community centers, schools, churches, or senior housing complexes), home-delivered nutrition services, family caregiver support, community service employment, the Long-Term Care Ombudsman Program, and services to prevent the abuse, neglect, and exploitation of older persons. Except for Title V, Community Service Employment for Older Americans (CSEOA), all programs are administered by the Administration on Aging (AOA) in the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS). Title V is administered by the Department of Labor's (DOL's) Employment and Training Administration. The OAA has been reauthorized and amended numerous times since it was first enacted in 1965. On April 19, 2016, President Barack Obama signed P.L. 114-144 , the Older Americans Act Reauthorization Act of 2016. P.L. 114-144 authorizes appropriations for OAA programs through FY2019, among other changes to act. Prior to the 2016 reauthorization, the last OAA reauthorization occurred in 2006, when the Older Americans Act Amendments of 2006 ( P.L. 109-365 ) was enacted, which extended the act's authorizations of appropriations through FY2011 (authorizations of appropriations for most OAA programs expired on September 30, 2011). OAA-authorized activities have continued to receive funding for FY2012 through FY2016. This report provides information on bipartisan efforts to reauthorize the OAA, including a discussion of key issues, followed by a brief summary of that act's historical development. Next, it provides a section-by-section summary of P.L. 114-144 , The Older Americans Act Reauthorization Act of 2016. OAA reauthorization bills have been introduced in the past two Congresses, with legislative action in the 113 th and 114 th Congresses. In the 112 th Congress, only the Senate introduced legislation, the Older Americans Act Amendments of 2012 ( S. 3562 ); however, no action was taken. In the 113 th Congress, OAA reauthorization bills were introduced in the House ( H.R. 3850 and H.R. 4122 ) and Senate ( S. 1028 and S. 1562 ), with legislative action in the Senate HELP Committee on a bipartisan bill, S. 1562 . On October 30, 2013, the Senate HELP Committee ordered S. 1562 , the Older Americans Act Reauthorization Act of 2014, reported favorably with an amendment in the nature of a substitute. The bill was subsequently placed on the Senate Legislative Calendar but was not considered on the Senate floor. In the House, OAA reauthorization bills were referred to the House Committee on Education and the Workforce but saw no further legislative action. In the 114 th Congress, both the House and the Senate have considered bipartisan legislation to reauthorize the OAA. The Senate first introduced a bipartisan bill, the Older Americans Act Reauthorization Act of 2015 ( S. 192 ), on January 20, 2015, which would authorize appropriations for most OAA programs for a three-year period through FY2018. The bill would also make various amendments to existing OAA authorities, including changes to the statutory funding formula for certain programs under Title III of the act. On February 3, 2015, the Senate Health, Education, Labor, and Pensions (HELP) Committee reported the bill favorably. S. 192 passed the Senate on July 16, 2015, and was subsequently referred to the House Committee on Education and the Workforce. The House took up S. 192 and passed the bill with an amendment on March 21, 2016. S. 192 , as amended, would authorize appropriations for OAA programs through FY2019, among other modifications. The Senate passed S. 192 , as amended by the House on April 7, 2016. On April 19, 2016, President Barack Obama signed P.L. 114-144 , the Older Americans Act Reauthorization Act of 2016. Similar to past OAA reauthorizations, the Title III funding formula became a point of contention in the most recent reauthorization debate. After much deliberation, the Senate revisited the FY2006 "hold harmless" requirement, which ensures that every state and U.S. territory receives at least its FY2006 amount. The hold harmless requirement has divided lawmakers from states with relatively faster-growing older populations from those representing states with relatively slower growth in their older populations. High-growth states have argued that the "hold harmless" provision in current law protects states whose populations are not increasing as quickly as others, resulting in an inequitable distribution of funds that disadvantage high-growth states. To address this issue, P.L. 114-144 changes the Title III statutory funding formula for four programs by reducing the effect of the FY2006 hold harmless provision over a three-year period. These changes affect the following programs: (1) supportive services and centers, (2) congregate nutrition services, (3) home-delivered nutrition services, and (4) disease prevention and health promotion services. This legislative change was introduced in the bipartisan Senate bill ( S. 192 ). The House amended S. 192 but did not change the hold harmless reduction as proposed in the Senate's version. Rather, it amended the effective dates for the hold harmless reduction, from FY2016 through FY2019 to FY2017 through FY2020. Prior to the 2016 OAA reauthorization, the statutory language for most OAA discretionary authorizations of appropriations provided for "such sums as may be necessary" for a given fiscal year rather than identifying a discrete amount of funding authorized to be appropriated. P.L. 114-144 specifies certain amounts that are authorized to be appropriated for OAA programs and activities for FY2017 through FY2019. This change to the statutory language was included in the House amendment to S. 192 and reflects House protocols established by the majority leadership that are intended to guide legislation considered on the House floor. These protocols include "Elimination of 'Such Sums' Discretionary Authorizations" and "Cut-Go for Discretionary Authorizations." One challenge for OAA reauthorization has been balancing the interests of policymakers and stakeholders in establishing new programs and activities that would expand authorities or create new requirements under the act with competing interests to consolidate or streamline certain authorities. In addition, much of the reauthorization debate has been framed in the context of constraints on discretionary appropriations in the current budgetary climate. As a result, there has been little interest among policymakers and stakeholders in seeking new or significant program expansions under a reauthorization. Certain provisions under P.L. 114-144 provide some additional flexibility to states, area agencies on aging, and social service providers in addressing modernization of senior centers, falls prevention, and behavioral health screening, for example. The law codifies existing practices, such as requiring "evidence-based" disease prevention and health promotion services. It also aligns related programs, such as the workforce programs under Title V and those under the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ) while establishing new Title V performance measures and providing states with the option to establish a combined state plan for Title V under WIOA. Furthermore, the act repeals certain sections under Title IV that do not receive funding, such as grants for Computer Training, Multidisciplinary Centers and Multidisciplinary Systems, and Ombudsman and Advocacy Demonstration Projects. Other provisions clarify policy for the Long-Term Care Ombudsman Program and address coordination among Aging and Disability Resource Centers (ADRCs) and other home and community-based service organizations providing information and referral. For a section-by-section summary see " The Older Americans Act Reauthorization of 2016 ." First enacted in 1965, the Older Americans Act (OAA) was created in response to concern by policymakers about a lack of community social services for older individuals. The original legislation established authority for grants to states for community planning and social services, research and development projects, and personnel training in the field of aging. The law also established the Administration on Aging (AOA) within the then-Department of Health, Education, and Welfare (DHEW) to administer the newly created grant programs and to serve as the federal focal point on matters concerning older persons. Although older persons may receive services under many other federal programs, today the act is considered to be the major vehicle for the organization and delivery of social and nutrition services to this population. It authorizes a wide array of service programs through a nationwide network of State Units on Aging (SUAs), Area Agencies on Aging (AAAs), and tribal organizations, as well as thousands of aging and social service providers in local communities. The act also supports the sole federal job program targeting low-income older workers and funds training, research, and demonstration activities in the field of aging. Prior to the creation of the act in 1965, older persons were eligible for limited social services through some federal programs. However, with the recognition that older individuals were becoming an increasing proportion of the population and that their needs were not being formally addressed through existing programs, many groups began advocating on their behalf. Their actions led President Truman to initiate the first National Conference on Aging in 1950. Conferees called for government and voluntary agencies to accept greater responsibility for the problems and welfare of older persons. Further interest in the field of aging led President Eisenhower to create the Federal Council on Aging in 1956 to coordinate the activities of the various units of the federal government related to aging. The beginning of a major thrust toward legislation along the lines of the later-enacted OAA was made at the 1961 White House Conference on Aging. The conferees called for a federal coordinating agency in the field of aging to be set up on a statutory basis, with adequate funding for coordinating federal efforts in aging, as well as a federal program of grants for community services specifically for the elderly. In response to the White House Conference on Aging recommendations, legislation was introduced in 1962 to establish an independent U.S. Committee on Aging to cut across the responsibilities of many departments and agencies, and create a program of grants for social services, research, and training that would benefit older persons. Legislation introduced in 1963 modified the 1962 proposal by creating within DHEW the AOA, which was to be under the direction of a Commissioner for Aging, appointed by the President with the approval of the Senate. The OAA as introduced in 1965 paralleled the 1963 proposal. Sponsors emphasized how it would provide resources necessary for public and private social service providers to meet the social service needs of the elderly. The act received bipartisan support and was signed into law by President Lyndon Johnson on July 14, 1965 (P.L. 89-73). In addition to creating AOA, the act authorized grants to states for community planning and services programs, as well as for research, demonstration, and training projects in the field of aging. In his remarks upon signing the bill, the President indicated that the legislation would provide "an orderly, intelligent, and constructive program to help us meet the new dimensions of responsibilities which lie ahead in the remaining years of this century. Under this program every state and every community can now move toward a coordinated program of services and opportunities for our older citizens." Since the original legislation was enacted in 1965, the OAA has been amended numerous times. The following provides a summary of major amendments to the OAA over the past four decades. The first amendments to the act in 1967 (P.L. 90-42) extended authorization for the state grant program and for research, demonstration, and training programs created in 1965. In 1969, authority was added under P.L. 91-69 for a program of area-wide model projects to test new and varied approaches to meet the social service needs of the elderly. The 1969 amendments also authorized the foster grandparent and retired senior volunteer programs to provide part-time volunteer opportunities for the elderly. (Authority for volunteer programs was subsequently repealed and these programs were reauthorized under the Domestic Volunteer Service Act of 1973, P.L. 93-113 ). Major amendments to the act occurred in 1972 with the creation of the national nutrition program for the elderly (P.L. 92-258). The 1973 amendments ( P.L. 93-29 ) represented a major shift in federal law with the establishment of sub-state AAAs. For the first time, the act authorized the creation of local agencies whose purpose is to plan and coordinate services for older persons and to act as advocates for programs on their behalf. These amendments also created legislative authority for the community service employment program for older Americans that had previously operated as a demonstration initiative under the Economic Opportunity Act. In 1974, Congress passed legislation to extend the national nutrition program for the elderly ( P.L. 93-351 ). The 1975 amendments ( P.L. 94-135 ) extended the OAA through 1978, specifying certain services to receive funding priority under the state and area agency on aging program. In 1977, Congress made changes to the OAA nutrition program under P.L. 95-65 , which permitted states to receive cash payments in lieu of donated food under the U.S. Department of Agriculture's surplus commodities food program. The 1978 amendments ( P.L. 95-478 ) represented a major structural change to the act when the separate grant programs for social services, nutrition services, and multipurpose senior center facilities were consolidated into one program under the authority of SUAs and AAAs. The intent of these amendments was to improve coordination among the various service programs under the act. Among other changes were requirements for establishing state long-term care ombudsman programs and a new Title VI authorizing grants to Indian tribal organizations for social and nutrition services to older Native Americans. The 1981 amendments ( P.L. 97-115 ) made modifications to give SUAs and AAAs more flexibility in the administration of their service programs. These amendments also emphasized the transition of participants to private sector employment under the community service employment program. In 1984, Congress addressed a number of provisions ( P.L. 98-459 ), including adding responsibilities for AOA; adding provisions designed to target services toward low-income minority older persons; giving more flexibility to states regarding service funds allocations; and giving priority to the needs of Alzheimer's patients and their families. The 1986 amendments ( P.L. 99-269 ) increased authorized appropriations to provide a higher per meal reimbursement rate and directed the Secretary of Agriculture and the Department of Health and Human Services (HHS) to inform states, AAAs, and meal providers of their eligibility to participate in the National Commodity Processing Program. The 1987 amendments ( P.L. 100-175 ) expanded certain service components of SUAs and AAAs to address the special needs of certain populations. Congress authorized the following six additional distinct authorizations of appropriations for services: in-home services for the frail elderly; long-term care ombudsman services; assistance for special needs; health education and promotion services; services to prevent abuse, neglect, and exploitation of older individuals; and outreach activities for persons who may be eligible for benefits under the supplemental security income (SSI), Medicaid, and food stamp programs. Among other changes were provisions designed to give special attention to the needs of older Native Americans and persons with disabilities, emphasize targeting of services to those most in need, elevate the status of AOA within HHS, and liberalize eligibility of community service employment participants for other federal programs. The 1992 amendments ( P.L. 102-375 ) restructured some of the act's programs. A new Title VII, Vulnerable Elder Rights Protection Activities, was created to consolidate and expand certain programs that focus on protection of the rights of older persons. Title VII incorporated separate authorizations of appropriations for the long-term care ombudsman program; program for the prevention of elder abuse, neglect, and exploitation; elder rights and legal assistance development program; and outreach, counseling, and assistance for insurance and public benefit programs. In addition, provisions were included to strengthen requirements related to targeting of Title III services on special population groups. Other amendments authorized programs for assistance to caregivers of the frail elderly, clarified the role of Title III agencies in working with the for-profit sector, and required improvements in AOA data collection. In 1993, the OAA was amended ( P.L. 103-171 ) to establish an Assistant Secretary for Aging (formerly the Commissioner on Aging) within HHS, extended the time frame for convening the White House Conference on Aging, and made technical amendments to the act and several other acts. The 2000 amendments ( P.L. 106-501 ) were enacted after six years of congressional debate on reauthorization. P.L. 106-501 extended the act's authorizations of appropriations for programs through FY2005. These amendments authorized the National Family Caregiver Support Program under Title III; required the Secretary of Labor to establish performance measures for the senior community service employment program; allowed states to impose cost-sharing for certain Title III services older persons receive while retaining authority for voluntary contributions by older persons toward the costs of services; and consolidated a number of previously separately authorized programs. In addition, the amendments required the President to convene a White House Conference on Aging by December 31, 2005. In 2003, the OAA was amended ( P.L. 108-7 ) to revise provisions for the Nutrition Services Incentive Program, whereby maintaining access to commodities within USDA but transferring authority for such program from the USDA, where it had been since its inception, to AOA. The 2006 amendments ( P.L. 109-365 ) extended the act's authorizations of appropriations for programs through FY2011. Among other things, P.L. 109-365 authorized the Assistant Secretary for Aging to designate an individual within AOA to be responsible for prevention of elder abuse, neglect, and exploitation and to coordinate federal elder justice activities. It revised the formula for the allocation of Title III funds and revised the Title V community service employment program to place more emphasis on training of older individuals, while maintaining emphasis on placing them in community service activities. The law also required the Secretary of Labor to conduct a national competition for Title V funds every four years. The 2006 amendments also required states to conduct increased planning efforts related to the growing number of older people in coming decades, and focused attention on the needs of older people with limited English proficiency and those at risk of institutional placement. The law added authority for the Assistant Secretary for Aging to conduct several new demonstration programs under Title IV. Among these are demonstration projects for model projects to assist older people to age in place, including supportive services programs in Naturally Occurring Retirement Communities (NORCs). The following provides a section-by-section summary of key provisions in The Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ). For a comparison of prior law (as amended through the Older Americans Act Amendments of 2006, P.L. 109-365 ) and changes to certain definitions under P.L. 114-144 , see Appendix A , Table A-1 . For a comparison of prior law authorizations of appropriations (as amended by P.L. 109-365 ) with changes under P.L. 114-144 , see Appendix B , Table B-1 . States the title of the act as Older Americans Act Reauthorization Act of 2016. The law adds or amends terms and definitions under OAA Title I. Specifically, it replaces the term "abuse" with a new definition and adds a new term and definition for "adult protective services." It also amends the definition of "Aging and Disability Resource Center" and "elder justice," and it establishes that the term "exploitation" also includes "financial exploitation." It further amends the definition of "disease prevention and health promotion services" to include oral health as a part of routine health screening. For a comparison of these current law definitions (as amended through P.L. 109-365 , The Older Americans Act Amendments of 2006) and changes to the term or definition under P.L. 114-144 , see Table A-1 . The law makes the following amendments to Title II of the act, which sets forth requirements for the Administration on Aging (AOA). The law adds a new requirement for the AOA Director of the Office of LTC Ombudsman Programs to collect and analyze best practices related to responding to elder abuse, neglect, and exploitation in LTC facilities, and publish a report. It further requires that the Assistant Secretary, acting through the designee responsible for elder abuse prevention and services, coordinate with the heads of state adult protective services programs and the Director of the Office of LTC Ombudsman Programs in fulfilling specified responsibilities. The law amends the function of the Assistant Secretary for Aging to include the term "health and economic" in requiring the AOA to (1) assist in the establishment of programs designed to meet the health and economic needs of older individuals, and (2) prepare, publish, and disseminate educational materials dealing with the "health and economic" welfare of older individuals. It adds the Health Resources and Services Administration (HRSA) to the list of agencies that AOA would coordinate with to develop a national plan regarding specified training needs in the field of aging. The law adds a new provision requiring the AOA to provide information and technical assistance to states, AAAs, and service providers, in collaboration with relevant federal agencies, on providing efficient, person-centered transportation services, including across geographic boundaries. It requires the AOA to identify model programs and provide information and technical assistance to states, AAAs, and service providers to support the modernization of senior centers. In addition, it requires the AOA to provide technical assistance and share best practices with states, AAAs, and ADRCs on how to collaborate and coordinate services with health care entities, such as Federally Qualified Health Centers (FQHCs), to improve care coordination for individuals with multiple chronic illnesses. It requires the Assistant Secretary, in providing for the AOA to play a lead role with respect to issues concerning home and community-based long-term care to include, when feasible, developing a consumer-friendly tool to assist older individuals and their families in choosing home and community-based services. The tool focuses on ways for consumers to assess how providers protect the health, safety, welfare, and rights of older individuals, including the rights provided under OAA Section 314 (regarding Rights Related to In-Home Services for Frail Individuals). In requiring the Assistant Secretary to implement ADRCs in all states, the law amends language with respect to ADRCs providing personalized and consumer-friendly assistance to empower individuals to "identify and articulate goals of care" and to help individuals "respond to" or plan ahead for their "long-term care needs." It adds a new provision requiring ADRCs to provide information and referrals regarding available home and community-based services for individuals who are at risk for residing in, or who reside in, institutional settings, so that the individuals have the choice to remain in or return to the community. It further adds a new provision requiring the Assistant Secretary to ensure that programs authorized under the OAA include appropriate training in the prevention of abuse, neglect, and exploitation and provision of services that address elder justice and exploitation of older individuals. The law authorizes the appropriation of $40,063,000 for each of fiscal years 2017 through 2019 for administration, salaries, and expenses for AOA. It also authorizes appropriations for the following activities under Title II of the act: To carry out the National Eldercare Locator Service; $2,088,758 for FY2017, $2,132,440 for FY2018, and $2,176,121 for FY2019. To carry out Pension Counseling and Information Programs; $1,904,275 for FY2017, $1,944,099 for FY2018, and $1,983,922 for FY2019. To carry out Elder Rights Support Activities; $1,312,904 for FY2017, $1,340,361 for FY2018, and $1,367,817 for FY2019. To carry out Aging and Disability Resource Centers; $6,271,399 for FY2017, $6,402,551 for FY2018, and $6,533,703 for FY2019. The law makes the following amendments to OAA Title III, which provides grants for state and community programs on aging. The law authorizes appropriations for the following: $356,717,276 for FY2017, $364,456,847 for FY2018, and $372,196,069 for FY2019 to carry out Part B, Supportive Services; $459,937,586 for FY2017, $469,916,692 for FY2018, and $479,895,348 for FY2019 to carry out Part C, Subpart 1, Congregate Nutrition Services; $232,195,942 for FY2017, $237,233,817 for FY2018, and $242,271,465 for FY2019 to carry out Part C, Subpart 2, Home-Delivered Nutrition Services; $20,361,334 for FY2017, $20,803,107 for FY2018, and $21,244,860 for FY2019 to carry out Part D, Disease Prevention and Health Promotion; and $154,336,482 for FY2017, $157,564,066 for FY2018, and $160,791,658 for FY2019 for Part E, National Family Caregiver Support Program. The law changes the statutory funding allocations for OAA Title III, Parts B, C, and D, which allocate funding to supportive services, congregate nutrition, home-delivered nutrition, and preventive services. It retains the same state and territory minimum amounts allotted under current law and the same population-based formula factor (aged 60 and over), but reduces state and U.S. territory hold harmless amounts (previously referenced to FY2006 funding levels) by 1% from the previous fiscal year as follows: For FY2017, no state receives less than 99% of the annual amount allotted to the state in FY2016. For FY2018, no state receives less than 99% of the annual amount allotted to the state in FY2017. For FY2019, no state receives less than 99% of the annual amount allotted to the state in FY2018. For FY2020 and each subsequent fiscal year, no state receives less than 100% of the annual amount allotted to the state in FY2019. The law includes the term "modernization" in requiring that each plan provide for certain specified services through a comprehensive and coordinated system for the establishment, maintenance, modernization, or construction of multipurpose senior centers (including a plan to use the skills and services of older individuals in paid and unpaid work, including multigenerational and older individual to older individual work). It also adds a new requirement that the area plan provide that the AAA will, in coordination with the state agency and with the state agency responsible for elder abuse prevention services, increase public awareness of elder abuse, neglect, and exploitation, and remove barriers to education, prevention, investigation, and treatment of elder abuse neglect and exploitation education, as appropriate. It includes protection from elder abuse, neglect, and exploitation among a list of topics that AAAs may make recommendations to government officials in the planning and service area as well as recommendations to the state on actions to build capacity to meet the needs of older individuals in the planning and service area. The law authorizes appropriations of $164,055,664 for FY2017, $167,486,502 for FY2018, and $170,917,349 for FY2019. The law includes chronic condition self-care management and falls prevention to the list of supportive services that state grant programs may provide. It also adds behavioral health screening and falls prevention services screening, and screening for elder abuse, neglect, and exploitation to this list. It amends language to add senior center modernization to a list of grant activities the Assistant Secretary must make to states. It further requires the AAAs to make efforts to coordinate the services with agencies and organizations carrying out intergenerational projects to pursue opportunities for the development of intergenerational shared site models for programs or projects, consistent with the OAA's purposes. The law replaces the term "solicit" with "utilize" in requiring the state to ensure that a nutrition project "utilize" the expertise of a dietician or other individuals with equivalent education and training in nutrition science, or an individual with comparable expertise. It further amends this section to add that, where feasible, the state should ensure that the nutrition project encourages the use of locally grown foods in meals programs and identifies potential partnerships and contracts with local producers and providers of locally grown foods. The law amends Part D to establish an "Evidence-Based" Disease Prevention and Health Promotion Services Program and require the Assistant Secretary to provide grants to states for "evidence-based" disease prevention and health promotion services and information. The law replaces the definition of "child" (which previously included an individual with a disability) with separate definitions of the terms "child" and "individual with a disability." Specifically, it defines the term "child" to mean an individual who is not more than 18 years of age. It defines the term "individual with a disability" to mean an individual with a disability, as defined in Section 3 of the Americans with Disabilities Act (ADA), who is not less than 18 and not more than 59 years of age. It also replaces the term "grandparent or older individual who is a relative caregiver" with the term "older relative caregiver." It defines "older relative caregiver" to mean a caregiver who is 55 years of age or older and who lives with, is the informal provider of in-home community care to, and is the primary caregiver for a child or an individual with a disability. In the case of a caregiver for a child, an older relative caregiver is the grandparent, step-grandparent, or other relative (other than the parent) by blood, marriage, or adoption, of the child; is the primary caregiver of the child because the biological or adoptive parents are unable or unwilling to serve as the primary caregivers of the child; and has a legal relationship to the child, such as legal custody, adoption, or guardianship, or is raising the child informally. In the case of a caregiver for an individual with a disability, an older relative caregiver is the parent, grandparent, or other relative by blood, marriage, or adoption, of the individual with a disability. Under OAA Title IV, the law authorizes the Assistant Secretary to make grants and enter into contracts providing continuing support for Medicare program integrity initiatives that train senior volunteers to prevent and identify health care fraud and abuse. To carry out grants and contracts under Section 411, it authorizes appropriations for aging network support activities of $6,216,054 for FY2017, $6,346,048 for FY2018, and $6,476,043 for FY2019; and elder rights support activities of $10,856,828 for FY2017, $11,083,873 for FY2018, and $11,310,919 for FY2019. It further amends requirements for training grants under Native American Programs to provide annually for "national trainings" for directors of programs under Title IV of the act instead of (previously) an annual national training meeting. The law also amends requirements for legal assistance demonstration and support projects for older individuals to require that the Assistant Secretary make grants or enter into contracts with "nonprofit organizations" experienced in providing support and technical assistance on a nationwide basis to certain specified entities and other organizations interested in the legal rights of older individuals instead of (previously) "national nonprofit organizations" with such experience. The law repeals certain grant programs under Title IV of the act. Specifically, it repeals grants for Section 415 (Computer Training), Section 419 (Multidisciplinary Centers and Multidisciplinary Systems), and Section 421 (Ombudsman and Advocacy Demonstration Projects). The law amends Title V to replace references to the Workforce Investment Act of 1998 with the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ) throughout the title. It refers to a workforce development board when grantees conduct projects in certain areas and requires grantees to submit project descriptions to the local workforce development board in addition to the state agency and area agency on aging. With respect to pilot, demonstration, and evaluation projects, it includes state and local workforce development boards as entities to be consulted with in order to promote coordination of Title V activities. It defines the terms "local workforce development board" and "state workforce development board" to have the same meaning as the terms "local board" and "state board," respectively, in Section 3 of WIOA. The bill requires state plans to identify and address coordination and any unnecessary duplication of Title V grantee activities with those carried out under WIOA and other related programs in the state. It authorizes states to develop and submit a combined state plan in accordance with Section 103 of WIOA, which applies in lieu of a state plan approved under Title V. The law amends performance measures and additional indicators to strike reference to any additional indicators under Title V. It requires each grantee and the DOL Secretary to reach agreement on performance measures for the first two program years of the grant. Prior to the third program year, each grantee must reach agreement with the Secretary on performance measures for the third and fourth program years. In doing so, it requires each grantee and the Secretary to (1) take into account how performance levels compare for other established grantees, (2) ensure levels are adjusted using objective statistical modeling, and (3) take into account the extent to which expected levels promote continuous performance improvement. It also allows for certain adjustments to performance based on economic conditions and individuals served based on objective statistical modeling. The law replaces certain core performance indicators with the following new indicators: the percentage of project participants who are in unsubsidized employment during the second quarter after exit from the program; the percentage of project participants who are in unsubsidized employment during the fourth quarter after exit from the project; the median earnings of project participants who are in unsubsidized employment during the second quarter after exit from the project; indicators of effectiveness in serving employers, host agencies, and project participants; and the number of eligible individuals served, including the number of participating individuals, including those with a severe disability, are frail or are age 75 and older, have limited English proficiency or low literacy skills, among other specified characteristics. As soon as practicable after July 1, 2016, the law requires the Secretary to determine if a grantee has, for program year 2016, either met or failed to meet such expected performance levels. For purposes of assessing grantee performance before program year 2017, it requires the Secretary to use the core indicators of performance in effect at the time of the award and the most recent corresponding expected performance levels. The Secretary is required to implement the core performance measures, as specified, no later than December 31, 2017. Effective on January 1, 2018, it prohibits the Secretary from publishing a notice announcing a grant competition until the day on which the Secretary implements the core performance measures. The law authorizes appropriations of $445,189,405 for FY2017, $454,499,494 for FY2018, and $463,809,605 for FY2019 for Title V of the act. It adds that such amounts obligated to grantees are available during the program year that begins on July 1 of the calendar year immediately following the beginning of the fiscal year in which the amounts are appropriated, and that ends on June 30 of the following calendar year. The law authorizes appropriations under Title VI of the act as follows: $31,934,018 for FY2017, $32,601,843 for FY2018, and $33,269,670 for FY2019 for supportive and nutrition services to Native Americans; and $7,718,566 for FY2017, $7,879,982 for FY2018, and $8,041,398 for FY2019 for the Native American Caregiver Support Program. The law authorizes appropriations under Title VII of the act as follows: $16,280,630 for FY2017, $16,621,101 for FY2018, and $16,961,573 for FY2019 to carry out the long-term care (LTC) Ombudsman Program under chapter 2; and $4,891,876 for fiscal year 2017, $4,994,178 for fiscal year 2018, and $5, 096,480 for fiscal year 2019 to carry out Prevention of Elder Abuse, Neglect, and Exploitation Activities and the Legal Assistance Development Program under chapters 3 and 4. The law amends the definition of the term "resident" to mean "an individual" who resides in a LTC facility instead of (previously) an "older individual." Thus, it eliminates explicit reference to "older" individuals, which allows residents of any age who reside in LTC facilities to receive Ombudsman Program services, including investigating and resolving complaints. The law requires the state long-term care (LTC) Ombudsman to be responsible for the management, including the fiscal management, of the Office of the State LTC Ombudsman (hereinafter referred to as the "Office"). It amends the functions of the Ombudsman to add language stating that the Ombudsman's functions include identifying, investigating, and resolving complaints that are made by, or on behalf of, residents with limited or no decision making capacity and who have no known legal representative. It further specifies that if such a resident is unable to communicate consent for an Ombudsman to work on a complaint involving the resident, the Ombudsman is required to seek evidence to indicate what outcome the resident would have communicated and work to accomplish that outcome. It also amends the duties of designated local ombudsman entities and representatives to identify, investigate, and resolve complaints made by or on behalf of residents with limited decision making capacity in similar circumstances. In addition to residents having regular and timely access to the Ombudsman's services, the law requires that the Ombudsman ensure that residents have private and unimpeded access to such services. In providing technical support for the development of resident and family councils, the law requires the Ombudsman to actively encourage and assist in the development of such councils. Similarly, it amends the duties of designated local ombudsman entities and representatives to actively encourage and assist in the development of such councils. It further adds that the Ombudsman, when feasible, continue to carry out specified functions on behalf of residents transitioning from a LTC facility to a home care setting. The law amends the requirement that states ensure representatives of the Office have "access" to LTC facilities and residents to specify that representatives have "private and unimpeded access." It also amends a provision that requires representatives to have appropriate access to the medical and social records of a resident, subject to certain conditions, to provide that representatives have appropriate access to "all files, records, and other information" concerning a resident rather than (as previously) "files." It amends current law to clarify that representatives must have appropriate access to review such information when a resident is "unable to communicate consent" to the review and has no legal representative, rather than (as previously) "unable to consent." Similarly, it expands the requirement that representatives have access to the "records" as is necessary to investigate a complaint, to specify that representatives have access to the "files, records, and information" necessary. It adds that the Ombudsman and representatives of the Office would be considered a "health oversight agency" for purposes of Section 246(c) of the Health Insurance Portability and Accountability Act of 1996 (HIPAA, P.L. 104-191 ), including regulations issued under that section. Thus, the release of residents' individually identifiable health information to the Ombudsman could not be prevented from occurring under certain specified circumstances. Under current law, the state agency is required to establish procedures for the disclosure of files maintained by the program by the Ombudsman or other ombudsman entities. P.L. 114-144 strikes the language "files and records" and replaces it with "files, records, and other information" in each place the term appears under disclosure requirements. It amends disclosure requirements pertaining to the identity of the complainant or resident to ensure that the Ombudsman may disclose information as needed in order to best serve residents with limited or no decision making capacity who have no known legal representative and are unable to communicate consent, in order for the Ombudsman to carry out functions and duties as described. The law replaces the subsection on conflict of interest with a new subsection that separately describes individual and organizational conflict of interest. The law also requires the state agency to ensure that no individual, or member of an immediate family of an individual, involved in the designation of the Ombudsman, or the designation of a local ombudsman entity or representative, is subject to a conflict of interest. Furthermore, the state agency is required to ensure that no officer or employee of the Office, representative of a local Ombudsman entity, or member of the immediate family of the office, employee, or representative, be subject to a conflict of interest. The law also requires the state agency to ensure that the Ombudsman does not have direct involvement in the licensing or certification of a LTC facility or provider of a LTC service; does not have an ownership or investment interest in a LTC facility or service; is not employed by, or participating in the management of, a LTC facility or a related organization, and has not been employed by such a facility or organization within one year before the date of the determination involved; does not receive, or have the right to receive, directly or indirectly, remuneration under a compensation arrangement with an owner or operator of a LTC facility; does not have management responsibility for, or operate under the supervision of an individual with management responsibility for adult protective services (APS); and does not serve as a guardian or in another fiduciary capacity for residents of LTC facilities in an official capacity. The law requires the state agency to comply with specified requirements in a case where the Office poses an organizational conflict of interest, including a situation in which the Office is placed in an organization that is responsible for licensing, certifying, or surveying LTC services in the state; is an association of LTC facilities or any other residential facilities for older individuals; provides LTC services including those carried out under certain Medicaid waiver and other authorities; provides LTC case management; sets rates for LTC services; provides APS; is responsible for Medicaid eligibility determinations; conducts preadmission screenings for placement in LTC facilities; or makes decisions regarding admission or discharge of individuals to or from such facilities. The state agency is not authorized to operate the Office or carry out the program, directly or by contract or other arrangement, in a case in which there is an organizational conflict of interest unless such conflict of interest has been identified by the state agency, disclosed by the state agency to the Assistant Secretary in writing, and remedied in accordance with certain requirements. In a case where potential or actual organizational conflict of interest involving the Office is disclosed or reported to the Assistant Secretary by any person or entity, the Assistant Secretary requires the state agency to remove the conflict or submit and obtain the approval of the Assistant Secretary for an adequate remedial plan that indicates how the Ombudsman will be unencumbered in fulfilling specified functions. The law amends certain sections of the act (§102, Definitions; §201, Establishment of AOA; §202, Functions of the Assistant Secretary; and §321, Supportive Services and Senior Centers) to include the term "behavioral" to specified provisions that address mental health to read "mental and behavioral" health. The law requires the Assistant Secretary to issue guidance to states, AAAs, and providers of services for older individuals with respect to serving Holocaust survivors, including promising practices for conducting outreach. It requires the Assistant Secretary to consult with experts and organizations serving Holocaust survivors and take into account the possibility that the needs of Holocaust survivors may vary based on geography. The guidance must include how certain providers, such as nutrition services providers, transportation service providers, LTC ombudsman, and supportive services providers may address the specified needs of Holocaust survivors under the act. Appendix A. Changes to Definitions Under P.L. 114-144 Table A-1 compares prior law definitions under Title I of the Older Americans Act (as amended through P.L. 109-365 ) and changes to definitions under the Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ). Changes under P.L. 114-144 are indicated in italics. Appendix B. Older Americans Act: Authorizations of Appropriations Table B-1 compares the authorizations of appropriations for each title of the act as stipulated under prior law of the Older Americans Act, as amended by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ), and The Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ). Originally enacted in 1965, the Older Americans Act (OAA) supports a wide range of social services and programs for individuals aged 60 years or older. These services and programs include supportive services, congregate nutrition services (i.e., meals served at group sites such as senior centers, community centers, schools, churches, or senior housing complexes), home-delivered nutrition services, family caregiver support, community service employment, the Long-Term Care Ombudsman Program, and services to prevent the abuse, neglect, and exploitation of older persons. Except for Title V, Community Service Employment for Older Americans (CSEOA), all programs are administered by the Administration on Aging (AOA) in the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS). Title V is administered by the Department of Labor's (DOL's) Employment and Training Administration. The OAA has been reauthorized and amended numerous times since it was first enacted in 1965. On April 19, 2016, President Barack Obama signed P.L. 114-144 , the Older Americans Act Reauthorization Act of 2016. P.L. 114-144 authorizes appropriations for OAA programs through FY2019, among other changes to act. Prior to the 2016 reauthorization, the last OAA reauthorization occurred in 2006, when the Older Americans Act Amendments of 2006 ( P.L. 109-365 ) was enacted, which extended the act's authorizations of appropriations through FY2011 (authorizations of appropriations for most OAA programs expired on September 30, 2011). OAA-authorized activities have continued to receive funding for FY2012 through FY2016. This report provides information on bipartisan efforts to reauthorize the OAA, including a discussion of key issues, followed by a brief summary of that act's historical development. Next, it provides a section-by-section summary of P.L. 114-144 , The Older Americans Act Reauthorization Act of 2016. OAA reauthorization bills have been introduced in the past two Congresses, with legislative action in the 113 th and 114 th Congresses. In the 112 th Congress, only the Senate introduced legislation, the Older Americans Act Amendments of 2012 ( S. 3562 ); however, no action was taken. In the 113 th Congress, OAA reauthorization bills were introduced in the House ( H.R. 3850 and H.R. 4122 ) and Senate ( S. 1028 and S. 1562 ), with legislative action in the Senate HELP Committee on a bipartisan bill, S. 1562 . On October 30, 2013, the Senate HELP Committee ordered S. 1562 , the Older Americans Act Reauthorization Act of 2014, reported favorably with an amendment in the nature of a substitute. The bill was subsequently placed on the Senate Legislative Calendar but was not considered on the Senate floor. In the House, OAA reauthorization bills were referred to the House Committee on Education and the Workforce but saw no further legislative action. In the 114 th Congress, both the House and the Senate have considered bipartisan legislation to reauthorize the OAA. The Senate first introduced a bipartisan bill, the Older Americans Act Reauthorization Act of 2015 ( S. 192 ), on January 20, 2015, which would authorize appropriations for most OAA programs for a three-year period through FY2018. The bill would also make various amendments to existing OAA authorities, including changes to the statutory funding formula for certain programs under Title III of the act. On February 3, 2015, the Senate Health, Education, Labor, and Pensions (HELP) Committee reported the bill favorably. S. 192 passed the Senate on July 16, 2015, and was subsequently referred to the House Committee on Education and the Workforce. The House took up S. 192 and passed the bill with an amendment on March 21, 2016. S. 192 , as amended, would authorize appropriations for OAA programs through FY2019, among other modifications. The Senate passed S. 192 , as amended by the House on April 7, 2016. On April 19, 2016, President Barack Obama signed P.L. 114-144 , the Older Americans Act Reauthorization Act of 2016. Similar to past OAA reauthorizations, the Title III funding formula became a point of contention in the most recent reauthorization debate. After much deliberation, the Senate revisited the FY2006 "hold harmless" requirement, which ensures that every state and U.S. territory receives at least its FY2006 amount. The hold harmless requirement has divided lawmakers from states with relatively faster-growing older populations from those representing states with relatively slower growth in their older populations. High-growth states have argued that the "hold harmless" provision in current law protects states whose populations are not increasing as quickly as others, resulting in an inequitable distribution of funds that disadvantage high-growth states. To address this issue, P.L. 114-144 changes the Title III statutory funding formula for four programs by reducing the effect of the FY2006 hold harmless provision over a three-year period. These changes affect the following programs: (1) supportive services and centers, (2) congregate nutrition services, (3) home-delivered nutrition services, and (4) disease prevention and health promotion services. This legislative change was introduced in the bipartisan Senate bill ( S. 192 ). The House amended S. 192 but did not change the hold harmless reduction as proposed in the Senate's version. Rather, it amended the effective dates for the hold harmless reduction, from FY2016 through FY2019 to FY2017 through FY2020. Prior to the 2016 OAA reauthorization, the statutory language for most OAA discretionary authorizations of appropriations provided for "such sums as may be necessary" for a given fiscal year rather than identifying a discrete amount of funding authorized to be appropriated. P.L. 114-144 specifies certain amounts that are authorized to be appropriated for OAA programs and activities for FY2017 through FY2019. This change to the statutory language was included in the House amendment to S. 192 and reflects House protocols established by the majority leadership that are intended to guide legislation considered on the House floor. These protocols include "Elimination of 'Such Sums' Discretionary Authorizations" and "Cut-Go for Discretionary Authorizations." One challenge for OAA reauthorization has been balancing the interests of policymakers and stakeholders in establishing new programs and activities that would expand authorities or create new requirements under the act with competing interests to consolidate or streamline certain authorities. In addition, much of the reauthorization debate has been framed in the context of constraints on discretionary appropriations in the current budgetary climate. As a result, there has been little interest among policymakers and stakeholders in seeking new or significant program expansions under a reauthorization. Certain provisions under P.L. 114-144 provide some additional flexibility to states, area agencies on aging, and social service providers in addressing modernization of senior centers, falls prevention, and behavioral health screening, for example. The law codifies existing practices, such as requiring "evidence-based" disease prevention and health promotion services. It also aligns related programs, such as the workforce programs under Title V and those under the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ) while establishing new Title V performance measures and providing states with the option to establish a combined state plan for Title V under WIOA. Furthermore, the act repeals certain sections under Title IV that do not receive funding, such as grants for Computer Training, Multidisciplinary Centers and Multidisciplinary Systems, and Ombudsman and Advocacy Demonstration Projects. Other provisions clarify policy for the Long-Term Care Ombudsman Program and address coordination among Aging and Disability Resource Centers (ADRCs) and other home and community-based service organizations providing information and referral. For a section-by-section summary see " The Older Americans Act Reauthorization of 2016 ." First enacted in 1965, the Older Americans Act (OAA) was created in response to concern by policymakers about a lack of community social services for older individuals. The original legislation established authority for grants to states for community planning and social services, research and development projects, and personnel training in the field of aging. The law also established the Administration on Aging (AOA) within the then-Department of Health, Education, and Welfare (DHEW) to administer the newly created grant programs and to serve as the federal focal point on matters concerning older persons. Although older persons may receive services under many other federal programs, today the act is considered to be the major vehicle for the organization and delivery of social and nutrition services to this population. It authorizes a wide array of service programs through a nationwide network of State Units on Aging (SUAs), Area Agencies on Aging (AAAs), and tribal organizations, as well as thousands of aging and social service providers in local communities. The act also supports the sole federal job program targeting low-income older workers and funds training, research, and demonstration activities in the field of aging. Prior to the creation of the act in 1965, older persons were eligible for limited social services through some federal programs. However, with the recognition that older individuals were becoming an increasing proportion of the population and that their needs were not being formally addressed through existing programs, many groups began advocating on their behalf. Their actions led President Truman to initiate the first National Conference on Aging in 1950. Conferees called for government and voluntary agencies to accept greater responsibility for the problems and welfare of older persons. Further interest in the field of aging led President Eisenhower to create the Federal Council on Aging in 1956 to coordinate the activities of the various units of the federal government related to aging. The beginning of a major thrust toward legislation along the lines of the later-enacted OAA was made at the 1961 White House Conference on Aging. The conferees called for a federal coordinating agency in the field of aging to be set up on a statutory basis, with adequate funding for coordinating federal efforts in aging, as well as a federal program of grants for community services specifically for the elderly. In response to the White House Conference on Aging recommendations, legislation was introduced in 1962 to establish an independent U.S. Committee on Aging to cut across the responsibilities of many departments and agencies, and create a program of grants for social services, research, and training that would benefit older persons. Legislation introduced in 1963 modified the 1962 proposal by creating within DHEW the AOA, which was to be under the direction of a Commissioner for Aging, appointed by the President with the approval of the Senate. The OAA as introduced in 1965 paralleled the 1963 proposal. Sponsors emphasized how it would provide resources necessary for public and private social service providers to meet the social service needs of the elderly. The act received bipartisan support and was signed into law by President Lyndon Johnson on July 14, 1965 (P.L. 89-73). In addition to creating AOA, the act authorized grants to states for community planning and services programs, as well as for research, demonstration, and training projects in the field of aging. In his remarks upon signing the bill, the President indicated that the legislation would provide "an orderly, intelligent, and constructive program to help us meet the new dimensions of responsibilities which lie ahead in the remaining years of this century. Under this program every state and every community can now move toward a coordinated program of services and opportunities for our older citizens." Since the original legislation was enacted in 1965, the OAA has been amended numerous times. The following provides a summary of major amendments to the OAA over the past four decades. The first amendments to the act in 1967 (P.L. 90-42) extended authorization for the state grant program and for research, demonstration, and training programs created in 1965. In 1969, authority was added under P.L. 91-69 for a program of area-wide model projects to test new and varied approaches to meet the social service needs of the elderly. The 1969 amendments also authorized the foster grandparent and retired senior volunteer programs to provide part-time volunteer opportunities for the elderly. (Authority for volunteer programs was subsequently repealed and these programs were reauthorized under the Domestic Volunteer Service Act of 1973, P.L. 93-113 ). Major amendments to the act occurred in 1972 with the creation of the national nutrition program for the elderly (P.L. 92-258). The 1973 amendments ( P.L. 93-29 ) represented a major shift in federal law with the establishment of sub-state AAAs. For the first time, the act authorized the creation of local agencies whose purpose is to plan and coordinate services for older persons and to act as advocates for programs on their behalf. These amendments also created legislative authority for the community service employment program for older Americans that had previously operated as a demonstration initiative under the Economic Opportunity Act. In 1974, Congress passed legislation to extend the national nutrition program for the elderly ( P.L. 93-351 ). The 1975 amendments ( P.L. 94-135 ) extended the OAA through 1978, specifying certain services to receive funding priority under the state and area agency on aging program. In 1977, Congress made changes to the OAA nutrition program under P.L. 95-65 , which permitted states to receive cash payments in lieu of donated food under the U.S. Department of Agriculture's surplus commodities food program. The 1978 amendments ( P.L. 95-478 ) represented a major structural change to the act when the separate grant programs for social services, nutrition services, and multipurpose senior center facilities were consolidated into one program under the authority of SUAs and AAAs. The intent of these amendments was to improve coordination among the various service programs under the act. Among other changes were requirements for establishing state long-term care ombudsman programs and a new Title VI authorizing grants to Indian tribal organizations for social and nutrition services to older Native Americans. The 1981 amendments ( P.L. 97-115 ) made modifications to give SUAs and AAAs more flexibility in the administration of their service programs. These amendments also emphasized the transition of participants to private sector employment under the community service employment program. In 1984, Congress addressed a number of provisions ( P.L. 98-459 ), including adding responsibilities for AOA; adding provisions designed to target services toward low-income minority older persons; giving more flexibility to states regarding service funds allocations; and giving priority to the needs of Alzheimer's patients and their families. The 1986 amendments ( P.L. 99-269 ) increased authorized appropriations to provide a higher per meal reimbursement rate and directed the Secretary of Agriculture and the Department of Health and Human Services (HHS) to inform states, AAAs, and meal providers of their eligibility to participate in the National Commodity Processing Program. The 1987 amendments ( P.L. 100-175 ) expanded certain service components of SUAs and AAAs to address the special needs of certain populations. Congress authorized the following six additional distinct authorizations of appropriations for services: in-home services for the frail elderly; long-term care ombudsman services; assistance for special needs; health education and promotion services; services to prevent abuse, neglect, and exploitation of older individuals; and outreach activities for persons who may be eligible for benefits under the supplemental security income (SSI), Medicaid, and food stamp programs. Among other changes were provisions designed to give special attention to the needs of older Native Americans and persons with disabilities, emphasize targeting of services to those most in need, elevate the status of AOA within HHS, and liberalize eligibility of community service employment participants for other federal programs. The 1992 amendments ( P.L. 102-375 ) restructured some of the act's programs. A new Title VII, Vulnerable Elder Rights Protection Activities, was created to consolidate and expand certain programs that focus on protection of the rights of older persons. Title VII incorporated separate authorizations of appropriations for the long-term care ombudsman program; program for the prevention of elder abuse, neglect, and exploitation; elder rights and legal assistance development program; and outreach, counseling, and assistance for insurance and public benefit programs. In addition, provisions were included to strengthen requirements related to targeting of Title III services on special population groups. Other amendments authorized programs for assistance to caregivers of the frail elderly, clarified the role of Title III agencies in working with the for-profit sector, and required improvements in AOA data collection. In 1993, the OAA was amended ( P.L. 103-171 ) to establish an Assistant Secretary for Aging (formerly the Commissioner on Aging) within HHS, extended the time frame for convening the White House Conference on Aging, and made technical amendments to the act and several other acts. The 2000 amendments ( P.L. 106-501 ) were enacted after six years of congressional debate on reauthorization. P.L. 106-501 extended the act's authorizations of appropriations for programs through FY2005. These amendments authorized the National Family Caregiver Support Program under Title III; required the Secretary of Labor to establish performance measures for the senior community service employment program; allowed states to impose cost-sharing for certain Title III services older persons receive while retaining authority for voluntary contributions by older persons toward the costs of services; and consolidated a number of previously separately authorized programs. In addition, the amendments required the President to convene a White House Conference on Aging by December 31, 2005. In 2003, the OAA was amended ( P.L. 108-7 ) to revise provisions for the Nutrition Services Incentive Program, whereby maintaining access to commodities within USDA but transferring authority for such program from the USDA, where it had been since its inception, to AOA. The 2006 amendments ( P.L. 109-365 ) extended the act's authorizations of appropriations for programs through FY2011. Among other things, P.L. 109-365 authorized the Assistant Secretary for Aging to designate an individual within AOA to be responsible for prevention of elder abuse, neglect, and exploitation and to coordinate federal elder justice activities. It revised the formula for the allocation of Title III funds and revised the Title V community service employment program to place more emphasis on training of older individuals, while maintaining emphasis on placing them in community service activities. The law also required the Secretary of Labor to conduct a national competition for Title V funds every four years. The 2006 amendments also required states to conduct increased planning efforts related to the growing number of older people in coming decades, and focused attention on the needs of older people with limited English proficiency and those at risk of institutional placement. The law added authority for the Assistant Secretary for Aging to conduct several new demonstration programs under Title IV. Among these are demonstration projects for model projects to assist older people to age in place, including supportive services programs in Naturally Occurring Retirement Communities (NORCs). The following provides a section-by-section summary of key provisions in The Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ). For a comparison of prior law (as amended through the Older Americans Act Amendments of 2006, P.L. 109-365 ) and changes to certain definitions under P.L. 114-144 , see Appendix A , Table A-1 . For a comparison of prior law authorizations of appropriations (as amended by P.L. 109-365 ) with changes under P.L. 114-144 , see Appendix B , Table B-1 . States the title of the act as Older Americans Act Reauthorization Act of 2016. The law adds or amends terms and definitions under OAA Title I. Specifically, it replaces the term "abuse" with a new definition and adds a new term and definition for "adult protective services." It also amends the definition of "Aging and Disability Resource Center" and "elder justice," and it establishes that the term "exploitation" also includes "financial exploitation." It further amends the definition of "disease prevention and health promotion services" to include oral health as a part of routine health screening. For a comparison of these current law definitions (as amended through P.L. 109-365 , The Older Americans Act Amendments of 2006) and changes to the term or definition under P.L. 114-144 , see Table A-1 . The law makes the following amendments to Title II of the act, which sets forth requirements for the Administration on Aging (AOA). The law adds a new requirement for the AOA Director of the Office of LTC Ombudsman Programs to collect and analyze best practices related to responding to elder abuse, neglect, and exploitation in LTC facilities, and publish a report. It further requires that the Assistant Secretary, acting through the designee responsible for elder abuse prevention and services, coordinate with the heads of state adult protective services programs and the Director of the Office of LTC Ombudsman Programs in fulfilling specified responsibilities. The law amends the function of the Assistant Secretary for Aging to include the term "health and economic" in requiring the AOA to (1) assist in the establishment of programs designed to meet the health and economic needs of older individuals, and (2) prepare, publish, and disseminate educational materials dealing with the "health and economic" welfare of older individuals. It adds the Health Resources and Services Administration (HRSA) to the list of agencies that AOA would coordinate with to develop a national plan regarding specified training needs in the field of aging. The law adds a new provision requiring the AOA to provide information and technical assistance to states, AAAs, and service providers, in collaboration with relevant federal agencies, on providing efficient, person-centered transportation services, including across geographic boundaries. It requires the AOA to identify model programs and provide information and technical assistance to states, AAAs, and service providers to support the modernization of senior centers. In addition, it requires the AOA to provide technical assistance and share best practices with states, AAAs, and ADRCs on how to collaborate and coordinate services with health care entities, such as Federally Qualified Health Centers (FQHCs), to improve care coordination for individuals with multiple chronic illnesses. It requires the Assistant Secretary, in providing for the AOA to play a lead role with respect to issues concerning home and community-based long-term care to include, when feasible, developing a consumer-friendly tool to assist older individuals and their families in choosing home and community-based services. The tool focuses on ways for consumers to assess how providers protect the health, safety, welfare, and rights of older individuals, including the rights provided under OAA Section 314 (regarding Rights Related to In-Home Services for Frail Individuals). In requiring the Assistant Secretary to implement ADRCs in all states, the law amends language with respect to ADRCs providing personalized and consumer-friendly assistance to empower individuals to "identify and articulate goals of care" and to help individuals "respond to" or plan ahead for their "long-term care needs." It adds a new provision requiring ADRCs to provide information and referrals regarding available home and community-based services for individuals who are at risk for residing in, or who reside in, institutional settings, so that the individuals have the choice to remain in or return to the community. It further adds a new provision requiring the Assistant Secretary to ensure that programs authorized under the OAA include appropriate training in the prevention of abuse, neglect, and exploitation and provision of services that address elder justice and exploitation of older individuals. The law authorizes the appropriation of $40,063,000 for each of fiscal years 2017 through 2019 for administration, salaries, and expenses for AOA. It also authorizes appropriations for the following activities under Title II of the act: To carry out the National Eldercare Locator Service; $2,088,758 for FY2017, $2,132,440 for FY2018, and $2,176,121 for FY2019. To carry out Pension Counseling and Information Programs; $1,904,275 for FY2017, $1,944,099 for FY2018, and $1,983,922 for FY2019. To carry out Elder Rights Support Activities; $1,312,904 for FY2017, $1,340,361 for FY2018, and $1,367,817 for FY2019. To carry out Aging and Disability Resource Centers; $6,271,399 for FY2017, $6,402,551 for FY2018, and $6,533,703 for FY2019. The law makes the following amendments to OAA Title III, which provides grants for state and community programs on aging. The law authorizes appropriations for the following: $356,717,276 for FY2017, $364,456,847 for FY2018, and $372,196,069 for FY2019 to carry out Part B, Supportive Services; $459,937,586 for FY2017, $469,916,692 for FY2018, and $479,895,348 for FY2019 to carry out Part C, Subpart 1, Congregate Nutrition Services; $232,195,942 for FY2017, $237,233,817 for FY2018, and $242,271,465 for FY2019 to carry out Part C, Subpart 2, Home-Delivered Nutrition Services; $20,361,334 for FY2017, $20,803,107 for FY2018, and $21,244,860 for FY2019 to carry out Part D, Disease Prevention and Health Promotion; and $154,336,482 for FY2017, $157,564,066 for FY2018, and $160,791,658 for FY2019 for Part E, National Family Caregiver Support Program. The law changes the statutory funding allocations for OAA Title III, Parts B, C, and D, which allocate funding to supportive services, congregate nutrition, home-delivered nutrition, and preventive services. It retains the same state and territory minimum amounts allotted under current law and the same population-based formula factor (aged 60 and over), but reduces state and U.S. territory hold harmless amounts (previously referenced to FY2006 funding levels) by 1% from the previous fiscal year as follows: For FY2017, no state receives less than 99% of the annual amount allotted to the state in FY2016. For FY2018, no state receives less than 99% of the annual amount allotted to the state in FY2017. For FY2019, no state receives less than 99% of the annual amount allotted to the state in FY2018. For FY2020 and each subsequent fiscal year, no state receives less than 100% of the annual amount allotted to the state in FY2019. The law includes the term "modernization" in requiring that each plan provide for certain specified services through a comprehensive and coordinated system for the establishment, maintenance, modernization, or construction of multipurpose senior centers (including a plan to use the skills and services of older individuals in paid and unpaid work, including multigenerational and older individual to older individual work). It also adds a new requirement that the area plan provide that the AAA will, in coordination with the state agency and with the state agency responsible for elder abuse prevention services, increase public awareness of elder abuse, neglect, and exploitation, and remove barriers to education, prevention, investigation, and treatment of elder abuse neglect and exploitation education, as appropriate. It includes protection from elder abuse, neglect, and exploitation among a list of topics that AAAs may make recommendations to government officials in the planning and service area as well as recommendations to the state on actions to build capacity to meet the needs of older individuals in the planning and service area. The law authorizes appropriations of $164,055,664 for FY2017, $167,486,502 for FY2018, and $170,917,349 for FY2019. The law includes chronic condition self-care management and falls prevention to the list of supportive services that state grant programs may provide. It also adds behavioral health screening and falls prevention services screening, and screening for elder abuse, neglect, and exploitation to this list. It amends language to add senior center modernization to a list of grant activities the Assistant Secretary must make to states. It further requires the AAAs to make efforts to coordinate the services with agencies and organizations carrying out intergenerational projects to pursue opportunities for the development of intergenerational shared site models for programs or projects, consistent with the OAA's purposes. The law replaces the term "solicit" with "utilize" in requiring the state to ensure that a nutrition project "utilize" the expertise of a dietician or other individuals with equivalent education and training in nutrition science, or an individual with comparable expertise. It further amends this section to add that, where feasible, the state should ensure that the nutrition project encourages the use of locally grown foods in meals programs and identifies potential partnerships and contracts with local producers and providers of locally grown foods. The law amends Part D to establish an "Evidence-Based" Disease Prevention and Health Promotion Services Program and require the Assistant Secretary to provide grants to states for "evidence-based" disease prevention and health promotion services and information. The law replaces the definition of "child" (which previously included an individual with a disability) with separate definitions of the terms "child" and "individual with a disability." Specifically, it defines the term "child" to mean an individual who is not more than 18 years of age. It defines the term "individual with a disability" to mean an individual with a disability, as defined in Section 3 of the Americans with Disabilities Act (ADA), who is not less than 18 and not more than 59 years of age. It also replaces the term "grandparent or older individual who is a relative caregiver" with the term "older relative caregiver." It defines "older relative caregiver" to mean a caregiver who is 55 years of age or older and who lives with, is the informal provider of in-home community care to, and is the primary caregiver for a child or an individual with a disability. In the case of a caregiver for a child, an older relative caregiver is the grandparent, step-grandparent, or other relative (other than the parent) by blood, marriage, or adoption, of the child; is the primary caregiver of the child because the biological or adoptive parents are unable or unwilling to serve as the primary caregivers of the child; and has a legal relationship to the child, such as legal custody, adoption, or guardianship, or is raising the child informally. In the case of a caregiver for an individual with a disability, an older relative caregiver is the parent, grandparent, or other relative by blood, marriage, or adoption, of the individual with a disability. Under OAA Title IV, the law authorizes the Assistant Secretary to make grants and enter into contracts providing continuing support for Medicare program integrity initiatives that train senior volunteers to prevent and identify health care fraud and abuse. To carry out grants and contracts under Section 411, it authorizes appropriations for aging network support activities of $6,216,054 for FY2017, $6,346,048 for FY2018, and $6,476,043 for FY2019; and elder rights support activities of $10,856,828 for FY2017, $11,083,873 for FY2018, and $11,310,919 for FY2019. It further amends requirements for training grants under Native American Programs to provide annually for "national trainings" for directors of programs under Title IV of the act instead of (previously) an annual national training meeting. The law also amends requirements for legal assistance demonstration and support projects for older individuals to require that the Assistant Secretary make grants or enter into contracts with "nonprofit organizations" experienced in providing support and technical assistance on a nationwide basis to certain specified entities and other organizations interested in the legal rights of older individuals instead of (previously) "national nonprofit organizations" with such experience. The law repeals certain grant programs under Title IV of the act. Specifically, it repeals grants for Section 415 (Computer Training), Section 419 (Multidisciplinary Centers and Multidisciplinary Systems), and Section 421 (Ombudsman and Advocacy Demonstration Projects). The law amends Title V to replace references to the Workforce Investment Act of 1998 with the Workforce Innovation and Opportunity Act (WIOA, P.L. 113-128 ) throughout the title. It refers to a workforce development board when grantees conduct projects in certain areas and requires grantees to submit project descriptions to the local workforce development board in addition to the state agency and area agency on aging. With respect to pilot, demonstration, and evaluation projects, it includes state and local workforce development boards as entities to be consulted with in order to promote coordination of Title V activities. It defines the terms "local workforce development board" and "state workforce development board" to have the same meaning as the terms "local board" and "state board," respectively, in Section 3 of WIOA. The bill requires state plans to identify and address coordination and any unnecessary duplication of Title V grantee activities with those carried out under WIOA and other related programs in the state. It authorizes states to develop and submit a combined state plan in accordance with Section 103 of WIOA, which applies in lieu of a state plan approved under Title V. The law amends performance measures and additional indicators to strike reference to any additional indicators under Title V. It requires each grantee and the DOL Secretary to reach agreement on performance measures for the first two program years of the grant. Prior to the third program year, each grantee must reach agreement with the Secretary on performance measures for the third and fourth program years. In doing so, it requires each grantee and the Secretary to (1) take into account how performance levels compare for other established grantees, (2) ensure levels are adjusted using objective statistical modeling, and (3) take into account the extent to which expected levels promote continuous performance improvement. It also allows for certain adjustments to performance based on economic conditions and individuals served based on objective statistical modeling. The law replaces certain core performance indicators with the following new indicators: the percentage of project participants who are in unsubsidized employment during the second quarter after exit from the program; the percentage of project participants who are in unsubsidized employment during the fourth quarter after exit from the project; the median earnings of project participants who are in unsubsidized employment during the second quarter after exit from the project; indicators of effectiveness in serving employers, host agencies, and project participants; and the number of eligible individuals served, including the number of participating individuals, including those with a severe disability, are frail or are age 75 and older, have limited English proficiency or low literacy skills, among other specified characteristics. As soon as practicable after July 1, 2016, the law requires the Secretary to determine if a grantee has, for program year 2016, either met or failed to meet such expected performance levels. For purposes of assessing grantee performance before program year 2017, it requires the Secretary to use the core indicators of performance in effect at the time of the award and the most recent corresponding expected performance levels. The Secretary is required to implement the core performance measures, as specified, no later than December 31, 2017. Effective on January 1, 2018, it prohibits the Secretary from publishing a notice announcing a grant competition until the day on which the Secretary implements the core performance measures. The law authorizes appropriations of $445,189,405 for FY2017, $454,499,494 for FY2018, and $463,809,605 for FY2019 for Title V of the act. It adds that such amounts obligated to grantees are available during the program year that begins on July 1 of the calendar year immediately following the beginning of the fiscal year in which the amounts are appropriated, and that ends on June 30 of the following calendar year. The law authorizes appropriations under Title VI of the act as follows: $31,934,018 for FY2017, $32,601,843 for FY2018, and $33,269,670 for FY2019 for supportive and nutrition services to Native Americans; and $7,718,566 for FY2017, $7,879,982 for FY2018, and $8,041,398 for FY2019 for the Native American Caregiver Support Program. The law authorizes appropriations under Title VII of the act as follows: $16,280,630 for FY2017, $16,621,101 for FY2018, and $16,961,573 for FY2019 to carry out the long-term care (LTC) Ombudsman Program under chapter 2; and $4,891,876 for fiscal year 2017, $4,994,178 for fiscal year 2018, and $5, 096,480 for fiscal year 2019 to carry out Prevention of Elder Abuse, Neglect, and Exploitation Activities and the Legal Assistance Development Program under chapters 3 and 4. The law amends the definition of the term "resident" to mean "an individual" who resides in a LTC facility instead of (previously) an "older individual." Thus, it eliminates explicit reference to "older" individuals, which allows residents of any age who reside in LTC facilities to receive Ombudsman Program services, including investigating and resolving complaints. The law requires the state long-term care (LTC) Ombudsman to be responsible for the management, including the fiscal management, of the Office of the State LTC Ombudsman (hereinafter referred to as the "Office"). It amends the functions of the Ombudsman to add language stating that the Ombudsman's functions include identifying, investigating, and resolving complaints that are made by, or on behalf of, residents with limited or no decision making capacity and who have no known legal representative. It further specifies that if such a resident is unable to communicate consent for an Ombudsman to work on a complaint involving the resident, the Ombudsman is required to seek evidence to indicate what outcome the resident would have communicated and work to accomplish that outcome. It also amends the duties of designated local ombudsman entities and representatives to identify, investigate, and resolve complaints made by or on behalf of residents with limited decision making capacity in similar circumstances. In addition to residents having regular and timely access to the Ombudsman's services, the law requires that the Ombudsman ensure that residents have private and unimpeded access to such services. In providing technical support for the development of resident and family councils, the law requires the Ombudsman to actively encourage and assist in the development of such councils. Similarly, it amends the duties of designated local ombudsman entities and representatives to actively encourage and assist in the development of such councils. It further adds that the Ombudsman, when feasible, continue to carry out specified functions on behalf of residents transitioning from a LTC facility to a home care setting. The law amends the requirement that states ensure representatives of the Office have "access" to LTC facilities and residents to specify that representatives have "private and unimpeded access." It also amends a provision that requires representatives to have appropriate access to the medical and social records of a resident, subject to certain conditions, to provide that representatives have appropriate access to "all files, records, and other information" concerning a resident rather than (as previously) "files." It amends current law to clarify that representatives must have appropriate access to review such information when a resident is "unable to communicate consent" to the review and has no legal representative, rather than (as previously) "unable to consent." Similarly, it expands the requirement that representatives have access to the "records" as is necessary to investigate a complaint, to specify that representatives have access to the "files, records, and information" necessary. It adds that the Ombudsman and representatives of the Office would be considered a "health oversight agency" for purposes of Section 246(c) of the Health Insurance Portability and Accountability Act of 1996 (HIPAA, P.L. 104-191 ), including regulations issued under that section. Thus, the release of residents' individually identifiable health information to the Ombudsman could not be prevented from occurring under certain specified circumstances. Under current law, the state agency is required to establish procedures for the disclosure of files maintained by the program by the Ombudsman or other ombudsman entities. P.L. 114-144 strikes the language "files and records" and replaces it with "files, records, and other information" in each place the term appears under disclosure requirements. It amends disclosure requirements pertaining to the identity of the complainant or resident to ensure that the Ombudsman may disclose information as needed in order to best serve residents with limited or no decision making capacity who have no known legal representative and are unable to communicate consent, in order for the Ombudsman to carry out functions and duties as described. The law replaces the subsection on conflict of interest with a new subsection that separately describes individual and organizational conflict of interest. The law also requires the state agency to ensure that no individual, or member of an immediate family of an individual, involved in the designation of the Ombudsman, or the designation of a local ombudsman entity or representative, is subject to a conflict of interest. Furthermore, the state agency is required to ensure that no officer or employee of the Office, representative of a local Ombudsman entity, or member of the immediate family of the office, employee, or representative, be subject to a conflict of interest. The law also requires the state agency to ensure that the Ombudsman does not have direct involvement in the licensing or certification of a LTC facility or provider of a LTC service; does not have an ownership or investment interest in a LTC facility or service; is not employed by, or participating in the management of, a LTC facility or a related organization, and has not been employed by such a facility or organization within one year before the date of the determination involved; does not receive, or have the right to receive, directly or indirectly, remuneration under a compensation arrangement with an owner or operator of a LTC facility; does not have management responsibility for, or operate under the supervision of an individual with management responsibility for adult protective services (APS); and does not serve as a guardian or in another fiduciary capacity for residents of LTC facilities in an official capacity. The law requires the state agency to comply with specified requirements in a case where the Office poses an organizational conflict of interest, including a situation in which the Office is placed in an organization that is responsible for licensing, certifying, or surveying LTC services in the state; is an association of LTC facilities or any other residential facilities for older individuals; provides LTC services including those carried out under certain Medicaid waiver and other authorities; provides LTC case management; sets rates for LTC services; provides APS; is responsible for Medicaid eligibility determinations; conducts preadmission screenings for placement in LTC facilities; or makes decisions regarding admission or discharge of individuals to or from such facilities. The state agency is not authorized to operate the Office or carry out the program, directly or by contract or other arrangement, in a case in which there is an organizational conflict of interest unless such conflict of interest has been identified by the state agency, disclosed by the state agency to the Assistant Secretary in writing, and remedied in accordance with certain requirements. In a case where potential or actual organizational conflict of interest involving the Office is disclosed or reported to the Assistant Secretary by any person or entity, the Assistant Secretary requires the state agency to remove the conflict or submit and obtain the approval of the Assistant Secretary for an adequate remedial plan that indicates how the Ombudsman will be unencumbered in fulfilling specified functions. The law amends certain sections of the act (§102, Definitions; §201, Establishment of AOA; §202, Functions of the Assistant Secretary; and §321, Supportive Services and Senior Centers) to include the term "behavioral" to specified provisions that address mental health to read "mental and behavioral" health. The law requires the Assistant Secretary to issue guidance to states, AAAs, and providers of services for older individuals with respect to serving Holocaust survivors, including promising practices for conducting outreach. It requires the Assistant Secretary to consult with experts and organizations serving Holocaust survivors and take into account the possibility that the needs of Holocaust survivors may vary based on geography. The guidance must include how certain providers, such as nutrition services providers, transportation service providers, LTC ombudsman, and supportive services providers may address the specified needs of Holocaust survivors under the act. Appendix A. Changes to Definitions Under P.L. 114-144 Table A-1 compares prior law definitions under Title I of the Older Americans Act (as amended through P.L. 109-365 ) and changes to definitions under the Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ). Changes under P.L. 114-144 are indicated in italics. Appendix B. Older Americans Act: Authorizations of Appropriations Table B-1 compares the authorizations of appropriations for each title of the act as stipulated under prior law of the Older Americans Act, as amended by the Older Americans Act Amendments of 2006 ( P.L. 109-365 ), and The Older Americans Act Reauthorization Act of 2016 ( P.L. 114-144 ).
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First enacted in 1965, the Older Americans Act (OAA) was created in response to concern by policymakers about a lack of community social services for older individuals. Since then, the OAA has been reauthorized and amended numerous times. The last OAA reauthorization occurred in 2006, when the Older Americans Act Amendments of 2006 (P.L. 109-365) was enacted, which extended the act's authorizations of appropriations through FY2011 (authorizations of appropriations for most OAA programs expired on September 30, 2011). OAA-authorized activities have continued to receive funding for FY2012 through FY2016. Today the OAA supports a wide range of social services and programs for individuals aged 60 years or older. These services and programs include supportive services, congregate nutrition services (i.e., meals served at group sites such as senior centers, community centers, schools, churches, or senior housing complexes), home-delivered nutrition services, family caregiver support, community service employment, the Long-Term Care Ombudsman Program, and services to prevent the abuse, neglect, and exploitation of older persons. Except for Title V, Community Service Employment for Older Americans (CSEOA), all programs are administered by the Administration on Aging (AOA) in the Administration for Community Living (ACL) within the Department of Health and Human Services (HHS). Title V is administered by the Department of Labor's (DOL's) Employment and Training Administration. In the 114th Congress, both the House and the Senate have considered bipartisan legislation to reauthorize the OAA. On July 16, 2015, the Senate passed S. 192, the Older Americans Act Reauthorization Act of 2015. The House took up S. 192 and passed the bill with an amendment on March 21, 2016. The Senate passed S. 192, as amended by the House on April 7, 2016. On April 19, 2016, President Barack Obama signed P.L. 114-144, the Older Americans Act Reauthorization Act of 2016. Key reauthorization issues for policymakers and stakeholders included changes to the Title III statutory funding formula for certain programs, statutory language for discretionary authorizations of appropriations, and constraints on discretionary appropriations in the current budgetary climate that have curbed interest in amending the act to establish new programs or activities. This report provides information on the status of bipartisan legislation to reauthorize the OAA and key issues, followed by a brief summary of that act's historical development. Next, it provides a section-by-section summary of P.L. 114-144, the Older Americans Act Reauthorization Act of 2016.
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This report provides background information and issues for Congress on the San Antonio (LPD-17) class amphibious ship program. The Navy's proposed FY2012 budget requested funding for the procurement of an 11 th and final San Antonio (LPD-17) class amphibious ship. Issues for Congress in 2011 included whether to approve, reject, or modify the Navy's proposed funding request for the 11 th LPD-17, whether to encourage or direct the Navy to use the LPD-17 design as the basis for the design of the LSD(X) class of amphibious ships that the Navy wants to begin procuring in FY2017, and—particularly if the LPD-17 design is used as the basis for the LSD(X)—whether to fund the procurement of a 12 th LPD-17 in FY2014 or FY2015. Congress's decisions on these issues can affect, among other things, Navy and Marine Corps funding requirements and capabilities, and the shipbuilding industrial base. The primary function of Navy amphibious ships is to lift (i.e., transport) U.S. Marines and their equipment and supplies to distant operating areas, and enable Marines to conduct expeditionary operations ashore in those areas. Although amphibious ships are designed to support Marine landings against opposing military forces, they are also used for operations in permissive or benign situations where there are no opposing forces. Due to their large storage spaces and their ability to use helicopters and landing craft to transfer people, equipment, and supplies from ship to shore without need for port facilities, amphibious ships are potentially useful for a range of non-combat and combat operations. On any given day, some of the Navy's amphibious ships, like some of the Navy's other ships, are forward-deployed to various overseas operating areas. Forward-deployed U.S. Navy amphibious ships are often organized into three-ship formations called amphibious ready groups (ARGs). On average, two or perhaps three ARGs might be forward-deployed at any given time. Amphibious ships are also sometimes forward-deployed on an individual basis to certain lower-threat operating areas, particularly for conducting peacetime engagement activities with foreign countries or for responding to smaller-scale contingencies. Although the Navy's planned 313-ship fleet, first presented to Congress in February 2006, called for a 31-ship amphibious force that includes 10 LPD-17s, Navy and Marine Corps officials subsequently agreed that a 33-ship amphibious force that includes 11 LPD-17s would be needed to minimally meet the Marine Corps' goal of having an amphibious ship force with enough combined capacity to lift the assault echelons (AEs) of two Marine Expeditionary Brigades (MEBs). A 33-ship force would include 15 amphibious ships for each MEB, plus three additional ships to account for 10% to 15% of the amphibious ship force being in overhaul at any given time. Marine Corps and Navy officials also agree that a 38-ship amphibious force would more fully meet the Marine Corps' 2.0 MEB AE amphibious lift requirement. Such a force would include 17 amphibious ships for each MEB, plus four additional ships to account for 10% to 15% of the amphibious ship force being in overhaul at any given time. Although a 38-ship force would more fully meet the Marine Corps' lift requirement, the Navy and Marine Corps have agreed to accept the operational risks associated with having a 33-ship force rather than a 38-ship force. For further discussion of the amphibious lift goal, see Appendix A . As of the end of FY2011, the Navy's amphibious force included the following 28 ships: 8 Wasp (LHD-1) class ships , each displacing about 40,500 tons; 1 Tarawa (LHA-1) class ship , displacing about 40,000 tons; 5 San Antonio (LPD-17) class ships , each displacing about 26,000 tons; 2 Austin (LPD-4) class ships , each displacing about 17,000 tons; and 12 Whidbey Island/Harpers Ferry (LSD-41/49) class ships , each displacing about 16,000 tons. Table 1 shows the projected total number of amphibious ships under the Navy's 30-year (FY2012-FY2041) shipbuilding plan. The Navy initiated the LPD-17 program in the 1990s to provide replacement ships for the Navy's aging Austin (LPD-4) class amphibious ships, which entered service between 1965 and 1971, and three other, older classes of amphibious ships that have already been removed from Navy service. LPD-17s have been built primarily by the Avondale shipyard near New Orleans, LA, and the Ingalls shipyard near Pascagoula, MS, that form part of Huntington Ingalls Industries (HII). HII was previously owned by Northrop Grumman, during which time it was called Northrop Grumman Shipbuilding (NGSB). As shown in Table 2 , the first LPD-17 was procured in FY1996, and a total of 11 were procured through FY2012. As of the end of FY2011, the first five had entered service. The LPD-17 program has experienced considerable cost growth, schedule delays, and construction problems, particularly on the earlier ships in the program. The first ship in the program experienced cost growth of about 70%, and later ships in the program were substantially more expensive to build than originally estimated. The design and construction of the first ship were delayed by about two years. Delays in building the first ships were a primary reason for the FY2001-FY2002 hiatus in LPD-17 procurement shown in Table 2 . The first and second ships were delivered to the Navy in incomplete form, and numerous construction problems were identified on the first two ships. There have been recurrent reports of construction problems on in-service LPD-17s. The Navy has been working to overcome these problems and is reporting success in these efforts. For additional details, see Appendix B and Appendix C . The Navy's FY2012 30-year shipbuilding plan calls for the procurement of a new class of amphibious ship called the LSD(X) starting in FY2017. LSD(X)s are to replace the Navy's 12 aging Whidbey Island/Harpers Ferry (LSD-41/49) class amphibious ships. Some observers have suggested using the LPD-17 design as the basis for the LSD(X). Navy officials do not stress this option and instead appear more interested in developing an all-new design for the LSD(X). If a decision were made to use the LPD-17 design as the basis for the LSD(X), then procuring a 12 th LPD-17 in FY2014 or FY2015 would help keep the LPD-17 production line open until the procurement of the first LSD(X) in FY2017, which in turn might help reduce LSD(X) production costs. The Navy's proposed FY2012 budget requested funding for the procurement of an 11 th and final San Antonio (LPD-17) class amphibious ship. The ship had received $184.0 million in prior-year advance procurement (AP) funding, and the Navy's proposed FY2012 budget requested the remaining $1,847.4 million needed to complete the ship's estimated procurement cost of $2,031.4 million. Issues for Congress for 2011 included whether to approve, reject, or modify the Navy's proposed funding request for the 11 th LPD-17; whether to encourage or direct the Navy to use the LPD-17 design as the basis for the design of the LSD(X); and whether to fund the procurement of a 12 th LPD-17 in FY2014 or FY2015, particularly if the LPD-17 design is used as the basis for the LSD(X). Supporters of using the LPD-17 design as the basis for the LSD(X) could argue that doing so could substantially reduce LSD(X) design costs by avoiding the need for creating an all-new design for the LSD(X), and help constrain LSD(X) production costs and risks by taking advantage of the LPD-17 production learning curve, particularly if a 12 th LPD-17 were procured in FY2014 or FY2015 so as to keep the LPD-17 production line open until the scheduled start of LSD(X) production in FY2017. An amphibious force with 12 LPD-17s and 10 LSD(X)s, they could argue, would be able to meet the 2.0 MEB (AE) amphibious lift goal as well as would an amphibious force with 11 LPD-17s and 11 LSD(X)s. An LSD(X) based on the LPD-17 design, they could argue, could have its features optimized so that a force with 12 LPD-17s and 10 LSD(X)s would meet the goal. The production-cost and production-risk advantages of taking advantage of the existing LPD-17 production learning curve, they could argue, outweigh the potential cost-reduction advantages of staging a competition between shipyards for the right to build LSD(X)s. Skeptics of using the LPD-17 design as the basis for the LSD(X) could argue that it is too early to know whether an LPD-17-based LSD(X) would be a good approach, because operational requirements for the LSD(X) have not yet been determined. They could argue that an LPD-17-based LSD(X) could be bigger and more expensive to procure and operate than what the Navy needs, and that while a brand-new LSD(X) design would likely have higher design costs than an LPD-17-based design, an all-new LSD(X) design might be smaller and less expensive to procure and operate than an LPD-17-based design, eventually offsetting its higher initial design cost. They could argue that an all-new LSD(X) design could more comprehensively incorporate newer technologies, including technologies for reducing crew size, than could an LPD-17 based design. They could also argue that competition is an important mechanism for restraining shipbuilding costs, and that it would be easier for the Navy to stage an effective competition between shipbuilders for the right to build an all-new LSD(X) design than an LPD-17-based design, because no shipbuilder would have a significant cost advantage going into the bidding for an all-new LSD(X) design by virtue of having previously built LPD-17s. At a May 6, 2010, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the following exchange occurred between Senator Kay Hagan and Sean Stackley, the Navy's acquisition executive (i.e., the Assistant Secretary of the Navy [Research, Development and Acquisition]): SENATOR HAGAN: The 2011-2015 shipbuilding plan calls for procuring the 11 th and the final of the San Antonio class landing platform dock amphibious ship in 2012. In 2017, the 30-year shipbuilding plan calls for the start of procurement of a replacement for aging landing ship dock amphibious ships. Secretary Stackley, or all of you, can the LPD 17 design be used for the basis of the LSD replacement? And would the procurement of a 12 th LPD 17 in 2014 or 2015 support keeping the production line open while transitioning to the start of the LSD replacement? STACKLEY: Yes, ma'am. Let me—let me start that. In general terms, the Navy would look for reuse of design and common hull forms to improve affordability of any new program. The timing for the LSD(X), I mentioned in my opening remarks is ahead of need. The LSD 41 and 49 class do not exit the service until the mid-2020s. We look at concerns with the industrial base, so we have pulled that replacement program as early as we can without pushing some other requirement out that's, frankly, more urgent on a schedule basis. So we have the LSD(X) just outside of the FYDP. And this year and next year we are going through the definition of the requirements to determine exactly what is the lift fingerprint that the replacement ship has to provide, and does that, in fact, line up with an LPD 17 hull form? If it turns out that the LPD 17 is more capability than what the LSD(X) is, then we have to do the affordability and trades review to balance off what's the cost of a new start versus the cost of re-use. And affordability and capability requirements and schedules are all going to be brought to the table in that—in that review and, frankly, that debate. The Navy's proposed FY2012 budget requested funding for the procurement of an 11 th and final San Antonio (LPD-17) class amphibious ship. The ship had received $184.0 million in prior-year advance procurement (AP) funding, and the Navy's proposed FY2012 budget requested the remaining $1,847.4 million needed to complete the ship's estimated procurement cost of $2,031.4 million. The House Armed Services Committee, in its report ( H.Rept. 112-78 of May 17, 2011) on H.R. 1540 , recommended approval of the Navy's request for FY2012 procurement funding for the LPD-17 program (page 346). The report states: The committee received testimony that the Marine Corps' requirement for amphibious ships is 38 ships, but that the number of ships that are absolutely necessary with acceptable risk is 33. The committee encourages the Secretary of the Navy to continue pursuing a minimum of 33 amphibious ships. (Page 34) S. 1867 , an original measure reported by Senator Levin on November 15, 2011, without written report, in effect superseded S. 1253 (see below). S. 1867 recommended approval of the Navy's request for FY2012 procurement funding for the LPD-17 program. (See Section 4101 of the bill. In the printed version of the bill, the relevant table within this section appears on page 611.) S. 1253 was, in effect, superseded by S. 1867 (see above). S. 1253 as reported by the Senate Armed Services Committee ( S.Rept. 112-26 of June 22, 2011) recommended approval of the Navy's request for FY2012 procurement funding for the LPD-17 program. (See Section 4101 of the bill as reported by the committee. In the printed version of the bill as reported by the committee, the relevant table within this section appears on page 606.) The conference report ( H.Rept. 112-329 of December 12, 2011) on H.R. 1540 / P.L. 112-81 of December 31, 2011, recommended reducing by $10 million the Navy's request for FY2012 procurement funding for the LPD-17 program, with the reduction being for "Excess ECO [engineering change order] funding" (page 812). In final action, H.R. 2055 became a consolidated appropriations vehicle incorporating nine appropriations bills, including the FY2012 DOD appropriations bill, which was incorporated as Division A. The conference report ( H.Rept. 112-331 of December 15, 2011) on H.R. 2055 / P.L. 112-74 of December 23, 2011, reduced by $10 million the Navy's request for FY2012 procurement funding for the LPD-17 program, with the reduction being for "Excess ECO [engineering change order] funding" (page 629). The House Appropriations Committee, in its report ( H.Rept. 112-110 of June 16, 2011) on H.R. 2219 , recommended reducing by $14 million the Navy's FY2012 request for procurement funding for the LPD-17 program, with the reduction being for "Excess ECO [engineering change order] funding." (Pages 153-154) The Senate Appropriations Committee, in its report ( S.Rept. 112-77 of September 15, 2011) on H.R. 2219 , recommended approving the Navy's FY2012 request for procurement funding for the LPD-17 program (page 120). Regarding another amphibious shipbuilding program, the committee's report stated: LHA 8 Amphibious Assault Ship .—The fiscal year 2012 budget request includes $26,702,000 for LHA 8 amphibious assault ship preliminary design efforts. The Committee is aware that the Department of the Navy plans to reintroduce a well deck and optimize the aviation capability of LHA 8, which is planned for procurement in fiscal year 2016. Considering growing fiscal pressure on the national defense budget and increasing amphibious assault ship demands from combatant commanders for contingency operations, theater security cooperation, humanitarian assistance, and conventional deterrence missions, the Committee believes it is essential that LHA 8 be introduced in the most cost effective manner. Therefore, the Committee directs the Department of the Navy to fully fund advance planning and design of LHA 8 and work with industry to identify affordability and producibility strategies that will lead to more efficient construction of a large deck amphibious assault ship to best meet combatant commander needs. (Pages 189-190) For the conference report on the FY2012 DOD Appropriations Act, see the above discussion of H.R. 2055 / P.L. 112-74 . Appendix A. Additional Information on Amphibious Lift Goal This appendix presents additional background information on the amphibious lift goal. Expressed in Terms of MEBs The Marine Corps' goal for amphibious lift is to have a force of amphibious ships with enough combined lift capacity to simultaneously land the assault echelons (AEs) of two Marine Expeditionary Brigades (MEBs), or 2.0 MEB AEs for short. This goal, Marine Corps officials state, reflects responsibilities assigned to Marine Corps forces in U.S. regional war plans. A MEB is a Marine air-ground task force (MAGTF) of 14,484 Marines and their equipment and supplies. The AE of a MEB is the initial part of the MEB to go ashore. The remaining part that goes ashore later is called the assault follow-on echelon (AFOE). Marine Corps doctrine calls for the AE to go ashore from amphibious ships, and for the AFOE to go ashore from less-survivable sealift (i.e., cargo-type) ships controlled by the Military Sealift Command (MSC). The AE of a MEB includes 10,055 of the MEB's Marines, plus equipment and supplies for these 10,055 Marines. The amphibious lift goal as approved by the Secretary of Defense has changed numerous times since the Korean War, reflecting changes in strategic or budgetary circumstances. One such change occurred in 1991, as the Cold War was ending. The most recent change occurred in 2006, when the goal was reduced from 2.5 MEB AEs to 2.0 MEB AEs. Table A -1 shows amphibious lift goals since 1980. In discussions of the current 2.0 MEB AE amphibious lift goal, the "AE" part is often dropped for convenience, even though the current requirement still relates to MEB AEs rather than complete MEBs. Marine Corps officials state that the 2006 reduction in the amphibious lift goal to 2.0 MEB AEs is acceptable because the Navy and Marine Corps also plan to field a new squadron of 14 next-generation maritime prepositioning force ships called the Maritime Prepositioning Force of the Future, or MPF(F). The planned 14-ship MPF(F) squadron, which is to include three modified LHA/LHD-type ships and 11 sealift (i.e., cargo-transport) ships, is to have a capability for putting an additional MEB ashore. Unlike the amphibious ship force, the MPF(F) squadron is not intended as assault shipping—the sealift ships in the MPF(F) squadron have less survivability and self-defense capability than the Navy's amphibious ships, and are therefore considered unsuitable for use in forcible-entry operations. MPF(F) ships, however, are in general less expensive to procure than amphibious ships, and they are designed to remain prepositioned at sea in a theater of interest for long periods of time before returning the port for maintenance. Together, the Navy's amphibious ship force and the MPF(F) squadron are to provide a total of 3.0 MEB AEs of lift, or 30,165 troops. Translated into Numbers of Amphibious Ships The Marine Corps states the 2.0 MEB AE amphibious lift goal translates into a requirement for a force of 33 amphibious ships, including 11 LHAs/LHDs, 11 LSD-41/49 class ships, and 11 LPD-17s. In explaining how the requirement for 2.0 MEB AEs translates into this 33-ship requirement, the Marine Corps states the following: Given the lift capabilities of the Navy's current amphibious ships, each MEB AE would require 19 operational amphibious ships to lift: 6 LHAs/LHDs, 7 LSD-41/49s, and 6 LPD-17s. To arrive at a more fiscally constrained goal, the Marine Corps reduced the above 19-ship total to 17 operational ships: 5 LHAs/LHDs, 7 LSD-41/49s, and 5 LPD-17s. This 17-ship force requires about 11% of the MEB AE's vehicles to be shifted to the AFOE, which creates a degree of operational risk. This 17-ship force was presented to Navy officials in mid-2007. To arrive at a still-more fiscally constrained goal, Navy and Marine Corps officials in mid-2007 agreed to reduce the 17-ship total to 15 operational ships—5 of each kind. This 15-ship force requires about 20% of the MEB AE's vehicles and about 12% of its cargo to be shifted to the AFOE, which creates an additional degree of operational risk. The Marine Corps testified in April 2008 that: Each MEB AE requires seventeen amphibious warfare ships.... However, given current fiscal constraints, the Navy and Marine Corps have agreed to assume a degree of operational risk by limiting the assault echelon of each MEB by using only fifteen ships per MEB.... Table A -2 shows the five elements of the amphibious lift footprint, and how limiting each MEB AE to 17 or 15 operational ships results in some of the MEB AE's vehicles and cargo being shifted to the AFOE. Using 15 operational ships per MEB AE, providing lift for 2.0 MEB AEs would require 30 operational ships: 10 LHAs/LHDs, 10 LSD-41/49s, and 10 LPD-17s. The Marine Corps states that, in light of ship maintenance requirements, maintaining a force of 30 operational ships (i.e., ships not in maintenance) would require having an additional 15% in total inventory, meaning a total of 34.5 ships (11.5 of each kind) for 2.0 MEB AEs. The figure of 34.5 ships, the Marine Corps states, was then rounded down to 33 ships (11 of each kind). Table A -3 shows the total number of amphibious ships that the Marine Corps states would be needed to lift 2.0 MEBs (the current goal), 2.5 MEBs (the goal from 1991 to 2006), and 3.0 MEBs (the broader current goal currently being met through a combination of amphibious and MPF[F] ships), using 15, 17, or 19 operational ships per MEB AE, and including an additional allowance to account for ships in maintenance. The first column shows the current 33-ship requirement for 2.0 MEB AEs using 15 operational ships per MEB. Table A -3 shows a total of 37 amphibious ships would be needed to meet the 2.0 MEB AE using 17 amphibious ships per MEB. In April 2009 testimony to Congress, the Navy revised this figure to 38 ships, including 17 ships for each MEB plus four (rather than three) additional ships to account for 10% to 15% of the amphibious ship force being in overhaul at any given time. Marine Corps Testimony in 2008 Regarding the amphibious lift goal, the Marine Corps testified in April 2008 as follows: Shipbuilding Requirements Based on strategic guidance, in the last several years the Navy and Marine Corps have accepted risk in our Nation's forcible entry capacity, and reduced amphibious lift from 3.0 MEB assault echelon (AE) to 2.0 MEB AE. In the budgetary arena, the value of amphibious ships is too often assessed exclusively in terms of forcible entry—discounting their demonstrated usefulness across the range of operations and the clear imperative for Marines embarked aboard amphibious ships to meet Phase 0 demands. The ability to transition between those two strategic goalposts, and to respond to every mission-tasking in between, will rely on a strong Navy-Marine Corps Team and the amphibious ships that facilitate our bond. The Navy and Marine Corps have worked diligently to determine the minimum number of amphibious ships necessary to satisfy the Nation's needs. The Marine Corps' contribution to the Nation's forcible entry requirement is a single, simultaneously-employed two MEB assault capability—as part of a seabased MEF. Although not a part of the MEF AE, a third reinforcing MEB is required and will be provided through MPF(F) shipping. Each MEB AE requires seventeen amphibious warfare ships—resulting in an overall ship requirement for thirty-four amphibious warfare ships. However, given current fiscal constraints, the Navy and Marine Corps have agreed to assume a degree of operational risk by limiting the assault echelon of each MEB by using only fifteen ships per MEB —in other words, a Battle Force that provides thirty "operationally available" amphibious warfare ships. Amphibious Ships In that thirty-ship Battle Force, ten aviation-capable big deck ships (LHA / LHD / LHA(R)), ten LPD 17 class ships, and ten LSD class ships are required to accommodate the MAGTF [Marine Air-Ground Task Force] capabilities. In order to meet a thirty-ship availability rate—based on a CNO-approved maintenance factor of ten percent—a minimum of eleven ships of each of the current types of amphibious ships are required—for a total of thirty-three ships. The CNO has concurred with this requirement for thirty-three amphibious warfare ships, which provide the "backbone" of our maritime capability—giving us the ability to meet the demands of harsh environments across the spectrum of conflict. The LPD 17 San Antonio class of amphibious warfare ships represents the Department of the Navy's commitment to a modern expeditionary power projection fleet enabling our naval force to operate across the spectrum of warfare. The LPD 17 class replaces four classes of older ships—LKA, LST, LSD 36, LPD 4—and will have a forty-year expected service life. It is imperative that eleven of these ships be built to meet the minimum of ten necessary for the 2.0 MEB AE amphibious lift requirement. Procurement of the tenth and eleventh LPDs remains a priority. Appendix B. May 25, 2011, Navy Testimony on LPD-17 Program This appendix presents an excerpt on the LPD-17 program from the Navy's prepared statement for a May 25, 2011, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee. For further discussion of LPD-17 class construction problems, see Appendix C . The text of the excerpt is as follows: The SAN ANTONIO Class LPD (LPD 17) has a 40-year expected service life and serves as the replacement for four classes of older ships: the LKA, LST, LSD 36, and the LPD 4. Lessons learned from the effort to resolve material reliability concerns identified in the early ships of the class are being applied to ships currently under construction. Quality continues to improve with each ship delivered as the Navy continues to work closely with the shipbuilder to address cost, schedule, and performance issues. Five ships have been delivered, and four more ships are under construction. The construction contract for the 10 th ship was recently awarded and the eleventh and final LPD is planned for procurement in FY 2012. Ships of the class have deployed seven times including two ships that are currently on deployment. USS SAN ANTONIO (LPD 17) has deployed once (2008), USS NEW ORLEANS LPD 18 has completed two successful overseas deployments (2009 and 2010). USS MESA VERDE (LPD 19) has also completed two successful overseas deployments. Today, LPD 19 is again deployed overseas; and USS GREEN BAY (LPD 20) is in the middle of her first overseas deployment. LPD 18 and USS NEW YORK (LPD 21) are fully operational, conducting local operations in their homeport areas. LPD 17 is completing her major post- deployment repair availability prior to next sea trials. In February of this year, LPD 21 successfully passed an inspection by the Navy's Board of Inspection and Survey (INSURV) to support the Final Contract Trials. The President of INSURV remarked that LPD 21 was the best LPD 17 Class ship they had seen and that lessons learned from the first ships of the class were clearly being implemented. The Navy and Industry have made significant progress in correcting early class design and construction issues on the LPD 17 Class. Early ships of the LPD 17 Class were delivered to the Navy with pipe welding quality, engine alignment problems, inadequate lube oil cleanliness and bearing wear which led to unplanned engine repairs and overhauls. These material issues, combined with an optimized sized crew and a reliance on computer-based vice classroom training, led to decreased reliability and operational availability of the class. The above issues, as well as inadequate initial reliability of the ships computer network and some of the engine and ship control systems led the Navy and DoD independent operational testing organizations to rate the ships as not operationally suitable during the initial operational testing conducted in 2007-2008. Follow-on Test and Evaluation (FOT&E), which commenced in July 2010 and runs through FY 2012, is being conducted by the Navy's Commander, Operational Test & Evaluation Force and the Marine Corps Operational Test and Evaluation Activity to confirm adequate corrective actions have been taken. Over the last couple of years, the shipbuilder (Northrop Grumman Shipbuilding (NGSB), now Huntington Ingalls Industries, (HII)) has implemented several initiatives to address the quality issues associated with ship construction and delivery. The shipbuilder significantly revised their welding, quality and production processes to improve quality and ensure consistency across all of their shipbuilding facilities. Their workforce was re-trained and re-certified to the updated process. The Navy and HII have improved the oil flushing procedures to get all the contaminants out of the ship's lube oil system and improvements to the lube oil filters and strainers have been developed to better remove any contaminants that might be introduced through normal operation of the engines. These more stringent flushing procedures are being used on all ships in the class and the improved filters and strainers are planned for installation on all ships in the class. Additionally, the shipyard has taken several steps to ensure pipe sections are maintained in a clean condition from fabrication in the pipe shop to installation on the ship including a new cleaning process in the pipe shop and improved pipe capping procedures to prevent contaminants from entering the pipe during shipping and installation onboard the ship. The Navy has also significantly improved its lube oil sampling and analysis process. This process has been incorporated into the ship construction process. The shipbuilder is responsible for the overall quality of the ship. To manage quality, the shipbuilder utilizes a Quality Management System (QMS) comprising of Quality Control (ensuring the correct product requirements, manufacturing processes, etc.) and Quality Assurance (focused on end product quality and conformance). The Ship Wide Area Network (SWAN) design, which was based upon 1990's Asynchronous Transfer Mode (ATM) technology, experienced multiple failures resulting in failover monitoring, maintainability, and supportability issues. The ATM-based SWAN is being replaced by current Gigabit Ethernet technology hardware and software. Today, this "Gig-E" SWAN is installed on LPD 17, 18 and 21 with no reported failures to date. LPD 19 and 20 will receive this upgrade in FY 2012; and the baseline for LPD 22 and follow ships has been updated to include the Gig-E SWAN. Initial system reliability issues with the engine controls, ship controls, and interior communications systems have been addressed through major software upgrades to each system, as well as the replacement of critical obsolete parts with more rugged, current technology hardware. Government oversight by the Navy's Supervisor of Shipbuilding, Gulf Coast (SSGC) has been revamped with an increase in overall SSGC manning by 21 percent from 2005 through the end of 2010, including an intensive focus on critical waterfront Quality Assurance (QA) billets. All Government QA weld inspectors were required to undergo re-training and re-certification in critical process areas, and QA oversight was increased across all phases of production. Within the last 18 months, the QA organization has been restructured to include more surveillance of in process work and compliance with formal ship construction procedures. A revamped training program has been implemented, providing an "apprentice to subject matter expert" career roadmap for QA specialists. SSGC has implemented a process of "critical process pulse audits" to ensure HII maintains production quality across the critical shipbuilding areas of structure, pipe, electrical, and coatings. Navy critical process metrics have been aligned with the shipbuilder to better assess performance trends leading to earlier identification of issues when they arise. In addition, Commander, Naval Sea Systems Command (NAVSEA) sent teams of QA experts to assess SSGC ability to provide QA oversight and HII's production quality in Spring 2009, July 2010 and January 2011. The NAVSEA audits confirmed initial improvement by both SSGC and HII. The focus going forward, and a key element of the critical process pulse audits, is ensuring sustainment of that performance. The Navy is also strengthening the LPD 17 Class crew training by establishing more traditional shore-based schoolhouses for critical systems that will result in a blended philosophy of classroom, on-ship, and computer-based training rather than solely relying on the previously emphasized computer-based shipboard training. The Ship Manning Document (SMD) was recently approved, increasing the LPD 17 Class crew size to 381 from the original "optimized" manning level of 360. The LPD 17 Class System Sustainability Strike Team, made up of personnel from the Fleet, the Navy regional maintenance centers, the shipbuilder, the Supervisor of Shipbuilding, the class planning yard, and the Navy Warfare Centers was established in FY 2009. The Strike Team has focused resources on developing and prioritizing correction plans addressing system design, production/quality, operations and maintenance issues identified in recent test/evaluation reports, as well as those discovered during normal shipboard operations. Lessons learned from this effort are being incorporated in the ship construction process. Quality and reliability problems seen on the early ships of the class are being systematically addressed by the shipbuilder and the Navy. Additionally, the Fleet has recognized the need for additional manning for each ship and training for the crews, which is being implemented. The above-listed corrections and improvements are already being realized in the later ships of the class, as evidenced by LPD 21's recent success during Final Contract Trials. The Navy recently discovered quality problems with repairs on various ships during Fleet maintenance availabilities. We are addressing these issues by providing additional government oversight to ensure strict compliance with all required maintenance and repair specifications and holding the contractor accountable to provide quality. Appendix C. LPD-17 Cost Growth and Construction Problems This appendix, along with Appendix B , provides details on cost growth and construction problems in the LPD-17 program. Cost Growth The Congressional Budget Office (CBO) testified in July 2007 that the first LPD-17 experienced cost growth of about 70% and is, on a per-ton basis, the most expensive amphibious ship ever built for the Navy. When LPD-17 procurement began, follow-on ships in the class were estimated to cost roughly $750 million each. Estimated procurement costs for the follow-on ships subsequently grew to figures between about $1,200 million and about $1,500 million. The Navy estimates the procurement cost of the 11 th ship at $2,040.6 million. A relatively small portion of the cost growth in the program since its inception is attributable to the decision to reduce the program's sustaining procurement rate from two ships per year to one ship per year. Most of the program's cost growth is attributable to other causes. Construction Problems Developments in 2005-2007 The first LPD-17, which was procured in FY1996, encountered a roughly two-year delay in design and construction. It was presented to the Navy for acceptance in late June 2005. A Navy inspection of the ship conducted June 27-July 1, 2005, found numerous construction deficiencies. The Navy accepted delivery of LPD-17 with about 1.1 million hours of construction work remaining to be done on the ship. This equated to about 8.7% of the total hours needed to build the ship, and (with material costs included) about 7% of the total cost to build the ship. The Navy accepted delivery of LPD-18 with about 400,000 hours of construction work remaining to be done on the ship. This equated to about 3.3% of the total hours needed to build the ship. The Navy accepted delivery of LPD-19 with about 45,000 hours of construction work remaining to be done on the ship. This equated to about 0.4% of the total hours needed to build the ship. The Navy stated that it accepted LPD-17 in incomplete condition for four reasons: It permitted the fleet to begin sooner the process of evaluating LPD-17 through operational use so as to identify problems with the LPD-17 class design that need to be fixed in follow-on LPD-17s. It avoided further delays in giving the LPD-17's crew an opportunity to conduct post-delivery tests and trial events that are intended to identify construction (as opposed to class design) problems with LPD-17 itself. It permitted LPD-17 to leave the shipyard sooner and thereby mitigated schedule and cost impacts on other ships being built at the shipyard (other LPD-17s, LHD-8, and DDG-51s) that would have resulted from having LPD-17 remain in the shipyard longer. It reduced the cost of the remaining construction work to be done on LPD-17 because the work in question could be performed by repair shipyards that charge lower rates for their work than the construction shipyard. Of the approximately $160 million in post-delivery work performed on LPD-17, $108 million was for the 1.1 million hours of construction work remaining to complete the ship. (The rest was for post-shakedown and other work that normally occurs after a ship is completed and delivered to the Navy.) This $160 million in work was funded through the post-delivery part of the outfitting/post-delivery (OF/PD) line item in the Shipbuilding and Conversion, Navy (SCN) account. Because OF/DP costs are not included in ship end cost, the reported end cost of LPD-17 will understate the ship's actual construction cost by $108 million. The Navy planned to fund post-delivery construction work on LPD-18 and LPD-19 through the completion of prior-year shipbuilding line item in the SCN account—a line item that is included in ship end cost. The Government Accountability Office (GAO) testified in July 2007 that: The Navy moved forward with ambitious schedules for constructing LPD 17 and [the Littoral Combat Ship] despite significant challenges in stabilizing the designs for these ships. As a result, construction work has been performed out of sequence and significant rework has been required, disrupting the optimal construction sequence and application of lessons learned for follow-on vessels in these programs. In the LPD 17 program, the Navy's reliance on an immature design tool led to problems that affected all aspects of the lead ship's design. Without a stable design, work was often delayed from early in the building cycle to later, during integration of the hull. Shipbuilders stated that doing the work at this stage could cost up to five times the original cost. The lead ship in the LPD class was delivered to the warfighter incomplete and with numerous mechanical failures, resulting in a lower than promised level of capability. These problems continue today—2 years after the Navy accepted delivery of LPD 17. Recent sea trials of the ship revealed problems with LPD 17's steering system, reverse osmosis units, shipwide area computing network, and electrical system, among other deficiencies. Navy inspectors noted that 138 of 943 ship spaces remained unfinished and identified a number of safety concerns related to personnel, equipment, ammunition, navigation, and flight activities. To date, the Navy has invested over $1.75 billion constructing LPD 17. LPD-17 was commissioned into service on January 14, 2006. In April 2007, it was reported that the first LPD-17 had thousands of construction deficiencies. In late June and early July 2007, it was reported that Secretary of the Navy Donald Winter had sent a letter to the chairman and chief executive officer of Northrop Grumman, Ronald Sugar, dated June 22, 2007, expressing deep concerns about NGSS's performance, particularly in connection with the LPD-17 program. According to these news reports, Winter's letter contained the following statements among others, although not necessarily in the order shown below: "I am deeply concerned about Northrop Grumman Ship Systems' (NGSS) ability to recover in the aftermath of Hurricane Katrina, particularly in regard to construction of LPD 17 Class vessels." "I am equally concerned about NGSS' ability to construct and deliver ships that conform to the quality standards maintained by the Navy and that adhere to the cost and schedule commitments agreed upon at the outset by both NGSS and the Navy." "... even prior to Katrina [NGSS's performance] was marginal, resulting in significant cost overruns that forces the Navy to take delivery of the LPD-17 with numerous outstanding deficiencies.... " "NGSS' inefficiency and mismanagement of LPD 17 put the Navy in an untenable position." "By taking delivery of ships with serious quality problems, the Fleet has suffered unacceptable delays in obtaining deployable assets. Twenty-three months after commissioning of LPD 17, the Navy still does not have a mission-capable ship." "These delays create further problems as work must be completed or redone by other shipyards that are not as familiar with the ship's design." "The Navy also took delivery of LPD-18 (USS New Orleans) in an incomplete fashion, albeit more complete than LPD-17." "... persistent shortcomings at the NGSS yards are troubling and causing me not only grave concern about the LPD program, but also the LHA and DDG-1000 programs." "The Navy does not wish to find itself in the same situation [with other ships that] it faces with LPD 17 & 18." "It is imperative that NGSS deliver future ships devoid of significant quality problems and that it meet its cost and schedule obligations." One press report stated: "'Continued, focused management' is necessary to successfully deliver the remainder of the class, according to Winter." "[Navy acquisition executive] Dr. [Delores] Etter will be closely monitoring metrics with NGSS and the acquisition team as we move forward." Sugar reportedly sent a reply letter to Winter dated June 29, 2007. According to one press report, Sugar stated in the letter: "I share your concern regarding the need to fully recover and improve our shipyards, and produce completed LPD 17 class vessels of the highest quality with increasing efficiency.... Irrespective of Hurricane Katrina, Northrop has much work to do to meet the needs of the U.S. Navy." Another press report stated: Northrop Grumman Corp (NOC) has "much more work to do" to improve its performance on Navy ships, but problems with a $13.6-billion amphibious ship program were not solely the contractor's making, Chief Executive Ron Sugar said in a June 29 letter. "The original acquisition strategy was changed after contract award, there was funding instability, limited early funding for critical vendor information, and the 'integrated' Navy/contractor design team produced constant design churn and thousands of design changes," Sugar wrote, responding to a tersely worded letter from Navy Secretary Donald Winter. Northrop "certainly had performance problems," but the unprecedented effects of Hurricane Katrina, which severely damaged Northrop's three shipyards in the Gulf region in August 2005, "only served to greatly exacerbate the situation...." Sugar said he shared Winter's concerns and vowed that Northrop would invest, train and manage its operations to produce Navy ships of the highest quality with increasing efficiency. "Irrespective of Hurricane Katrina, Northrop has much more work to do to meet the needs of the U.S. Navy." "We are not happy with this history," Sugar added in the letter obtained by Reuters, "but we are incorporating the lessons from this experience into our operational plans going forward for new ships in the design, planning and production stages." He noted that Navy recently praised Northrop's work on a destroyer that was damaged by Hurricane Katrina, and termed it "one of the best ships ever delivered." Sugar said Northrop officials had given the Navy a list of efforts under way to improve training, quality, processes, productivity and facilities at the Gulf Coast shipyards. He promised "substantial investment," but gave no details. He said Northrop was aggressively reworking schedules for delivery of all ships affected by the hurricane. "We know we must do our part," Sugar said. After working to overcome construction problems, Navy officials in late 2007 stated that they were "cautiously optimistic" that the LPD-17 construction effort is stabilizing. A December 24, 2007, press report stated: As the Navy gears up for the first deployment of the new San Antonio-class amphibious transport dock slated for next year, a senior service shipbuilding official is "cautiously optimistic" the once-beleaguered program is on track.... On Dec. 15, the Navy commissioned the third ship, the Mesa Verde, in Panama City, Fla. It was the first ship in the class to be delivered without significant problems. The San Antonio class faced difficulties beginning in late 1998, when the initial construction contract was awarded to Avondale Industries in New Orleans. Avondale beat out Litton Ingalls Shipbuilding primarily because it planned to use a new computer program to design the ships—the first time a Navy ship was designed entirety using computer tools. But the computer systems didn't work, the Navy kept making design changes, costs escalated and major delays ensued. Litton Ingalls bought Avondale in 1999, its owners mistakenly thinking they could fix the program, and in late 2000 the shipyards were acquired by Northrop Grumman. Meanwhile, a succession of service program managers and acquisition executives struggled to hold down the design changes and manage costs, which have more than doubled from the $750 million per ship the Navy forecast in the late 1990s. All those problems and more affected the first two ships of the class. The San Antonio was delivered, incomplete, in mid-2005. The Navy accepted the ship knowing it had numerous construction defects, many of which would need to be fixed at extra costs after the shipyard's obligation period ended. The next ship, the New Orleans, was delivered in December 2007, also with incomplete spaces. To make things more challenging, Hurricane Katrina had wreaked havoc on the New Orleans-based Avondale shipyard in 2005. Nevertheless, construction on the Mesa Verde, the third new ship, went more smoothly. The Mesa Verde was built at Northrop Grumman's Ingalls shipyard in Pascagoula, Miss.... The Mesa Verde "sets a new standard for the LPD class as far as being a complete ship," Capt. Beth Dexter, the Navy's supervisor of shipbuilding in Pascagoula, told Military Times in September. "My Navy team is proud to present it." Robert Work, a naval analyst at the Center for Strategic and Budgetary Assessments in Washington, said it looks like the LPD 17 program is pulling away from its "checkered past." He said it appears the program is "getting back on track" and that it will be exciting to see the first ship as it enters the fleet. American shipbuilders have historically had difficulties with lead ships, he said.... Stiller told Navy Times that after Hurricane Katrina the Navy re-established new milestones to measure the new ships' progress. So far, each ship under construction is meeting these marks, she said. "I believe we are turning the corner," Stiller said. In 2008, she said, she hopes the service and industry will be able to "not just meet but beat" these milestones. Developments in 2008 In August 2008, it was reported that the maiden deployment of LPD-17 was delayed by two days due to problems with a hydraulic system that controls the stern gate used to gain access to the ship's well deck. In August 2008, it was also reported that: Just under two years after the amphibious transport dock New Orleans [LPD-18] was delivered incomplete, the amphib still can't perform the central mission for which it was designed: Carrying Marines, their gear and their vehicles into battle, according to a recent report by the Navy's Board of Inspection and Survey, or InSurv. The San Diego-based New Orleans was "degraded" in its "ability to conduct sustained combat operations," and has a slew of other problems, according to the inspection, conducted Aug. 11-15. The report, obtained by Navy Times , paints the picture of a ship not only troubled by the same technical problems as its older sibling, the first-in-class gator San Antonio, but also with many of its own. "The ship cannot support embarked troops, cargo or landing craft," the report said. Navy engineers found "serious materials deficiencies in the well deck and vehicle stowage areas"; the well deck's ventilation fans didn't work; the vehicle ramps were inoperative; and berthing for Marines and the ships' crew was found to be unsatisfactory. Moreover, the ship's propulsion system was unreliable, causing a 10-hour delay before it could put to sea for its final contract trials. Much of its communications equipment didn't work. And when the ship tried to test its Rolling Airframe Missile launchers, both of them fired just one missile at their targets and then lost power, forcing crews to reset their computer systems. The New Orleans InSurv arrived just as the Norfolk, Va.-based San Antonio [LPD-17] is preparing to make its maiden deployment this week. That ship was delivered three years ago, also incomplete. Like the San Antonio, the New Orleans' electrical system had ship-wide problems, according to Navy inspectors: "Significant electrical and electronic cable plant installation deficiencies exist," Navy inspectors wrote, including "dead-ended cables, cables improperly bundled and banded, cables exceeding nesting capacity, inadequate packing of cables at watertight penetrations." The findings make for a total of three ships with widespread electrical problems that were built at Northrop Grumman's shipyards along the Gulf Coast: the first two San Antonios and the amphibious assault ship Makin Island [LHD-8]. Northrop Grumman announced earlier this year that it had to delay the delivery of the Makin Island by six months to fix its wiring problems. The company agreed to bear the roughly $360 million cost. Margaret Mitchell-Jones, a spokeswoman for Northrop Grumman, said the company did not comment on ships it has already delivered to the Navy, but in a written statement Tuesday, she said the San Antonio class was constantly improving: "While we don't comment on the capabilities of commissioned ships, we can say that with each LPD, we continue to make significant improvements in all areas and this includes the electrical systems. The latest LPD, Green Bay, will be delivered this week to the U.S. Navy and, from a material and systems standpoint, was more complete than any other LPD at acceptance trials. This is a testament to the benefits of series ship production and our ability to come down the learning curve resulting in greater efficiencies." In September 2008, it was reported that: After facing a bevy of negative survey results for the first two LPD-17-class ships, the Navy appears to be headed in the right direction, moving away from incomplete work and into serial production, a Navy official said. Earlier this year, the USS New Orleans (LPD-18) came under fire for a poor showing by the Navy's Board of Inspection and Survey (InSurv). Last year, the USS San Antonio (LPD-17), the lead ship of the new class of ambitious ships, suffered numerous issues with its InSurv report. The Navy took delivery of both the San Antonio and the New Orleans with a significant amount of work left to complete. About three years ago, the Navy was facing challenges with the construction schedule for LPD-17. Eventually, the Navy was forced to take delivery of the ship early because they had no money to complete the work, Allison Stiller, deputy assistant secretary of the Navy ships, told Defense Daily in a recent interview. "With LPD-18, we knew we were going to be in a similar situation financially ... that we were going to have to take delivery with a lot less incomplete," she said, although not nearly to the extent of LPD-17. As the Navy and Northrop Grumman [NOC] Ship Systems began work on the USS Mesa Verde (LPD-19), they began to believe that this ship, too, would have to be delivered incomplete. But the combined effort of the shipyard and the Navy helped deliver a completed ship, she added. LPD-19 wrapped up her shock trials, and the Navy is now compiling the date from the tests, Stiller added. "We saw what we expected to see. There were no surprises from the shock trial," she said. The USS Green Bay (LPD-20) was just delivered, and the follow-on ships are looking good, Stiller noted. Stiller acknowledges there were concerns about delivering finished LPDs. Until the Mesa Verde, Northrop Grumman had not delivered a completed LPD. "Certainly there are still challenges in getting the ship delivered, but we are in serial production," she said. "The yard is working hard at it. The ships are delivering. [We are] seeing reduced trial cards on everyone of them. That's the trend you want to see. It's good news to get into serial production, no doubt about it." In October 2008, it was reported that: The U.S. Navy's third and fourth San Antonio-class amphibious transport docks show a distinct improvement over the troubled first two ships in the class, inspectors have found. According to reports by the Navy's Board of Inspection and Survey, the third ship, Mesa Verde [LPD-19], was much more complete than its earlier siblings when it was accepted by the Navy Sept. 27, 2007. And in their report on the fourth ship, Green Bay [LPD-20], inspectors included something never seen before in an inspection report (referred to as an InSurv) about an LPD 17-class ship—a compliment. "Green Bay was found to be a highly capable and well built ship," they wrote. "The main spaces fit, finish and cleanliness were [satisfactory.]" To be sure, each InSurv still found many problems aboard each ship, and it concluded Mesa Verde was "degraded in its ability to conduct sustained combat operations," as was New Orleans. Overall, however, the two inspections seemed to reinforce statements by the Navy and shipbuilder Northrop Grumman that the San Antonio class is gradually improving after its initial misfires, according to a veteran skipper who examined the documents. The reports showed that overall build quality on Mesa Verde and Green Bay was much improved over San Antonio and New Orleans, and neither amphib seemed to have experienced as many problems with shipwide networks or electrical systems as the first two. Neither new ship had major problems with their propulsion systems, as the first two did. Other major problems from the San Antonio and New Orleans—including incomplete berthing spaces, broken gear in the galleys and medical spaces, and nonfunctioning weapons—didn't reoccur in Mesa Verde or Green Bay. Meanwhile, years of work have helped transform San Antonio from one of the Navy's most infamous ships into a fully functional member of the fleet, the ship's captain said. In a conference call with reporters Oct. 6, Cmdr. Kurt Kastner said San Antonio has had no major problems since it sailed in August from Norfolk as part of the Iwo Jima Expeditionary Strike Group. In November 2008, it was reported that: The troubled amphibious transport dock San Antonio—in the middle of its first deployment—has been forced to undergo two weeks of maintenance in Bahrain due to leaks in its lube oil piping system, Navy officials said. "They had a scheduled port visit," said Lt. Nate Christensen, spokesman for 5 th Fleet in Bahrain. "They're in port for two weeks for a maintenance availability on some lube oil deficiencies. It's related to the diesel generators." Pat Dolan, a spokeswoman at Naval Sea Systems Command, confirmed that the problem involved leaks in the system. The yard period began earlier this week, although the exact day was unavailable. It was also reported in November 2008 that: The leaks were discovered while the ship was conducting maritime security operations in the Persian Gulf, according to U.S. Naval Forces Central Command spokesman Lt. Nathan Christensen.... The leaks were first discovered Oct. 9 and a second incident on Oct. 17 prompted the need for a thorough inspection, Lt. Clay Doss, a Navy spokesman at the Pentagon told ITN [ Inside the Navy ] Nov. 6. "We are confident this issue is limited to LPD-17 only," Doss said. Later in November 2008, it was reported that: Experts who have examined the photos of major oil leaks aboard the amphibious transport dock San Antonio are calling the workmanship on the new amphib "sloppy," "unacceptable" and "criminal." One former chief engineer said any other CHENG [Chief of Engineering] in the Navy would be "thankful this wasn't their ship." But it is someone's ship, and despite the finger-pointing, experts say the Navy has a serious problem on its hands.... "The secretary has been briefed on the issue and has been getting periodic extended updates about the progress of the repairs," said Capt. Beci Brenton, spokeswoman for Navy Secretary Donald Winter. While the brass is watching and the shipbuilder defends its work and promises to make fixes, one question remains: How was this allowed to happen? And are other problems lurking? " I ' m fuming " Margaret Mitchell-Jones, spokeswoman for shipbuilder Northrop Grumman, defended the contractor's performance and said the company is taking "corrective actions." "The quality of our work is something we take very seriously, and we have a rigorous program in place that includes inspecting and evaluating our work to ensure it adheres to the Navy's requirements," she said in a statement. "When issues arise, we aggressively address them in an immediate and methodical way. Upon hearing there may be a problem with lube oil leaks on LPD 17, we immediately responded with technical staff to assist in the Navy's efforts and began our own in-house critique." She added that "we are proactively conducting a comprehensive review of our procedures, processes and policies surrounding the LPD-class ships currently under construction at our Gulf Coast shipyards. This effort includes the implementation of short-term corrective actions until, aligned with our customer, we fully determine the cause and need for any long-term corrective actions to ensure conformance and reinforce the commitment to quality we have in our work. We have invited and welcomed Navy participation throughout our own internal review process." On Capitol Hill, lawmakers also are taking notice. Josh Holly, a spokesman for the Republican side of the House Armed Services Committee, said members "continue to follow [San Antonio's] challenges. The seapower subcommittee is aware of the most recent issues, although the Navy has not briefed us yet." Rep. Joe Sestak, D-Pa., a former vice admiral, said after viewing the photos: "It looks like more of a systemic problem from when it was built." "The ones who suffer are the bluejackets," said Sestak, a member of the House Armed Services Committee and former top warfare requirements and programs officer for the Navy. Naval analyst and author Norman Polmar put it more bluntly. "It's criminal. It's criminal that the Navy accepted this ship," he said. "And this is two and a half years after the Navy accepted the ship. It's bad enough that it was delivered this way." Polmar said he thinks the San Antonio should be towed back to the shipyard. "As a taxpayer and as a naval analyst," he said, "I'm fuming."... Who ' s to blame? Those familiar with the situation do not blame the crew or Navy engineers for the problem, comparing it with the discovery of a flaw in your car's chassis during a road trip: You may have topped off the oil and filled the gas tank before you left, they say, but you can't be expected to examine work completed long ago, when the car was built at the auto plant. Even those responsible for ensuring the material condition of the fleet—the ultracritical Board of Inspection and Survey—do so under certain assumptions, one Navy source said. "Even InSurv wouldn't have found faulty welds," the Navy source said. Cmdr. Jensin Sommer, a spokeswoman for 2 nd Fleet, said her command "certifies units for deployment and for integrated training with carrier and expeditionary strike groups so they're ready for integrated operations." "That's a different type of readiness than material condition," she added. Pat Dolan, spokeswoman for Naval Sea Systems Command, said naval engineers declined a request to explain the damage because they refused to comment on photos that had not been officially released. The photos were posted on a blog and later authenticated by Dolan. She did say that when the ship pulled into Bahrain, it was greeted by a crew of more than 30 engineers, pipefitters and welders flown to Bahrain from the U.S. As of Nov. 13, there were no initial cost estimates and no available progress reports. "We're still looking at mid- to late November for the repairs to be completed," Dolan said. She added that engineers are conducting a "root-cause analysis" and the repair and ship crews are fixing the flaws, noting "some that require replacing whole sections of pipe." Earlier, Dolan said the oil leaks had not posed a danger to sailors working near them. Other problems lurking? Naval experts and engineers familiar with the San Antonio's history are concerned that if these welding problems went undiscovered until now, what other problems are waiting to pop up? Jan van Tol, a retired captain who commanded the amphibious assault ship Essex, said he had deployments during his career commanding three ships that were interrupted by major breakdowns, and that it's not unusual to have technical experts come aboard. But the size of the repair team and the nature of this casualty is notable, he said. "It surprises me to see oil leaking from such major points. I associate leaks with moving parts," he said. "What's unusual is the sheer number of people who are going out to address what appears to be a wider-ranging problem." Van Tol said he thinks any such flaw—if detected—would have prevented the ship's deployment. So how did the ship get as far as it did? "Are these systemic problems in one or more of the ship's systems and physical plant? If they are, that goes to the question of craftsmanship and why did the Navy accept the ship? Are there ship-wide problems of a similar nature of poor craftsmanship and quality assurance? Who made the decisions to allow it to reach this point?" he said. "It raises the question of supervision and oversight, both at the shipyard and on the Navy's side." He won't go as far as other critics, but he did say the situation "certainly doesn't look good." "It's imperative to take a harsh, harsh look at how they got to this place. The Navy really needs to learn some harsh lessons," he said. Those lessons may soon be in the syllabus. Sestak, the former three-star, has called for a hard look at the defense acquisition process since his arrival in Congress in 2007. He believes the problems aboard the San Antonio are a symptom of a larger institutional breakdown among the defense industry, the Pentagon and Congress. As a former commander in the fleet, he said he finds it hard to believe that the San Antonio could have been allowed to deploy if anyone knew these breakdowns were imminent. "I expected to be handed machines of war that had a certain level of readiness I then had to maintain. At times there were unexpected problems. Something could break. But I never expected to deploy with a machine of war, particularly a relatively new one, that had systemic problems that would take weeks at a time [to fix]," said Sestak, who commanded the George Washington Carrier Strike Group. "When it's something that appears systemic to the construction of the machine of war, we're giving short shrift to our warriors out there." He said operators preparing for deployment care about how the ship and the crew perform; it's not their job to inspect welds. Quality construction is supposed to be a given, something certified long before the ship is ever put into action. In pre-deployment certifications, "they're not looking inside the welds. They're looking at how it's operating at that moment," he said. Sestak said the LPD 17 class is just one weapon system among many with major problems. "I'd like to go back to 'What are the institutional processes that permitted this to happen?' That is where I'd like to go back to the sources and find out how this can be done better," he said. "I have proposed that we should have hearings on acquisition reform in the new session, with LPD 17 part of that." For Polmar, the naval analyst, the Navy's experience with the San Antonio is a scandal worthy of investigation. He compares it to the infamous Air Force tanker deal that sent an Air Force civilian and an industry executive to jail. Besides the money and shoddy product, Polmar said putting such a problematic ship to sea put sailors' lives at risk. "It's as big in some respects as the tanker deal because it's difficult to get to the truth of this," he said. "It's difficult to find out who accepted the ship. People went to jail and were fined in the tanker deal, and that's the minimum of what should happen here." What's particularly shocking, he said, are the repeated problems in such a new product. "We're talking about a warship," he said. "You can see how the oil is leaking through those welds. You may see that on a ship that is 20 or 30 years old, not a ship that's two or three years old." One naval historian, who asked not to be named because of his affiliations, was asked to think of another surface Navy program this problematic. "The only thing I'd compare it to are [the littoral combat ship] and DDG 1000," he said. "It just seems like the Navy can't get it right anymore." It was also reported later in November 2008 that: Navy Secretary Donald Winter said Monday [November 17] he "continues to be unsatisfied" with the performance of the amphibious transport dock San Antonio, which has been sidelined by emergency repairs since Oct. 31. But after a speech in which he described the need for accountability and a "culture of quality" for Navy acquisitions and its private-sector vendors, Winter did not commit to new changes or penalties for problems with the San Antonio and its follow-on siblings. "I continue to be unsatisfied with the performance there," Winter said. "We are continuing to look at it. It's a matter I'll be spending some time on over the next few weeks. We'll adopt an appropriate course of action ahead." Still later in November 2008, it was reported that: As the Navy continues to examine problems with the lube oil system on the USS San Antonio (LPD-17), the service is taking steps to ensure there are no similar issues with the remainder of the class of amphibious ships. A team of 30 maintenance personnel from Norfolk Naval Shipyard Mid Atlantic Regional Maintenance Center is in Bahrain, handling the repair work, which is focused on the main propulsion lube oil system, Capt. Bill Galinis, program manager LPD-17, told Defense Daily in a recent interview. Galinis said initial inspections found a couple of issues. One problem was improperly installed or missing pipe hangers. A second issue were welds that Galinis noted "were on the lower side of the acceptable criteria." In some cases, those welds didn't pass a visual inspection, he added. "Those items combined resulted in some cracked welds that we found. We believe it was fatigue failure," he added. "A lot of that analysis is still ongoing." As of earlier this week, repairs to the San Antonio were 50 percent complete and the work was expected to be wrapped up by mid to late November. The main propulsion lube oil system problem on LPD-17 has led to a class-wide review, a Navy source told Defense Daily . That review includes inspection of the weld quality and an examination of whether the number of pipe supports on LPD-18, -19, and -20 are sufficient. "We are doing engineering analysis and shipboard inspections," the source said. "That includes visual, radiological and dye penetration." The lube oil leaks occurred in the forward and aft machinery space, the source said. The inspections take place in two groups, one focusing on the welds and the other on the pipe hangers, Galinis said. Weld inspections in one of two machinery rooms have been completed on LPD-18, Galinis added. The results of that inspection show the welds are good, he noted. "The ship is underway right now. When she pulls back in here ... we'll do the second machinery room," Galinis said. "We also just completed the pipe hanger inspection, so we have a list of pipe hangers we need to add." The pipe hanger work likely will get done before LPD-18's deployment next year, he added. The inspections are not limited to the ships, however. Galinis added the Navy is also looking at the weld inspection techniques used in the shipyards. "We are doing that from a training aspect, looking at the weld criteria that is applied when you do a visual inspection ... how that's applied to ensure there is uniformity." "[We are] also taking an opportunity to go back and look at the processes that are in place in the shipyard, all the way from how the pipe is fabricated in the pipe shop and weld joints that are installed, and how the welding is done, to installation on the ship and the way the pipe gets 'hangered' on the ship," Galinis said. "If you follow that trend all the way, from material receipt, through the fabrication of pipe details, to the installation of the pipe on the ship, to the testing of the pipe and inspection of the welds and the installation of the system, if you follow that process all the way through, there are things along the way here that we certainly can improve on," he added. "And we are taking that opportunity to do this." Northrop Grumman [NOC] Ship Systems said the quality of its work is something the company takes very seriously. "We have a rigorous program in place that includes inspecting and evaluating our work to ensure it adheres to the Navy's requirements. When issues arise, we aggressively address them in an immediate and methodical way," Margaret Mitchell-Jones, a Northrop Grumman Shipbuilding spokeswoman, told Defense Daily . "Upon hearing there may be a problem with lube oil leaks on LPD-17, we immediately responded with technical staff to assist in the Navy's efforts and began our own in-house critique. We have put our best people in place to assist our customer and we are proactively conducting a comprehensive review of our procedures, processes and policies surrounding the LPD-class ships currently under construction at our Gulf Coast shipyards." Those efforts include the implementation of short-term corrective actions until, aligned with the Navy, Northrop Grumman determines the cause and need for any long-term corrective actions to ensure conformance and reinforce the commitment to quality the company has in its work, Mitchell-Jones added. "We have invited and welcomed Navy participation throughout our own internal review process." Northrop Grumman builds the San Antonio-class amphibious ships at both its Pascagoula, Miss., and New Orleans shipyards. The fourth ship of the class, LPD-20, was just delivered, Galinis said. LPD-21 through -25 are under construction, with LPD-22 and -24 being built at Pascagoula and LPD-21, -23, and -25 being built in New Orleans. The Navy just received funding for LPD-26 in the FY '09 defense bill. "We are in the process of putting together the RFP documents," Galinis said. Lessons learned from the lube oil leak on LPD-17 have been rolled into LDP-21, he added. Currently, LPD-21 is about to begin the process where its lube oil system is flushed, Galinis said. "Obviously lessons learned from [LPD]-17 were immediately applied to [LPD]-21 because that piping system, although it is installed and fully built, hasn't been completed with all the ... insulation, so it was very easy to take what we were seeing on [LPD]-17 and go back and look at [LPD]-21 ... look at the welds, look at where the pipe hangers are ... and in some cases, quite frankly even now, not all the pipe hangers are installed. So we are kind of still in that process." For the ships that have already been delivered, Galinis said there is a big focus on LPD-18, which is out on the West Coast and will deploy next year. LPD-19 is currently going through her (Post Shakedown Availability PSA) in Norfolk, Va., at BAE Systems. "We will do a weld and hanger inspection on her during the current PSA period she is in," Galinis said. The Navy is doing an inspection right now on LPD-20. Earlier this month, she was going through an engineering certification with her crew, Galinis said. "We didn't want to get into the machinery spaces while she was going through that inspection." That certification wrapped up last week, so the Navy is now going through the inspection on her, he added. "So far the results look pretty good, but we are still in that process." It was subsequently reported in November 2008 that: While it might appear that the Navy's San Antonio-class program is fraught with problems, the Navy and industry team have been able to drastically reduce the number of inspection trial cards and put in place construction practices to cut down on installation work and on cost, according to a Navy official. When the USS San Antonio (LPD-17) wrapped up her trials, the Navy's Board of Inspection and Survey (INSURV) wrote up just over 16,000 trial cards, Capt. Bill Galinis, LPD-17 program manager, told Defense Daily in a recent interview. In April 2007, LPD-17 went into BAE Systems' repair facility in Norfolk, Va., to fix the problems found by the inspection. The cost of Post Shakedown Authority (PSA) for the USS San Antonio was $36 million.... When the USS New Orleans (LPD-18) finished her trials earlier this year, the INSURV board wrote up just under 14,000 trial cards, Galinis noted. "When we delivered the ships, they were not quite finished," he said of both the San Antonio and New Orleans. "When we got to [LPD]-19, that's where we saw the big down shift. We had a little bit more than a 50 percent reduction from hull 2 to hull 3, and that was a step increase for us," Galinis said. "Same thing on Part 1 cards, where you went from 740 cards to 257 ... better than a 50 percent decrease from the second to third ship." Part 1 cards note deficiencies that would affect a mission area of the ship, such as defensive systems, the ability to get underway and embark Marines, Galinis said. Part 2 cards are material deficiencies that would not necessarily degrade a mission area, he added. By the time the USS Mesa Verde (LPD-20) underwent her INSURV inspection, the amount of Part 1 cards decreased almost 90 percent, Galinis said. "That's a real credit to the builder and the Navy team that's down there on site, where literally we go through and prepare a ship to go through the trial process," Galinis said. The first trial is conducted by the Navy's Supervisor of Ships (SUPSHIP). Galinis said they take the INSURV reports from the previous inspections and start from there. "As we go through the test sequence, we are looking at these deficiencies and making sure we are rolling those lessons in," he said. "The shipyard has a process where they do that, and the SUPSHIP does that as well." But it's difficult to roll in those lessons learned. That's because two different yards are building the LPD-17 class: Northrop Grumman [NOC] Ship Systems Pascagoula, Miss., facility and the company's shipyard in New Orleans. "Across the class, you don't get true learning because we are building ships in alternate facilities," Galinis said. "Although there is some part of the workforce that moves back and forth across the two shipyards." Another issue has been that the lessons learned from LPD-17 and -18 have been rolled into the follow-on ships out of sequence, Galinis said. "On [LPD]-19 and -20, a lot of these lessons learned were cut in... out of sequence. In other words, if you had to plan how you do the work, some of the changes as a result of some of these earlier INSURV trials were rolled into these follow ships probably not at the optimum time, if you had an opportunity to really plan it out," he said. "That's because if you take a look at how the ships stack up on top of one another, they were just that close in the construction sequence." Not being able to cut that work in, in sequence, affects not only the number of changes that can be cut in but also what it cost to do that work, Galinis added. That also affects the end cost of this ship in some cases because it takes more man hours to do that. Galinis said it is the three, two, one rule. "What would take you an hour to do in a unit would take you two hours to do when you stack that on, and when the ship goes into the water that task would take you three hours to do," he said. "So you can see as a ship gets closer to delivery it gets more expensive to do the same amount of work, because you close the ship down and are working in a much more confined space ... and it's more difficult to do the work. "That's why when I say we are cutting corrections in, out of sequence here, you don't generally get as much learning and the same leverage," Galinis added. What people will start to see on the USS New York (LPD-21) and the follow ships, however, is that a lot of this work is being done in sequence, Galinis said. "So we are able to sort of pan that in, and certainly with [LPD-] 22 and follow-on you will see even more of that." The other thing the Navy and Northrop Grumman have been able to do on these ships is to increase the amount of pre-outfit on the units, Galinis said. There are 210 units on a LPD-17-class ship. Those units are built in modules. What the Navy would like to try to do is get as much pre-outfitting done as they possibly can. "By installing piping systems, equipment, some machinery units, ventilation, electrical components, things of that nature ... on the earlier ships pre-outfitting has probably been in the 70 percent range. We are moving up into the 90 percent, or even better, on these later ships," Galinis said. "Going back to that three-two-one rule, we are doing a lot more of that work on the front end of the construction process at a lower cost. As we start to stack those units, there is less installation work to do on the back end. "The lessons learned in the items that were identified on the previous ships, that work is being done more efficiently, in sequence on [LPD-] 21 and follow, and we are also able, on [LPD-] 22 and follow, to pull that back further and include that as part of the pre-outfitting work that we do. We are increasing that amount of work as well." A November 2008 press report stated: Pentagon acquisition czar John Young last week criticized the welds on the Northrop Grumman-built San Antonio (LPD-17), but said it remains to be seen if current problems with the ship lie with the builder or with the Navy. The first-of-class amphibious transport dock ship San Antonio hit a snag recently during its much-anticipated first deployment. The ship is pierside in Manama, Bahrain, where leaks in the lube oil piping system are being investigated and ultimately repaired. "All the vessels of the class are being reinspected," Young said in a Nov. 20 breakfast meeting with reporters in Washington. "I think the Navy is doing the prudent thing to go back and look through the class." Yet, Allison Stiller, the deputy assistant secretary of the Navy for shipbuilding, told Inside the Navy Nov. 12 that the service believes the problems with the San Antonio are exclusive to that ship. "Right now the issues that we're experiencing on the lead ship [LPD-17], we believe are isolated to the lead ship," Stiller said in an interview in her Pentagon office. "We're still getting the data, but the indications are this is limited to the lead ship and, again, it's pipe hangers, welds or a combination, and we have to come through that analysis to understand what the problem is," she added. Young noted last week that the investigation is not complete and he does yet know the extent of the lube oil piping system problem. "In the lube oil area, the Navy is still doing an investigation," he said. "The initial results of this are somewhat concerning, and that is both industry and the Navy may have inspected these welds to a lesser standard than the Navy called for." Moreover, the acquisition chief argued Northrop Grumman, the shipbuilder, had higher-than-normal defect rates on some of the ship's welds, which could in turn have led to the current problems. "In the past, the company had defect rates over 30 percent or higher on high-temperature, high-pressure welding and even on rather simple drain pipe welding," Young said. "None of those are the lube oil system, which I don't know if we had excessive defect rates there." If the leaks are found to be the result of inadequate inspections by industry, and in turn, the Navy, the taxpayer should not foot the bill, Young argued. "The government should not be paying under cost-plus contracts, in any area of product delivery, for poor standard of performance where we have to pay extra cost to have it re-done," he said. "I think the defect rates on some of those high-temperature, high-pressure welds, drain-pipe welds were excessive and the government needs to find a different way to do business with industry in any sector where we get something that's totally anomalous to what would be reasonable commercial practice." Northrop has launched its own investigation into the problem, the company's president of shipbuilding told ITN [Inside the Navy] last week. "When we first heard of the specific set of issues on LPD-17, we immediately set up our own investigation, our own team, to try to understand what are the issues to the best of our ability to figure out. What are our processes, where are the gaps in our processes, do we have them, have we already addressed them?" Mike Petters said in a Nov. 17 interview in Newport News, VA. "We have worked cooperatively with the Navy, and we're providing whatever assistance they're asking for," he added. "I don't think we're actually doing any of the repairs ourselves. We have had people there to assist in some of the fact finding and to help diagnose what's going on." The shipyard is "conducting briefings and reviews throughout all Gulf Coast facilities of Northrop Grumman Shipbuilding to include all quality inspectors, pipewelders, and pipefitters," a company spokeswoman said Nov. 20. Moreover, Northrop is taking other measures to ensure its processes are working right, including: —Performing a comprehensive review of all documentation from LPD-17, focusing specifically on pipe and weld design, quality inspection requirements and procedures as well as procedural compliance to design specifications; —inspecting the piping system to verify the necessary support hangers have been installed; and —performing inspections—in conjunction with the Navy—of the pipe systems on LPD-20 to ensure all weld standards are compliant before the ship leaves the yard in New Orleans. Developments in 2009 An August 2009 news report stated that: "The program manager for amphibious assault ships pledged a 'redoubling of efforts' in quality assurance of new LPD-17 amphibious assault ships after the lead ship in the class suffered a series of setbacks ranging from welding deficiencies to a delayed first deployment." A December 2009 report from the Department of Defense Director of Operational Test & Evaluation (DOT&E) provided the following assessment of the LPD-17 program: The following are DOT&E's observations and assessments based on testing completed to date: • LPD-17 is able to meet its amphibious lift requirements for landing force vehicles, cargo, personnel, fuel, hangar space, well-deck capacity, and flight-deck landing areas. • Reliability problems related to well deck ramps, ventilation, bridge crane, and Cargo Ammunition Magazine (CAM) elevators detracts from mission accomplishment and reduces amphibious warfare suitability. • The engineering plant, as designed, is effective and met its mobility (speed, endurance) requirements. • Reliability problems associated with the Engineering Control System (ECS), including frequent failures and high false alarm rates, and the electrical distribution system, including unexplained loss of service generators and the uncommanded opening of breakers, revealed shortfalls in manning and training to support sustained manual operation of the plant. • The Navy's Board of Inspection and Survey (INSURV) identified similar deficiencies in identical areas (propulsion, auxiliaries, electrical, damage control, deck) during both acceptance and final contract trials across all four of the first ships of the class. Catastrophic casualties recorded prior to the Full Ship Shock Trial in LPD-19 and during LPD-17's deployment revealed serious fabrication and production deficiencies in the main lube oil service system. • The ship is capable of supporting Command, Control, Communications, Computers, and Intelligence requirements in an ESG [expeditionary strike group] environment; however, reliability problems with the SWAN and the Interior Voice Communications System degrade command and control and are single points of failure during operations. • The Navy still needs to validate critical Information Exchange Requirements and pursue a formal Information Support Plan to support a Joint Interoperability Certification. • The LPD-17 exhibited difficulty defending itself against several widely proliferated threats, primarily due to: —Persistent SSDS Mk 2-based system engineering deficiencies —The ship's RAM system provided the only hard kill capability, preventing layered air defense —Problems associated with SPS-48E and SPQ-9B radar performance against certain Anti-Ship Cruise Missile attack profiles —Degraded situational awareness due to Mk 46 Gun Weapon System console configuration • LPD-17 failed to satisfy its reliability requirement during the first five hours of an amphibious assault and its total ship availability requirement during IOT&E. • The survivability of the San Antonio class ships appear to be improved over the LPD class ships they will replace. However, problems encountered with critical systems during testing (particularly with the electrical distribution, chilled water, SWAN, and ECS) and difficulty recovering mission capability may offset some of the survivability improvements and have highlighted serious reliability shortcomings. Developments in 2010 An early January 2010 news report stated: The amphibious transport dock New York has suffered a mechanical failure and can't get underway, Navy Times has learned. Engineers are investigating whether the ship's problems will affect its San Antonio-class siblings, several of which have struggled since joining the fleet. Inspectors discovered problems with the bearings on the New York's diesel engines during an assessment while the ship was at sea, but it was able to return to its dock at Naval Station Norfolk, Va., under its own power, said Lt. Cmdr. Herb Josey, a spokesman for Naval Surface Force Atlantic. Bearings hold a ship's engines and vital propulsion gear in place. The broken ones aboard the New York are still under warranty and will be repaired by its builder, Northrop Grumman, Josey said. Northrop Grumman spokeswoman Margaret Mitchell-Jones issued this statement: "Northrop Grumman is supporting the Navy in their analysis of this situation, however we defer any additional comment on commissioned ships to the Navy." The New York—which enjoys international fame for the 7.5 tons of steel from the wreckage of the World Trade Center built into its bow stem—was commissioned with national fanfare Nov. 7 in its namesake city. Since then it has been doing at-sea tests and inspections, including the week-long "diesel baseline assessment" that revealed its failed bearings, Josey said.... New York sailors told Navy Times in November before the ship's commissioning they were working out their own bugs in their new ship; for example, New York's helmsmen had gotten used to piloting it manually because its fiber-optic control network tended to blink out. Later in January 2010, it was reported that: A fresh set of problems with the long-troubled LPD 17 San Antonioclass amphibious ships has sidelined two of the vessels, led the U.S. Navy and its largest shipbuilder into a passionate game of finger-pointing, and raised questions about Northrop Grumman's ability to deliver quality work and the Navy's ability to carry out proper shipyard oversight. The larger issues are coming from two core problems discovered aboard the LPD 17s, five of which are in service with four still to come. Of more immediate importance is a problem that, left untreated, could wreck the four large diesel engines that drive the ships. The problem is not new but, having once thought a solution was at hand, the Navy and Northrop are once again trying to figure out why a fix hasn't been found. Another issue, affecting all the ships in the class and other ships built at Northrop's Gulf Coast shipyards, could—unless it's fixed—shorten the service lives of all the ships. But how and why that problem arose could drive closer to the competence of Northrop and the Navy's inspectors to properly inspect weld work. The Lube Oil Problem Engineers are trying to figure out how debris—"contaminants" in engineer-speak—is getting into lube oil in the large diesel engines that drive the ships. The contaminants cause excessive wear on bearings that support a crankshaft at the bottom of each engine. If the problem isn't treated, the crankshaft will be thrown out of line and the engine could suffer serious damage or even be wrecked. The problem isn't new, the Navy said, and showed up about a year ago in the third and fourth ships of the class. "We thought we had it licked," Jay Stefany, the Navy's program manager for the LPD 17 program, told reporters Jan. 21. "And that's where we were until right before Christmas." That's when the newest ship in the class, the USS New York (LPD 21), reported a bent crankshaft in one of the four diesel engines that drive the ship. Engineers found that the shaft was thrown out of alignment by scratches being made in the inner ring of the nine bearings that support the shaft—scratches that caused enough of a difference in the thickness of the bearings to make the shaft wobble. The scratches are caused by particles too small to see—much of them between 20 and 40 microns wide, or about .00118 of an inch, according to Stefany. Such particles are found in all engines, but there are unofficial reports that the particles causing the latest problems are coming from shipyard work: slag from welding waste and grit from sand blasting. The problems on the New York showed up in late November, after the ship returned to its base at Norfolk, Va. The ship, commissioned on Nov. 7 during an emotional and highly publicized ceremony at New York City, was widely proclaimed by Northrop as one of the best ships it had ever built, particularly because of its symbolism of the Sept. 11, 2001, terrorist attacks on the World Trade Center—steel from which was used in forging the ship's prow. Stefany said the problems were a recurrence of similar issues discovered about a year ago on the Mesa Verde (LPD 19) and Green Bay (LPD 20). "The ships were down for a number of months," he said, and stainless steel shavings were discovered in the lube oil. The problem was not with the Colt-Pielstick PC2.5 STC engines made by Fairbanks Morse Engine, he said, but changes were made in the piping between the engine and a strainer meant to catch contaminants. A new process to flush out the engines was also created and made standard. The ships subsequently reported no problems. The two earlier ships of the class, San Antonio (LPD 17) and New Orleans (LPD 18), also reported their engines were fine. More Examinations But with the new problems on the New York, the ships were examined again. Three of the ships were OK, but the San Antonio found contaminants in three of the four engines. The amphib is now at a shipyard in Norfolk awaiting repairs. The New York is also at Norfolk, where repairs are being made to the crankshaft bearings. Replacement of the bent crankshaft, however, will have to wait for a more extensive shipyard period this spring. Engineers working for the Naval Sea Systems Command (NAVSEA), Northrop Grumman and Fairbanks Morse are deeply perplexed by the problem, and a design review meeting is to begin Jan. 26 in New Orleans, bringing together all the principals along with the fleet to discover the cause and come up with a permanent solution. The fleet also is looking into the problem. Early in December, Adm. John Harvey, commander of Fleet Forces Command, ordered Rear Adm. Michelle Howard, commander of Expeditionary Strike Group Two, to begin a Manual of the Judge Advocate General investigation, or JAGMAN, of the problem. The effort reportedly is being led by NAVSEA's Rear Adm. Tom Eccles, the Navy's chief engineer. The investigation is focused primarily on the San Antonio and not the New York, which has yet to transfer to fleet operational control. The lube oil problem is the latest embarrassment to hit the LPD 17 program, which has suffered a string of well-publicized snags and setbacks almost since the initial construction contract was awarded in 1998. Workmanship problems and bad luck have followed some of the ships even after they entered service—on its long-delayed first deployment in fall 2008, the San Antonio was forced to remain at Bahrain for more than a month to repair weld leaks in the main propulsion lube oil system. The vexing lube oil problem on the ships is causing nerves to be frayed all around. The engines themselves are slightly modified versions of a tried-and-true model that is in wide use on ships and ashore, and has powered the Navy's LSD 41 Whidbey Island-class amphibious ships since the 1980s. Unsubstantiated charges range from shipyard sloppiness by Northrop Grumman or smaller yards that carry out overhauls to inadequate training of sailors who oversee the operation of the automated engine rooms. There is also the possibility that the fixes identified a year ago simply haven't all been made, said one key engineer. "Replacing that section of piping from the filter to the intake, that was the main fix," said Lee Graeber, vice president of engineering at Fairbanks Morse and a former NAVSEA engineer. That effort, he said, "is still going on." And while "dirty lube oil is still the prime suspect for the bearing failures," Graeber feels the bent shaft "was due to engine operation while the bearing on that engine was failing or in the process of failing." Turning off the engine, he said, would avoid such damage. Contaminants are found in all diesel engines, Graeber said. "They can be created by the combustion process in the engine itself—part of the lube oil filter process is to wash them out. Normally a diesel plant would have several lube oil purifiers that would take these out, and that also is being investigated—whether there are enough purifiers and they are of sufficient size and capacity." Virtually everything having to do with the engine and the design of the oil lubrication system will be examined at the design review, sources said, including design, welding, construction and maintenance procedures and other equipment. "They're trying to figure out what's wrong with the damn system," said one exasperated official. "Everybody could raise their hand." And while the New York is undergoing repairs, work on the San Antonio is on hold pending conclusion of the JAGMAN investigation. The Weld Problem A more widespread problem that came to light during the 2008 Bahrain repairs on the San Antonio has to do with substandard welds on pipe joints on ships delivered by Northrop's Gulf Coast yards at Avondale, New Orleans, and Ingalls, Pascagoula, Miss. The thickness of many welds, Stefany said, is too thin, meeting commercial but not military specifications. A design that featured too few hangars that hold pipes in place led to excessive vibration of the pipes on the San Antonio, causing the welds to fail. The welds would not have failed were there enough hangars, Stefany pointed out. Changes were made to the ship's design and more hangars were added in all the ships. The next ship to be commissioned, the San Diego (LPD 22), will "have the right hangaring from the beginning," he said. As a result of the problems, all Navy ships under construction at Northrop Grumman were reinspected for weld problems. "We found a higher-than-expected failure rate on quality of the thickness of the welds," Stefany said. The issue was not that, properly hangared, the welds would soon fail in service. Rather, Stefany said, the welds are "critical for shock survivability and for service life. You need [the thicker weld] dimensions to guarantee that." As a result, he said, a ship designed for a service life of 40 years might only make it to 30. "It's not as catastrophic [as the lube oil problem] but we're working it," Stefany said. "It's not as in-your-face as the engines are—basically it's just putting more welding material on." Throughout the summer of 2009, Northrop Grumman and the Supervisor of Shipbuilding (SUPSHIP) at Pascagoula reinspected all welds on all ships. All pipe welders were decertified and forced to go through retraining, Stefany said. "At the same time we retrained the shipbuilders, we retrained the SUPSHIP guys," he added. Delivery of the destroyer Dewey was delayed so fixes could be made, and Northrop sent a contingent of engineers to California aboard the new assault ship Makin Island to ensure the quality of repair work and carry out repairs if needed. While pipe weld problems were found on all the Navy ships under construction at Ingalls and Avondale, the Coast Guard's National Security Cutters (NSC) being built at Ingalls apparently evaded the worst of the issue. "The Coast Guard has not experienced any significant piping issues on its National Security Cutters," spokeswoman Laura Williams said Jan. 22. Some "piping discrepancies" were found and corrected on the second NSC, she said, adding that the first NSC, the Bertholf, "has not experienced any problems, but we are finishing follow up welding inspections to make sure any potential discrepancies are addressed." The ability of Northrop Grumman and SUSHIP to properly carry out weld inspections has also come into question because of the pipe weld problem. Reversing a chronic shortage of oversight personnel has been a major pledge of Navy officials over the past three years. "Last year we saw a marked improvement in the ability of SUPSHIP to hire people," said a Navy official. "But we're going to have issues that come to light. The issues we're talking about go back long before we were able to hire people." It was also reported at this time that: The Navy's top civilian acquisition official said he was confident in shipbuilder Northrop Grumman's "commitment to delivering quality ships to the Navy" even after the Navy announced last week that all Northrop's warships built on the Gulf Coast were being re-inspected for faulty welds. "In the rare instance where an issue like this arises, the Navy and industry have always worked together toward a quick and effective resolution. This remains the case today," said Sean Stackley, the assistant secretary of the Navy for research, development and acquisition, in a statement released Monday. "At no time did the weaknesses that were discovered endanger the safety of the crews, and the Navy has determined that existing welds are satisfactory for current ship operation. We have worked hard to ensure all ships meet or exceed fleet standards, and are reliable and combat ready assets. Plans are in place for inspections and required repairs to all affected ships during their normal industrial availabilities, with many already in progress." Stackley's statement was the first public comment from the Navy Department's leadership on the Jan. 21 announcement by Naval Sea Systems Command about the weld problems. Last week, a spokeswoman for Navy Secretary Ray Mabus referred questions to Stackley's office. Still, Stackley's statement did not answer the pressing questions raised by NavSea's announcement: How many warships—including destroyers and small- and large-deck amphibs—are potentially affected by the faulty welds? How or why did Navy inspectors sign off on out-of-spec welds that were discovered later on? How many of Northrop's welders and inspectors, and Navy inspectors, had to be decertified and recertified to work on ships after the problems were discovered? Who will pay for repairs? A spokesman for Stackley and a spokesman for NavSea's Supervisor of Shipbuilding both deferred those questions to NavSea. Navy Times has asked for answers and for comment from NavSea's senior leadership, but had not received a response by Monday morning. NavSea spokeswoman Monica McCoy did issue a statement Friday [January 22] about related problems with the San Antonio class of amphibious ships, blaming them in part on high labor turnover caused by the aftermath of Hurricane Katrina. Northrop Grumman also has blamed hurricane-caused worker problems for the heavy re-work necessary aboard the amphibious assault ship Makin Island. On July 1, 2010, the Navy released a 62-page report on its investigation of diesel engine and related maintenance and quality assurance issues on the San Antonio (LPD-17). The Navy released the document to reporters who had requested it through the Freedom of Information Act. The Navy provided a copy of the report to CRS on July 2, 2010. The report is dated January 10, 2010, and includes at the end an additional six-page "final endorsement" memorandum dated May 20, 2010. The final endorsement memorandum states in part: The investigation identified inadequate workmanship combined with a lack of quality control during new construction as the major causes of the damage. The investigation further identified shortcomings in ship design, systems integration, training, and ship's force management of critical engineering programs…. Numerous unacceptable conditions coalesced aboard USS SAN ANTONIO to produce the ship's significant engineering problems. Inadequate Government oversight during the construction process failed to prevent or identify as a problem the lack of cleanliness and quality assurance that resulted in contamination of closed systems. Material challenges with this ship and other ships of the class continue to negatively impact Fleet operations. Failures in the acquisition process, maintenance, training, and execution of shipboard programs all share in the responsibility for these engineering casualties….. COMVAVSEASYSCOM [Commander, Naval Sea Systems Command] has taken action… to remedy the matters under his cognizance, including change to system design, process improvement, greater government oversight during construction, and consideration of a contractual remedy with the builder. USS SAN ANTONIO, its ISIC [Immediate Superior in Command] (Amphibious Squadron SIX), and COMNAVSURFLANT [Commander, Naval Surface Force Atlantic] have also begun taking action to correct deficiencies under their cognizance. A July 1, 2010, press report states: Although New York has at least been able to get underway using three of its four main diesel engines, San Antonio is laid up in a Norfolk, Va. dry dock until August or September. Engineers not only are repairing its lube oil systems, they're attempting a first-of-its kind repair job on a bent crankshaft, cutting their way through the ship's decks to get to its machinery spaces…. Margaret Mitchell-Jones, a spokeswoman for Northrop Grumman, issued a written statement: "The report's findings support many of the findings from the industry/Navy technical team investigation into the bearing damage on the LPD main propulsion diesel engines this spring, resulting in a corrective action plan with recommended actions which are already in process. Northrop Grumman has aggressively prosecuted the issues and we are focused on corrective actions and moving forward." Rear Adm. Dave Thomas, commander of Naval Surface Force Atlantic, told reporters it was too early to tell how San Antonio's repairs would affect deployments for the rest of the fleet. He also said engineers were using the lessons of San Antonio to make repairs to the lube oil systems in the rest of the ships in the class. Thomas deferred questions about the report's recommendation for "a bottom up, top down review of [the Supervisor of Shipbuilding's] Gulf Coast quality control process," to Naval Sea Systems Command. A spokeswoman for NAVSEA had no response Thursday. A July 6, 2010, press report states: The Navy has full confidence in the Supervisors of Shipbuilding (SUPSHIPs), a NAVSEA spokeswoman says following the release of the JAGMAN report on LPD-17 last week. "SUPSHIP Gulf Coast (SSGC) identified a number of deficient welds on piping systems produced by Northrop Grumman Shipbuilding (NGSB) on LPD-17 after her delivery, and on other classes of ships in the Gulf Coast." While all shipbuilding defects identified are required to be corrected, the Navy has also formally requested Northrop Grumman Shipbuilding (NGSB) address and correct their process problems associated with each specific defect, the spokeswoman adds. "The Navy continues to closely monitor the progress being made by NGSB. NGSB is correcting their affected welding processes and SSGC has increased surveillances of welding and other critical processes."… "The SUPSHIPs have further strengthened government oversight by way of increased shipbuilder process compliance evaluations and audits of the shipbuilders' Quality Management System as added assurance that the final shipbuilding product is compliant to contract requirements," the NAVSEA spokeswoman says. On July 28, 2010, the Navy testified that the fourth LPD-17 class ship, Green Bay (LPD-20), had experienced problems with engine contaminants. Vice Admiral Kevin McCoy, the Commander of the Naval Sea Systems Command (NAVSEA), stated that: Earlier this spring Green Bay entered a post shake down availability following—following new construction trials. During that time frame, we elected to install system modifications that we determined coming out of the—the San Antonio investigation and other issues with main propulsion diesel engines on LP[D]-17 class. We changed the filtering system. We also did some piping changes between the final strainer and the engine to eliminate socket welds, and install butt welds so that we—we didn't have possibly contaminants and—and—and—and hideout places for contaminants in the system. Towards the—we also did a number of piping inspections and piping repairs due to inadequate fillet welds during the new construction process. Towards the end of that PSA—post-shakedown availability—we determined significant foreign material in the steering system that had fouled the rams (ph) and caused galling—or the steering ram (ph). And we had to go cut the deck and replace the ram (ph) which made that PSA go long, which pushed the downstream schedule. That has been repaired. The ship has been back out. Completed final contract trials last week. And we expect the ship to take its place in a regular fleet rotation from there on, sir. An October 1, 2010, press report stated: The troubles of the USS San Antonio, first of a large class of amphibious transport ships, haven't quite come to an end yet; the Navy and its engineers are continuing to find and fix a host of problems plaguing the 25,000-ton ship. Earlier this year, engineers searching for the cause of vibrations in the drive train discovered that imperfections in the way the ship's engines and main reduction gears were installed were threatening to eventually wreck the vessel. "The foundation bolts were not properly aligned or tightened. The main reduction gear was not properly installed and checked out," Adm. John Harvey, commander of Fleet Forces Command, said in a Sept. 20 interview at his headquarters in Norfolk, Va. "There was vibration of the entire diesel which was reflected through the crankshaft, down to the couplings with the reduction gear, to the shaft," Harvey said. "And you're trying to figure out where this thing …" he said, pausing. "Over time on that ship we had tremendous alignment problems within the drive train and within the diesel." The problems are being fixed, along with other issues on the San Antonio, during a shipyard period in Norfolk that has grown from a planned four or five months to eleven or more, and risen in cost from about $5 million to $39 million. The final bill will be higher still, when all the work is factored in. Harvey, who is charged with getting the Navy's ships ready for sea, last fall ordered a Judge Advocate General (JAGMAN) investigation into the situation aboard the San Antonio, prompted by continuing problems with the engines. The report, completed in January, concluded a host of issues contributed to problems on the ship, including inadequate workmanship, poor quality control during construction, shortcomings in the ship's design, and problems with the crew's management of engineering troubles. Even before the JAGMAN, problems had come to light involving bad electrical wiring installation, poor welds, and microscopic crud getting into the lubrication oil system of the ship's diesel engines. The latest problems to be revealed came to light after the investigation. The San Antonio entered Earl Industries' shipyard in Norfolk in December for a scheduled overhaul. "We went to ground zero with the ship" in an effort to get at the root of the problems, Harvey said. "Every time we think we get to a point where we think that problem is solved, we find some deeper one," he added with exasperation. Naval Sea Systems Command is continuing to work to fix the ship. "We wanted to try and get over the hump of incremental discovery," Rear Adm. Jim McManamon, NAVSEA's vice commander of the surface warfare directorate, said in a Sept. 30 phone interview. "To do it right, we're taking a very deliberate approach to really go after each of these bolts." Each engine contained 126 "fitted" bolts—shaped to fit individual holes—and two longer bolts, McManamon said. All the bolts on each of the San Antonio's four main engines were removed, inspected and replaced, he said, along with 32 bolts on each of the two main reduction gears, which transfer power from the diesels to the propeller shafts. "We're doing the full Monty on it," he said. The bolts don't have to be off by much to cause a problem. "We're talking about thousandths of an inch here," said John Hartranft, NAVSEA's director of the combustion engines branch. "We're dealing with very tight tolerances," he said, yet enough to allow the engine block to move or flex. Similar problems have been found on the second ship in the class, the New Orleans, and to a lesser extent on the third ship, the Mesa Verde. The bolts on the fourth ship, the Green Bay, were "much better," McManamon said, and about four bolts needed replacement on the New York, the fifth ship. The New Orleans will enter a shipyard at its homeport of San Diego in early November, for a planned 12-week overhaul. McManamon hopes the work can be done in that time, although he acknowledged it may take longer. Meanwhile, the San Antonio moved Sept. 10 from the shipyard at Earl to the main base at Norfolk, although the repairs are not yet complete. NAVSEA hopes to begin machinery trials in November, but with the coming holidays the overhaul isn't expected to be complete until after the first of the new year. Harvey was at a loss to explain how the problems came to be on the San Antonio, built by Northrop Grumman's shipyards at Avondale, La., and Pascagoula, Miss., and delivered to the Navy in August 2005 after a protracted and troubled fitting-out period. "I know they can build good ships; they can do it," he said. That engines could be installed improperly is "incomprehensible," he said. "A, that it would pass an internal quality check that way, and then B, that it would pass through the Navy's quality control that way." "I think we were so focused on getting that ship into service," he said of the frustrations of getting the ship completed, "that we rolled over a lot of issues." An October 2, 2010, press report stated: The latest round of repairs aboard the Norfolk-based amphibious ship San Antonio will run the Navy at least $39 million, far more than the $7 million officials originally estimated, the service said Friday. The San Antonio, commissioned in 2005, has been under continuous repair since December [2009]. The work initially was slated to wrap up by May [2010]. That's now been pushed back to spring 2011, when the ship is scheduled for sea trials, said Chris Johnson, a spokesman for Naval Sea Systems Command in Washington. "The reason we've lengthened that time is that we want to make sure we're finding all the root causes behind the problems before we send her back out to sea again," Johnson said. "We want to be sure we get this right."… The Navy has declined to disclose how much it has spent fixing the ship since its commissioning. An October 11, 2010, press report stated that, according to the officer who heads the Navy's amphibious warfare branch, 16 of 30 material problems found on LPD-17 class ships have been solved, and the Navy is working to solve the other 14. According to the report, the officer said that "investigators found the problems arose in part because the Navy has planned to rely on contractors who provided commercial off-the-shelf equipment for training, but given financial pressures, funding for the training was cut." The officer, according to the report, said that the Navy plans to have the needed training schools and classes fully implemented by 2014. An October 14, 2010, press report stated: The amphibious transport ship San Antonio, sidelined all year for repairs to the engineering plant, will miss a scheduled deployment next year in order to complete the work, Fleet Forces Command said in a statement released late Thursday [October 13]. San Antonio's sister ship, Mesa Verde, which returned in August from a seven-month, 35,000-mile deployment to the Persian Gulf, will take the San Antonio's place and deploy next summer with the Bataan Amphibious Ready Group, USFF said. Problems have plagued the San Antonio since the ship was delivered in August 2005 from Northrop Grumman Shipbuilding. Although similar issues have, to varying degrees, affected follow-on ships in the class, the San Antonio, first in its class, has consistently been a problem ship—a fact the Navy acknowledged when it accepted the vessel after a prolonged fitting-out period. The Navy and Northrop have long grown exasperated in trying to manage and deal with the ship's problems, which have included poor electrical wiring installations, bad welds, a dysfunctional engine control system and faulty hydraulics in the stern door. A persistent problem cropped up on all the ships of the class with contaminants in the engine lube-oil system. Earlier this year, while the San Antonio was undergoing an overhaul at Earl Industries in Norfolk, Va., engineers investigating the root cause of vibrations in the drive train—the engines, reduction gears and propeller shafts that drive the ship—discovered that bolts in the foundations of the diesel engines and the main reduction gears were improperly installed. If not fixed, officials said, the vibrations could eventually wreck the propulsion system. Over the ship's career, Navy inspectors also have cited the crew for poor maintenance procedures, and criticized training programs for insufficient instructions on how to operate the ship's systems. Last fall, Adm. John Harvey, head of Fleet Forces Command, ordered a Judge Advocate General investigation, known as a JAGMAN, to be carried out to get to the root of the San Antonio's problems. The investigation, completed in January, concluded that a host of issues contributed to problems on the ship, including inadequate workmanship, poor quality control during construction, shortcomings in the ship's design, and problems with the crew's management of engineering troubles. The ship completed her only fleet deployment in March 2009. The overhaul at Norfolk begun early this year was expected to take about four or five months and cost $5 million. But largely due to the engine foundation problems, the work is now expected to take about 11 months and the cost has risen to at least $39 million, according to the Naval Sea Systems Command. The final bill will be higher when all the work is factored in. But Harvey and NAVSEA seem determined to fix as many problems as possible during the current work package. "We went to ground zero with the ship," Harvey said in September. "We wanted to try and get over the hump of incremental discovery," Rear Adm. Jim McManamon, NAVSEA's vice commander of the surface warfare directorate, said Sept. 30 during a phone interview. "To do it right, we're taking a very deliberate approach." The Navy is working "to ensure that USS San Antonio returns to the fleet as a fully operational and deployable platform, and that the Navy has given her crew the proper tools and training necessary to use San Antonio to its fullest capability," USFF said in the statement. "San Antonio will deploy when it is operationally sound and ready to go," Harvey said in the statement. Navy officials said they were not aware of any new problems that have caused the ship to miss next year's deployment. Rather, they say, the delay is due to the year-long overhaul. Even though the repair work is continuing, the ship moved Sept. 10 from the shipyard to Naval Station Norfolk, Va., where she remains. NAVSEA officials expect the work to be finished about mid-January, after which the ship will need to go through a lengthy period of recertifications and crew training to return her to operational effectiveness. Mesa Verde is the third ship in the San Antonio class, and is considered by the Navy and Northrop to have been delivered in much better shape than the San Antonio and the second ship, New Orleans. Commissioned in late 2007, she carried out a cruise to South America before conducting a full deployment with the Nassau Amphibious Ready Group that began in January with disaster relief work in earthquake-stricken Haiti. An October 28, 2010, press report states: Northrop Grumman Corp.'s $1.68 billion amphibious warship, designed to transport Marines close to shore, wouldn't be effective in combat and couldn't operate reliably after being hit by enemy fire, according to the Department of Defense's top testing official. The San Antonio-class vessel's critical systems, such as electrical distribution, ship-wide fiber optics and voice-communications networks, aren't reliable, according to Michael Gilmore, the Defense Department's director of operational test and evaluation. The ship's armaments can't effectively defend against the most modern anti-ship weapons, Gilmore said. The ship is capable of operating "in a benign environment," Gilmore said in an e-mail to Bloomberg News outlining the unclassified summary of a classified report sent to Congress in June. The vessel is "not effective, suitable and not survivable in a combat situation," he said…. Northrop spokesman Randy Belote referred questions about the department's test report to the Navy, which said it's aware of the reported deficiencies and is making corrections that will be tested next year. "The majority of corrective actions have been implemented across the class and other corrections are in process," Navy spokeswoman Lieutenant Callie Ferrari said in an e-mail. "It would be inappropriate to comment on the specifics."… "Survivability" for the San Antonio means the degree to which the vessel "is able to avoid or withstand" an attack "without sustaining an impairment" of its ability to accomplish a combat mission, [Gilmore] said. His conclusion that the San Antonio is "not survivable" doesn't mean, however, that the hull and structure can't withstand a blow from an anti-ship missile due to inherent weaknesses, Gilmore said. In fact, the Northrop ship's hull construction is "improved" in comparison with the four classes of ships it will replace, he said…. Gilmore's conclusions are based on an assessment of data compiled in combat testing the Navy completed late last year, "previous reports and raw modeling data," the Navy said in a quarterly program report. Gilmore's office in August told Pentagon officials the vessel demonstrated "poor reliability with critical equipment and control systems," and an "inability to defend itself against a variety of threats." Navy test data indicated the vessels demonstrated an inability to "maintain or rapidly recover mission capability" after being hit by "the variety of weapons likely to be encountered," the testing office said. Raytheon Co. is a subcontractor providing electronics, a fiber-optics network and an anti-missile system the testing office concluded had "persistent engineering deficiencies." A November 1, 2010, press report stated: The U.S. Navy insists it is "well into the process" of correcting what a recently leaked Pentagon evaluation bluntly characterized as the combat ineffectiveness of its new class of amphibious ships. Moreover, it insists, the entire San Antonio class of amphibious transport dock ships is "warfare capable."… "The details of the study are classified," said Cheryl Irwin, a [DOD] spokeswoman. "However, we have said that this ship is more survivable than the one it is replacing." The Navy acknowledged the issues, but only circumspectly. Navy spokeswoman Lt. Callie Ferrari told Bloomberg that "the majority of corrective actions … are in process. The day after that [news] report [i.e., the October 28, 2010, press report cited above] was published, the Navy softened that response. "The Navy is taking the necessary steps to implement required actions across the LPD-17 class to improve the ships' survivability in a combat situation," Lt. Courtney Hillson said. Hillson said the classification of the Pentagon report makes it "inappropriate to comment on specifics." At the same time, she defended the ships' current fighting capability. "The San Antonio-class amphibious transport dock ships are warfare-capable ships," Hillson said. A November 15, 2010, press report quotes the Chief of Naval Operations as stating that "taking delivery of [LPD-17] without it being fully complete probably was not helpful," and that "the focus on quality as the ship is being built needs to be more intense than it was." The article also states that Roughead was impressed with the capabilities of the class when he visited LPD-19. A December 2010 report on various DOD acquisition programs from DOD's Director, Operational Test and Evaluation (DOT&E)—DOT&E's annual report for FY2010—stated, in its section on the LPD-17 program, that LPD-17 is capable of conducting amphibious operations in a benign environment but is not operationally effective, suitable, or survivable in a hostile environment. Chronic reliability problems associated with critical ship systems across the spectrum of mission areas reduce overall ship suitability and jeopardize mission accomplishment.… LPD-17 has not yet demonstrated adequate reliability and availability of critical ship systems, including: • Control Systems – SWAN [Shipboard Wide Area Network], Interior Voice Communications System (IVCS), and Engineering Control System (ECS). • Support equipment – Cargo Ammunition Magazine elevators, vehicular ramps, main propulsion diesel engines, electrical distribution system, and steering system. • Combat systems – SPQ-9B horizon search radar, the Mk 46 Gun Weapon System (GWS), and the Magazine Signature Control System. The following LPD-17 self-defense systems did not demonstrate adequate reliability: Mk 46 GWS, SSDS [Ship Self-Defense System] Mk 2, SPQ-9B, and SPS 48 [radar]/CEC [Cooperative Engagement Capability]. The Navy's Board of Inspection and Survey [INSURV] identified similar deficiencies in identical areas during both acceptance and final contract trials across all four of the first ships in the class. Severe casualties recorded prior to the Full Ship Shock Trial in LPD-19 and during LPD-17's deployment revealed serious fabrication and production deficiencies. The ship has not yet demonstrated an adequate Command, Control, Communications, Computers, and Intelligence [C4I] capability…. The design of the San Antonio class ships have numerous survivability improvements compared to the LPD class ships they will replace. However, problems encountered with critical systems during testing, as well as difficulties in recovering mission capability, have offset some of the survivability design improvements and have highlighted the impact of serious reliability shortcomings. PRA [Probability of Raid Annihilation] test bed events and the Self-Defense Test Ship events revealed several combat systems deficiencies and underscored several previously known deficiencies. Developments in 2011 A Navy point paper on the LPD-17 class that the Navy provided to a reporter on February 10, 2011, states: • The LPD 17 Class of ships has met or exceeded all key performance parameter objectives outlined in the LPD 17 Class Operational Requirements Document (ORD) with the exception of one information exchange requirement that still needs to be validated. • The first three ships of the class have successfully completed their maiden deployments, meeting not only their anticipated operational requirements but also responding to emergent missions requests. • DOT&E found the LPD 17 Class "not operationally effective, suitable, or survivable in a hostile environment"; and its report identified three major issues – reliability, self defense, and recoverability. The Program Office has completed its review of operational test reports by the Navy's Commander, Operational Test and Evaluation Force (COMOPTEVFOR) and DOT&E, developed corrective active action plans, and has resolved or is in process of resolving the deficiencies cited. Reliability • The LPD 17 Class operational evaluation was conducted with a legacy Asynchronous Transfer Mode (ATM) version of the Ship Wide Area Network (SWAN) and an early version of the Engineering Control System (ECS). The first two ships of the class have received the upgraded GIG-E SWAN; and no issues have been cited since installation. Upgrades to LPDs 19 and 20 are scheduled for completion by the end of 2012. All remaining LPD 17 Class ships in construction will include the SWAN upgrade. New ECS software to correct observed deficiencies and provide additional built-in test/monitoring capabilities has been installed on all LPD 17 class ships. • Main engine reliability issues have been observed on four of the first five LPD 17 Class ships. The root cause of those issues can be traced back to lube oil cleanliness. Poor initial system cleanliness led to steering reliability issues. A major redesign of the lube oil filtration system was completed in early 2010. Damaged bearings and lube oil piping segments have been replaced on all affected ships. New filters and modified strainers have been or will be installed on all delivered ships, as individual schedules permit. New flushing procedures have been developed and implemented; LPD 22 and follow ships will all be delivered with the new designs and components. • Interior/Exterior Communications (IVCS) components demonstrated unreliability and could not support high volume traffic; and the Uninterruptible Power Supply (UPS) batteries failed prematurely resulting in total power loss for vital components. The IVCS software has been upgraded; and new batteries, along with revised preventive maintenance procedures, have been installed on all LPD 17 Class ships. Additionally, a new UPS monitoring system is being implemented across the class. Self-Defense • While specific deficiencies noted by DOT&E are classified, the two primary mission areas addressed were air warfare and surface warfare. Air warfare system performance observed during LPD 17's operational evaluation has been subsequently improved. Mast interference with the SPS 48 air search radar has been significantly reduced through the installation of radar shrouds on all LPD 17 Class ships. The implementation of new hardware and software on LPD 20 and follow ships has corrected SPQ-9B surface search reliability issues. Back-fits are planned for LPDs 17-19, as their schedules permit. • The current gun systems onboard LPD 17 Class ships meets the stated surface warfare requirements outlined in the LPD 17 Class ORD. Software installations to increase operator situational awareness are being developed for future implementation. Recoverability • Recoverability refers to the ability of a ship and its crew to prevent loss and restore mission essential functions given a casualty from accidents or threat weapon effects. Systems that directly impact recoverability include UPS, SWAN, ECS, damage control equipment, shipboard damage control features and crew training. Ship system issues and associated resolutions have been identified in the preceding paragraphs. Additional isolation valves in the chill water system are planned for installation on all LPD 17 class ships; and fire detection system software deficiencies have been identified and corrected across the class to improve the ship's recoverability. Follow-On Test & Evaluation (FOT&E) • FOT&E, which commenced in July 2010, is being conducted by the Navy's COMOPTEVFOR and the Marine Corps Operational Test and Evaluation Activity (MCOTEA) under DOT&E oversight to confirm these corrective actions resolve the problems noted by DOT&E. The evaluation is scheduled to run through the end of 2011. At a March 1, 2011, hearing on the Department of the Navy's proposed FY2012 budget before the House Armed Services Committee, Admiral Gary Roughead, the Chief of Naval Operations, stated the following as part of a response to a question concerning the Navy's amphibious ships: I do believe that we are through the woods on the LPD-17 quality issues. We have worked that very hard. And—and I'm pleased with how those ships are now starting to perform. But it's – it's also a lesson to be learned that you don't take ships before they're finished and that you really make sure that you're leaning on the quality early on in the construction process. In its prepared statement for a March 9, 2011, hearing on Navy shipbuilding programs before the Seapower and Projection Forces subcommittee of the House Armed Services Committee, the Navy stated the following regarding the LPD-17 program: Lessons learned from the effort to resolve material reliability concerns identified in the early ships of the class are being applied to ships currently under construction. Quality continues to improve with each ship delivered as the Navy continues to work closely with the shipbuilder to address cost, schedule, and performance issues. An April 15, 2011, press report states: The U.S. Navy's most problem-plagued ship has a whole new set of issues, the service said - bad documentation of the work being done to fix it. The San Antonio (LPD 17), first of a class of large amphibious transport dock ships, has been under repair at Norfolk, Va., for over a year, with much of the work being done by the Earl Industries shipyard. The work was expanded from its original scope to include a comprehensive effort to fix a wide range of fundamental problems with the ship, which has never been considered fully operational since her delivery in July 2005. Now, said Naval Sea Systems Command (NAVSEA), audits of the work being done on the ship's four main propulsion diesels revealed "unacceptable, improper documentation in the overhaul reports" by Earl and Fairbanks Morse, makers of the Colt Pielstick diesel engines. "There were missing reports; reports with data indicating out-of-specification conditions without indication of what repairs were performed; and reports with missing data or inconsistent data," NAVSEA said in a statement. "This kind of performance fails to meet the maintenance standards we expect for ship repair by our contractors and their subcontractors." A Navy investigation is ongoing to check the work and see if any material deficiencies exist. "So far there is no indication of a material problem but the investigation is continuing," said NAVSEA spokesman Chris Johnson. The ship is scheduled to get underway from Norfolk for sea trials in late April, Johnson said April 15, but so far the investigation has not affected the trials schedule. Personnel actions also appear to be underway as a result of the improper documentation. NAVSEA declined to comment, saying it would violate privacy policies. Another April 15, 2011, press report states: The Navy said Thursday it has launched a new investigation into engine repairs aboard the Norfolk-based ship San Antonio after recent audits uncovered serious problems with records kept by private contractors who overhauled the engines…. So far, officials said, there is no indication that the latest round of engine work wasn't done properly, or that more fixes are needed. Instead, the problem is the Navy can't tell based on documents - documents the civilian contractors are required to provide - what work was done and what wasn't…. The Navy said the two contractors responsible are Earl Industries, the prime contractor, and Fairbanks Morse, the engine manufacturer. In a sign of how seriously the Navy is taking the documentation problems, Naval Sea Systems Command, which is responsible for developing and delivering ships, is performing independent checks on the San Antonio's engines. What's more, at least one top official has been removed at Norfolk Ship Support Activity, the Navy command that oversees ship repairs done by contractors. Thomas J. Murphy, who had been its civilian executive director since 2004, was replaced this week. A source outside the Navy said other civilian officials at the command were also removed; the Navy wouldn't confirm that, saying it would violate privacy rights…. Though work to overhaul the diesels was ongoing as recently as last month, the Navy has said the ship was nearly ready and would go to sea for performance tests by the end of this month. That timeline is still on track, according to Fleet Forces Command. The Navy said it is fully investigating what it described as the contractors' failure to coherently document the engine repairs. The Navy "is holding the contractors accountable," the service's statement said. The investigation also will look at whether insufficient government oversight played a role, the Navy added. Murphy, the ousted Norfolk Ship Support Activity director, declined to comment. In a written statement, Earl Industries President Jerry Miller stressed that the problems the Navy has uncovered so far relate only to record-keeping and reports, not to the quality of his company's repair work. Like the Navy, Miller said all recent checks on the engines suggest they're ready for sea tests. Miller noted that Earl Industries recently completed similar engine repairs on one of the San Antonio's sister ships, the Mesa Verde, which left for an overseas deployment ahead of schedule last month. "We are confident that San Antonio's upcoming sea trials will be equally successful and prove the quality of the complex overhaul work we've accomplished on all systems to correct the (San Antonio) class issues," he said. Fairbanks Morse said in a statement that it is cooperating with the Navy's investigation. "We are committed to resolving the matter in a satisfactory manner," the statement said. An April 20, 2011, press report states: The Navy has suspended the oversight authority of the local command responsible for supervising ship repairs done by private contractors. The command, called Norfolk Ship Support Activity, has headquarters at Norfolk Naval Station. Staffed by both sailors and civilians, it oversees all maintenance work done by private companies on Navy surface ships in the mid-Atlantic region. By suspending the command's oversight authority—formally known as its "technical warrant"—the Navy essentially is saying it no longer trusts Norfolk Ship Support Activity to make sure work by contractors is being done properly…. In response to further inquiries from The Pilot, the Naval Sea Systems Command said Tuesday [April 19] that Norfolk Ship Support Activity's oversight authority had been suspended. A senior Naval Sea Systems Command officer has been sent to "perform technical authority oversight duties until confidence is restored," the Naval Sea Systems Command said in a written statement…. In addition to suspending the command's authority, the Navy has removed at least one top official. Thomas J. Murphy, who had been the command's civilian executive director since 2004, was replaced last week. Sources outside the Navy said several other officials at the command were also removed; the Navy has declined to confirm that, saying it would violate privacy rights. Officials at the Naval Sea Systems Command couldn't say what will be required of Norfolk Ship Support Activity to restore its oversight authority, or how long it might take; that won't be known until the investigation is completed. Officials weren't aware of any other instances in recent history in which the Navy has suspended a command's maintenance oversight authority. In light of what's happening at the command, the Navy said, it is reviewing quality assurance practices and procedures at all regional maintenance centers. A May 27, 2011, press report stated: "We're getting back to where we should be," the captain of the long-troubled amphibious ship USS San Antonio (LPD 17) told reporters May 26. "I believe all the major repairs have been fixed." The San Antonio was pulled from service nearly two years ago in an effort to rectify problems that have plagued the ship since its delivery in August 2005. In that time, a Navy inspector general investigation delved into the causes of the problems. Additional issues emerged during the repairs, including the discovery that the engines and main reduction gears were improperly installed, and the repair period was extended multiple times. Fixing the ship became a top priority for U.S. Fleet Forces Command and received the personal attention of its commander, Adm. John Harvey. Stuck in a shipyard, the San Antonio missed a scheduled deployment, and the fleet has had to adjust to the ship's absence. "We were essentially a shore command for two years," Cmdr. Thomas Kait said during a press conference aboard the San Antonio after its return to Norfolk, Va., from 10 days of engineering trials. "The engines ran beautifully," he said. "They did fantastic. It was truly incredible to feel the ship vibrate under her own power at sea." A second series of trials still lies ahead for the ship, followed by at least 10 months of training before it can deploy again, Kait said. "We look forward to going out again and driving the ship as she was meant to be." The post-sea trials press conference was itself unusual and highlighted the Navy leadership's concern over the ship's performance. Reporters on the ship, however, were asked not to talk to crew members about the ship's condition or performance. A day earlier in Washington, some of the service's senior leaders were again grilled by Congress about why the ship was accepted from shipbuilder Northrop Grumman in 2005, despite knowledge of numerous construction deficiencies. "Were we obligated to take delivery of the early LPD 17s?" asked Sen. Jack Reed, D-R.I., at a Senate seapower subcommittee shipbuilding hearing. "We were not compelled to take delivery," Sean Stackley, the Navy's top acquisition official, said. "There was a confluence of events," he admitted, responding to congressional questions on the program he and other officials have been asked dozens of times since 2005. "It was a conscious decision." All five of the first ships in the class had material problems to varying degrees, acknowledged Vice Adm. Kevin McCoy, head of the Naval Sea Systems Command, although problems with the more recent ships have been less severe than the first-of-class San Antonio. Although more recent problems have been discovered on the ships, including grit in the lube oil system and poor welds, "all the other stuff greatly improved from the first" ship, McCoy said. "And, in fact, we had a highly successful final contract trial just earlier this spring on the New York that received lots of praise from" Navy inspectors. McCoy noted that in the week prior to the hearing, all five ships of the class were at sea, including two on deployment. Pressed by Sen. Roger Wicker, R-Miss., about a government inspector's assertion that the ships were not yet survivable in combat, McCoy declined to argue. "If you look at the issues that they identified, I don't take issue with the issues," he said. "We were in the middle of grit in lube oil in just about all our ships that we were dealing with, so there was a mobility issue." But McCoy was hopeful that problem has been solved. "I'll knock on wood here," he said, but "I think that one's behind us." A June 20, 2011, press report stated: It's been a rough road for the San Antonio. But it's starting to look a lot smoother. On June 15, the U.S. Navy ship returned to Naval Station Norfolk, Va., following nine days of sea trials—the second of two phases to test repairs after the ship was taken offline nearly two years ago. The verdict: It works. Just like it's supposed to. "San Antonio has made that transition from a ship that was needing a lot of help on the maintenance front [to] the level all my ships are at when they've passed through this phase," said Capt. Mark Scovill, commander of Amphibious Squadron 8, who was interviewed as the ship approached Norfolk. "We know we've gotta prove to everybody out there that we're ready to proceed. And that's what we aim to do. "We're gonna knock their socks off," Scovill said. "I can guarantee you that."... After a short maintenance availability to fix minor discrepancies discovered during the sea trials and an additional independent self-training underway period slated for July, San Antonio will be ready to begin predeployment work-ups Aug. 1, leaders said.... The ship's chief engineer for the past six months said, with conviction, that [earlier] mechanical and electrical problems have been fixed. "This ship has come a long way in the last few months," said Lt. Cmdr. William Pikul. "We've maxed out every engine, every shaft rpm, every item that we've got on board. And we're coming back in still on all four engines, still on ship's power, and we're ready to get back underway again next month." The first set of sea trials, held in late May, validated the diesel engines, testing their ability to power up and operate free of excess vibration.... This set of trials focused on combat systems and operating with amphibious craft in the ship's well deck. "All tested out 'sat' [satisfactory]," said Cmdr. Neil Koprowski, executive officer. He said the ship also was maneuvered much more stressfully than during the first set of trials. A July 20, 2011, press report stated: It's the last thing the Navy and the crew aboard the warship San Antonio wanted: Just when they thought they'd finally resolved the last of the vessel's engine problems, the diesels again are in need of repair. In the latest of a long series of breakdowns that have kept the young ship out of the fleet for years, the Navy said Tuesday [July 19] that all four of the San Antonio's engines experienced problems while the crew was training off the coast of Virginia last week. Though officials characterized the issues as minor, saying they'll be fixed by the end of the month, they were serious enough that one of the engines had to be shut down, and the Navy called off plans for the rest of the training. The San Antonio returned to Norfolk Naval Station on Saturday [July 16], 10 days early, after a team of engineers was sent aboard to assess the problems. The developments come less than two months after rigorous at-sea tests determined that the ship was finally fit for duty—the first such declaration since the San Antonio's disastrous maiden deployment in 2008. The latest issues are with the engines' intercoolers and with leak-off boxes that catch fuel coming off the injectors, said Lt. Cmdr. Bill Urban, a spokesman with Naval Surface Force Atlantic. In the case of the intercoolers, which improve combustion by cooling air that enters the engines, all four diesels experienced leaks, Urban said. He said fixing them will require replacing gaskets. The leak-off boxes also experienced leaks, which prevented them from adequately recapturing fuel, Urban said. He said the problem is minor in three of the engines, while one leaked enough that it had to be shut down. Even so, officials said, the repairs won't take long. The Navy said they'll be done pierside at Norfolk Naval Station, and they should be finished in time for the ship and its crew to begin a 20-week, pre-deployment training set for August. "Fortunately, these additional maintenance issues on San Antonio are not as significant as those in the past," Adm. John C. Harvey, the head of Fleet Forces Command, said in a written statement. "I fully expect San Antonio to begin her basic training phase on time in early August and deploy on schedule next year."... Urban said the latest problems aren't related to the lube oil systems or the alignment, although crews did perform maintenance on the intercoolers and leak-off boxes in the course of overhauling the ship's engines. It's not yet clear whether that contributed to the current issues; the Navy said it's still investigating. The overhaul was carried out by Earl Industries LLC. In May, around the same time that the San Antonio went to sea trials, the Navy announced it was canceling a five-year maintenance contract with Earl over concerns related to the company's performance aboard the San Antonio. Earl's president, Jerry Miller, declined to comment Tuesday [July 19]. An October 7, 2011, press report stated: The new U.S. amphibious ship San Diego [LPD-22] was damaged late last month when an improperly-installed relief valve caused part of the ship's ballast system to overpressurize, damaging three ballast tanks. The incident happened during builder's sea trials in the Gulf of Mexico. The San Diego, an LPD 17-class amphibious transport dock ship, was built at the Ingalls, Miss., shipyard of Huntington Ingalls Industries, and was underway for the first of two seagoing trials. Builder's trials are carried out by the shipbuilders to check if all systems are installed properly and act as designed. A series of acceptance trials are expected to take place in November, when U.S. Navy officials will test and inspect the ship to determine if it's ready for acceptance. The ship, which returned to port on Oct. 1, is operated during both trials by a civilian crew, most of whom are shipyard employees. The Navy crew takes over following acceptance and delivery. LPDs are designed to ballast down aft in order to flood a well deck, allowing landing craft and amphibious vehicles to float on or off. The ballast tanks are blown dry to expel seawater and raise the ship to de-water the well deck. During the sea trials, "a ballast tank was over-pressurized during the set-up for the ballasting and de-ballasting test," said Beci Brenton, a spokesperson for Huntington Ingalls. The tanks were on the port side of the ship's well deck. Chris Johnson, a spokesman for the Naval Sea Systems Command (NAVSEA), said the relief valve was installed backward, leading to the damage. Despite the incident, the ballasting and deballasting tests were performed successfully, Brenton and Johnson said. There were no indications, as of Oct. 6, of any damage to the ship's hull or side shell, both said. Following repairs, the ballast and deballast system and their tanks will be retested during acceptance trials, expected to be run in November. The ship, Brenton said, is still expected to be delivered to the Navy before Christmas. Overall, Huntington Ingalls called the trials "successful." "This builder's trial has gone very well," Richard Schenk, Ingalls' vice president for test and trials, said in an Oct. 4 press release. "This ship has performed extremely well."
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The Navy's proposed FY2012 budget requested funding for the procurement of an 11th and final San Antonio (LPD-17) class amphibious ship. The ship had received $184.0 million in prior-year advance procurement (AP) funding, and the Navy's proposed FY2012 budget requested the remaining $1,847.4 million needed to complete the ship's estimated procurement cost of $2,031.4 million. The Navy's FY2012 30-year shipbuilding plan calls for the procurement of a new class of amphibious ship called the LSD(X) starting in FY2017. Some observers have suggested using the LPD-17 design as the basis for the LSD(X). Navy officials do not stress this option and instead appear more interested in developing an all-new design for the LSD(X). If a decision were made to use the LPD-17 design as the basis for the LSD(X), then procuring a 12th LPD-17 in FY2014 or FY2015 would help keep the LPD-17 production line open until the procurement of the first LSD(X) in FY2017, which in turn might help reduce LSD(X) production costs. Issues for Congress in 2011 included whether to approve, reject, or modify the Navy's proposed funding request for the 11th LPD-17, whether to encourage or direct the Navy to use the LPD-17 design as the basis for the design of the LSD(X), and—particularly if the LPD-17 design is used as the basis for the LSD(X)—whether to fund the procurement of a 12th LPD-17 in FY2014 or FY2015.
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Prior to the passage of the Intelligence Reform and Terrorism Prevention Act of 2004, standards with respect to drivers' licenses and personal identification cards were determined on a state-by-state basis with no national standards in place. In fact, prior to September 11, 2001, legislation aimed at discouraging national standards for identification documents had gained bipartisan support and was thought likely to pass. Congressional action regarding national standards for state-issued identification documents before September 11, 2001, had proved to be highly controversial. For example, § 656 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 provided federal standards for state drivers' licenses and birth certificates when used as identification-related documents for federal purposes. Under this provision, a state had two choices. The state could require that each of its licenses include the licensee's Social Security number in machine-readable or visually readable form. Alternatively, a state could more minimally require that each applicant submit the applicant's Social Security number and verify the legitimacy of that number with the Social Security Administration. The section became subject to widespread public criticism shortly after its enactment with opponents most frequently alleging that it could be construed as a step toward a national identification card system. In response, Congress prohibited funding to implement regulations aimed at assisting the states to adopt the Social Security number requirements, and the underlying requirement itself was subsequently repealed in § 355 of the Department of Transportation and Related Agencies Appropriations Act 2000. After the events of September 11, 2001, the prevailing view of national standards for so-called "breeder documents," which includes, but is not limited to, drivers' licenses and personal identification cards, changed. Specifically, the final report of The National Commission on Terrorist Attacks Upon the United States (9/11 Commission) recommended that "the federal government should set standards for the issuance of birth certificates, and sources of identification, such as drivers' licenses." Responding to this recommendation, in 2004 Congress enacted The Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA). This act delegated authority to the Secretary of Transportation, in consultation with the Secretary of Homeland Security, empowering them to issue regulations with respect to minimum standards for federal acceptance of drivers' licenses and personal identification cards. Pursuant to the IRTPA, the Secretary was required to issue regulations within 18 months of enactment requiring that each driver's license or identification card, to be accepted for any official purpose by a federal agency, include the individual's (1) full legal name, (2) date of birth, (3) gender, (4) driver's license or identification card number, (5) digital photograph, (6) address, and (7) signature. In addition, the cards were required to contain physical security features designed to prevent tampering, counterfeiting, or duplication for fraudulent purposes; as well as a common machine-readable technology with defined minimum elements. Moreover, states were required, pursuant to implementing regulations, to confiscate a driver's license or personal identification card if any of the above security components were compromised. The statute also required that the implementing regulations address how drivers' licenses and identification cards were issued by the states. Specifically, the regulations were required to include minimum standards for the documentation required by the applicant, the procedures utilized for verifying the documents used, and the standards for processing the applications. The regulations were, however, prohibited from not only infringing upon the "State's power to set criteria concerning what categories of individuals are eligible to obtain a driver's license or personal identification card from that State," but also from requiring a state to take an action that "conflicts with or otherwise interferes with the full enforcement of state criteria concerning the categories of individuals that were eligible to obtain a driver's license or personal identification card." In other words, it appeared that if a state granted a certain category of individuals (i.e., aliens, legal or illegal) permission to obtain a license, nothing in the implementing regulations was to infringe upon that state's decision or its ability to enforce that decision. In addition, the regulations were not to require a single uniform design, and were required to include procedures designed to protect the privacy rights of individual applicants. Finally, the law required the use of negotiated rulemaking pursuant to the Administrative Procedure Act. This process was designed to bring together agency representatives and concerned interest groups to negotiate the text of a proposed rule. The rulemaking committee was required to include representatives from (1) state and local offices that issue drivers' licenses and/or personal identification cards, (2) state elected officials, (3) Department of Homeland Security, and (4) interested parties. In 2005, Congress again addressed the issue of national standards for drivers' licenses and personal identification cards by passing The REAL ID Act of 2005 (REAL ID). REAL ID contains a number of provisions relating to improved security for drivers' licenses and personal identification cards, as well as instructions for states that do not comply with its provisions. In addition, REAL ID repealed certain overlapping and potentially conflicting provisions of the IRTPA. In general, although REAL ID does not directly impose federal standards with respect to states' issuance of drivers' licenses and personal identification cards, states nevertheless appear to need to adopt such standards and modify any conflicting laws or regulations to continue to have such documents recognized by federal agencies for official purposes. REAL ID contains a statutory definition of the phrase "official purpose." For purposes of the act, an "official purpose" is defined as including, but not limited to, "accessing Federal facilities, boarding federally regulated commercial aircraft, entering nuclear power plants, and any other purposes that the Secretary [of Homeland Security] shall determine." In addition, REAL ID contains a provision that specifically repealed § 7212 of the IRTPA, which had contained the preexisting law with respect to national standards for drivers' licenses and personal identification cards. Section 202(c) of REAL ID establishes minimum issuance standards for federal recognition requiring that before a state can issue a driver's license or photo identification card, a state will have to verify with the issuing agency, the issuance, validity, and completeness of (1) a photo identification document or a non-photo document containing both the individual's full legal name and date of birth, (2) date of birth, (3) proof of a Social Security number (SSN) or verification of the individual's ineligibility for an SSN, and (4) name and address of the individual's principal residence. To the extent that information verification requirements previously existed, they were a function of state law and varied from state to state. This REAL ID provision appears to preempt any state verification standards and replace them with the new federal standards as established by this statutory language. Section 202(c)(2)(B) of REAL ID appears to require states to verify an applicant's legal status in the United States before issuing a driver's license or personal identification card. Previously, the categories of persons eligible for drivers' licenses were determined on a state-by-state basis. As indicated above, the IRTPA specifically prevented the Secretary of Transportation from enacting regulations that would interfere with this authority. This section of REAL ID appears to preempt any state law requirements and seems to require the states to verify the legal status of the applicant. Section 202(c)(2)(C) of REAL ID establishes a system of temporary licenses and identification cards that can be issued by the states to applicants who can present evidence that they fall into one of six categories. Under REAL ID, a state may only issue a temporary driver's license or identification card with an expiration date equal to the period of time of the applicant's authorized stay in the United States. If there is an indefinite end to the period of authorized stay, the card's expiration date is one year. The temporary card must clearly indicate that it is temporary and state its expiration date. Renewals of the temporary cards are to be done only upon presentation of valid documentary evidence that the status had been extended by the Secretary of Homeland Security. If such provisions existed prior to the enactment of REAL ID, they existed as a function of state law and are preempted by the act. Pursuant to § 202(d) of REAL ID, states are required to adopt procedures and practices to (1) employ technology to capture digital images of identity source documents, (2) retain paper copies of source documents for a minimum of seven years or images of source documents presented for a minimum of 10 years, (3) subject each applicant to a mandatory facial image capture, (4) establish an effective procedure to confirm or verify a renewing applicant's information, (5) confirm with the Social Security Administration an SSN presented by a person using the full Social Security account number, (6) refuse issuance of a driver's license or identification card to a person holding a driver's license issued by another state without confirmation that the person is terminating or has terminated the driver's license, (7) ensure the physical security of locations where cards are produced and the security of document materials and papers from which drivers' licenses and identification cards are produced, (8) subject all persons authorized to manufacture or produce drivers' licenses and identification cards to appropriate security clearance requirements, (9) establish fraudulent document recognition training programs for appropriate employees engaged in the issuance of drivers' licenses and identification cards, and (10) limit the length of time a drivers' license or personal identification card is valid to eight years. In addition to these requirements, REAL ID contains language requiring that states, if they elect to issue a drivers' license or personal identification card that does not conform to the requirements of this act, be required to use a unique color identifier or design to alert officials that the document is not to be accepted for any official purpose. Moreover, the states are required to clearly state on the face of the document that it is not to be accepted for federal identification or for any official purpose. Further, the enacted version of REAL ID includes a provision requiring the states to maintain a motor vehicle database that, at a minimum, contains all data fields printed on the drivers' license or identification card and all motor vehicle driver histories, including violations, suspensions, or "points." Finally, the act requires the states to provide electronic access to their databases to all other states. To the extent that any of these requirements previously existed, they did so as a function of state law. Thus, it appears that the state laws are preempted in favor of the new federal standards. Section 203 of REAL ID amends 18 U.S.C. § 1028(a)(8), which makes it a federal crime either to actually, or with intent, transport or transfer identification authentication features that are used on a document of the type intended or commonly presented for identification purposes. By replacing the phrase "false identification features" with "false or actual authentication features," this provision appears to broaden the scope of the criminal provision, making it a crime to traffic in identification features regardless of whether the feature is false. In addition, Section 203 requires that the Secretary of Homeland Security enter into the appropriate aviation-screening database the personal information of anyone convicted of using a false drivers' license at an airport. Section 204 of REAL ID authorizes the Secretary of Homeland Security to make grants to the states, for the purpose of assisting them in conforming to the new national standards. The section also contains the necessary language authorizing the appropriation of federal funds for the grant program. In addition, § 205 provides the Secretary of Homeland Security with the statutory authority to promulgate regulations, set standards, and issue grants. The Secretary is required by the statute to consult with both the Secretary of Transportation as well as with the states when acting pursuant to this authority. Moreover, the Secretary is authorized to extend the three-year deadline contained in Section 202(a)(1) for any state on the condition that the state provide an adequate justification for their non-compliance. The Department of Homeland Security (DHS) published a Notice of Proposed Rulemaking (NPRM) for REAL ID on March 3, 2007. The NPRM proposed requirements to meet the minimum standards required under the act. The proposed requirements included, inter alia , proposed requirements regarding the information and security features that must be incorporated into each card, proposed application information that must be presented to establish the identity and immigration status of an applicant before a card can be issued, and proposed physical security standards for state facilities where drivers' licenses and personal identification cards are produced. In response, DHS received over 21,000 comments to the NPRM during the 60-day public comment period. The final regulations were promulgated by DHS nine months later on January 29, 2008. Both at the time that REAL ID was debated in Congress, and during the regulatory comment period, questions about the constitutionality of the statute were raised. There have been four main constitutional arguments made against REAL ID. First, because REAL ID cannot be premised on Congress's power to regulate interstate commerce, it is a violation of states' rights as protected by the Tenth Amendment. Second, the requirement that REAL IDs be used to board federally regulated aircraft impermissibly encroaches on citizen's right to travel. Third, specific requirements such as the digital photograph potentially violate the Free Exercise Clause of the First Amendment. Finally, REAL ID infringes upon a citizen's right under the First Amendment to freely assemble, associate, and petition the government. Although Congress's power to regulate matters affecting interstate commerce is broad, it is not unlimited and, in recent years, has been constrained by the Court's interpretation of the Tenth Amendment. Such an interpretation appears to be derived from the Tenth Amendment's protection of state sovereignty, which the Supreme Court has invoked as a limit on Congress's Article I domestic powers. Starting with its decision in Garcia v. San Antonio Metropolitan Transit Authority —which held that most disputes over the effects on state sovereignty of federal commerce power legislation are to be considered political questions, and that the states should look for relief from federal regulation through the political process —the Court appears to be willing to use the Tenth Amendment to protect the sovereign interests of the states. Immediately after Garcia , however, it appeared that the only way to show a Tenth Amendment violation was to demonstrate that there had been a breakdown in the national political process that thwarted the ordinary procedural safeguards inherent in the federal system. Several years later in New York v. United States , which involved the "take title" provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1985, the Court held that the federal statute at issue effectively commandeered the state lawmaking process because regardless of which option the state chose, "the Act ... compelled them to enact and enforce a federal regulatory program." In reaching this conclusion, the Court held that essential to the concept of state sovereignty is control over the states' legislative process, which was diminished by the imposition of a federal mandate. In addition, the Court held that the "take title" provision threatened state sovereignty because it had the potential to cause confusion among citizens as to which government officials, state or federal, were responsible for particular actions. Finally, the Court made clear that the "States are not mere political subdivisions of the United States," and concluded that commandeering their legislative process treats them as such. Building on its holding in New York , the Court in Printz v. United States extended the anti-commandeering principle to include not only a state's legislative process, but also a state's executive functions, including its enforcement of the law. At issue in Printz were specific requirements of the Brady Handgun Violence Prevention Act, which required state and local officials to, inter alia , execute federal background checks on potential handgun purchasers. The Court, in holding the Brady provisions unconstitutional, also focused on the importance of state sovereignty stating that "[i]t is an essential attribute of the States' retained sovereignty that they remain independent and autonomous within their proper sphere of authority." Additionally, the Court held that, like the statute in New York , the Brady provisions were unconstitutional because they potentially confused citizens with respect to which government officials, state or federal, were to be held accountable in the event of any problems with the requirements. In 2000, however, the Supreme Court decided Reno v. Condon , and upheld, as consistent with the federalism principles established in New York and Printz, provisions of the Driver's Privacy Protection Act (DPPA). The DPPA regulated the ability of the states to disclose and resell information collected from state motor vehicle departments. The Court distinguished the DPPA from the statutes in both New York and Printz , because, according to the Court, the "DPPA does not require the states in their sovereign capacity to regulate its own citizens.... It does not require the [states] to enact any laws or regulations and it does not require state officials to assist in the enforcement of federal statutes regulating private individuals." In addition to its holding with respect to the constitutionality of the DPPA, the Court also referred to an argument advanced by the challenging state that Congress may only regulate the states directly when it does so via "generally applicable laws or laws that apply to individuals as well as States." The Court, holding that the DPPA was "generally applicable," found that it was not necessary to address this question, and thus, has left it reserved for future consideration. Whether limiting the standards to federal acceptance—as opposed to direct federal requirements on the states—obviates federalism concerns under Supreme Court jurisprudence remains to be seen as no cases have yet been filed challenging the constitutionality of the law. It appears possible to argue, however, that because the issuance of drivers' licenses remains a function of state law, the minimum issuance and verification requirements established by the act, even if limited to federal agency acceptance, constitute an effective commandeering by Congress of the state process, or a conscription of the state and local officials who issue the licenses. Although not expressly defined in the text of the Constitution, the Supreme Court has stated that the right to travel is a "privilege and immunity of national citizenship under the Constitution," as well as a "part of the 'liberty' of which the citizens cannot be deprived without due process of law." The Court has declared that the constitutional right to travel consists of three different components: first, it protects the right of a citizen of one state to enter and to leave another state; second, it protects the right to be treated as a welcome visitor rather than an unfriendly alien when temporarily present in the second state; and third, for those travelers who elect to become permanent residents, it protects the right to be treated like other citizens of that state. Precedent regarding the right to travel has developed along two primary strands. The first addresses burdens imposed by state governments and involves the Fourteenth Amendment, whereas the second strand involves federally imposed burdens on international travel and appears to involve the Fifth Amendment's due process clause. Under the Fourteenth Amendment cases, the right to travel from one state to another has been considered a fundamental right under the Constitution. Consistent with its status as a fundamental right is the requirement that the government's action satisfy the constitutional standard of review often referred to as strict scrutiny, or heightened scrutiny. Under strict scrutiny the government must provide a compelling state interest for the burden and show that the means utilized are narrowly tailored to the achievement of the goal or, phrased another way, the least restrictive means available. In addition to the strict scrutiny cases, there have been cases where the state has placed burdens on the act of travel itself. In these cases, the justification level appears to be much lower. The Court has held that burdens on travel are justifiable as long as they are uniformly applied and support the safety and integrity of the travel facilities. Thus, for example, highway tolls and airport fees have been upheld, but a general tax imposed on all individuals leaving a state may impermissibly restrict travel. Conversely, in right to travel cases involving federally imposed burdens on interstate travel, which implicate the Fifth Amendment, courts appear to reject the Fourteenth Amendment fundamental rights analysis and apply a less stringent rational basis test. The rational basis test simply requires that laws be rationally related to a legitimate government interest. Here again, the government appears not to be required to show a compelling interest to justify a uniformly applied, non-discriminatory travel-related restriction. Given that the airlines are seemingly authorized to refuse service to anyone who fails to present proper identification, it appears that a strong argument can be made that REAL ID imposes an additional burden on citizens who wish to travel by federally regulated aircraft. Thus, the inquiry should focus on the standard of review that should be applied. That said, it appears difficult to argue that ensuring the security and validity of identification documents will fail to increase passenger safety and transportation facility security, which are likely compelling governmental interests. Thus, it seems that, regardless of which standard of review is applied, the government may be in a strong position to argue that not only are the identification requirements justifiable, but also that their burden on the right to travel is minimal and, in light of the present conditions, entirely reasonable. Moreover, it is important to note that not having a REAL ID will not prevent individuals from boarding aircraft. Rather, the lack of a REAL ID, whether by state non-compliance or personal choice, will simply mean either that alternative identification will have to be produced (such as a military ID, passport, or other documents accepted by the Transportation Security Administration (TSA)) or additional security screening will be required before the individual is allowed to board. According to some opponents, the fact that REAL ID requires, without exemption, that a digital photograph appear on each document violates the religious beliefs of certain sects of Amish Christians, Muslim women, as well as other religions. Thus, it has been argued that this requirement unconstitutionally impacts the free exercise of their religion. The Supreme Court has consistently affirmed that the Free Exercise Clause protects religious beliefs; however, protection for religiously motivated conduct has waxed and waned over the years. In recent years, the Court has gradually abandoned any distinction between belief and conduct, developing instead a balancing test to determine when a uniform, nondiscriminatory requirement by government mandating action or non-action by citizens, such as the photo requirement contained in REAL ID, must allow exceptions for citizens whose religious scruples forbid compliance. In Sherbert v. Verner , the Court required a religious exemption from a secular, regulatory piece of economic legislation. Ms. Sherbert had been disqualified from receiving unemployment compensation because, as a Seventh Day Adventist, she would not accept Saturday work. According to state officials, this meant she was not complying with the statutory requirement to stand ready to accept suitable employment. The Court held that her denial of benefits could be justified under the Free Exercise Clause if "her disqualification as a beneficiary represents no infringement by the State of her constitutional rights of free exercise, or [if] any incidental burden on the free exercise of appellant's religions may be justified by a 'compelling state interest in the regulation of a subject within the State's constitutional power to regulate.... '" After Sherbert , the Court applied the "compelling state interest" test in several cases, finding, for example, in Wisconsin v. Yoder , that a state compulsory attendance law, as applied to require Amish children to attend 9 th and 10 th grades of public schools in contravention of Amish religious beliefs, violated the Free Exercise Clause. Conversely, however, the Court held that the government had a "compelling interest" with respect to compulsory participation in the Social Security system, as well as with regard to the denial of tax exemptions to church-run colleges whose racially discriminatory admissions policies derived from religious beliefs. Finally, in 1990 the Court decided Employment Division v. Smith , which involved a challenge to a state statute that denied unemployment benefits to drug users including Native Americans engaged in the sacramental use of peyote. The Court in Smith indicated that the "compelling interest test" does not apply to require exemptions from generally applicable criminal laws. Criminal laws, held the Court, are "generally applicable" when they apply across the board regardless of the religious motivation of the prohibited conduct, and are "not specifically directed at ... religious practices." Thus, except in the relatively uncommon circumstance when a statute calls for individualized consideration, then, the Free Exercise Clause affords no basis for exemption from a "neutral, generally applicable law." As the Court concluded in Smith , accommodation for religious practices incompatible with general requirements must ordinarily be found in "the political process." Subsequently, in 1993, Congress sought to supersede Smith and substitute a statutory rule of decision for free exercise cases. The Religious Freedom Restoration Act (RFRA) provides that laws of general applicability—federal, state, and local—may substantially burden the free exercise of religion only if they further a compelling governmental interest and constitute the least restrictive means of doing so. As Congress declared in the act itself, the purpose was "to restore the compelling interest test as set forth in Sherbert v. Verner ... and to guarantee its application in all cases where free exercise of religion is substantially burdened." In the most recent Supreme Court case to address these issues, Gonzales v. O Centro Espirita Beneficente Uniao Do Vegetal , the Court affirmed a preliminary injunction preventing the government from using the Controlled Substances Act from prosecuting practitioners of a Amazon Rainforest religious sect that receives communion by drinking a tea that contains hoasca , a hallucinogen that is prohibited under the federal Controlled Substances Act (CSA). Although the case arose on procedural grounds, the Court nevertheless held that the government has a burden of demonstrating a "compelling government interest," such that no exception can be made to accommodate the religious use of the drug. According to the Court, the absence of this required showing by the government, even at the preliminary injunction stage, necessitated a finding for the plaintiffs and a granting of the injunction. Thus, the question for a reviewing court, should a challenge to REAL ID be brought on Free Exercise grounds, will be whether the government has a "compelling interest" in uniform application of the law, such that no exceptions, even on reasonable religious grounds, can be afforded. Given REAL ID's strong basis as both an anti-terrorism and fraud prevention statute, it appears that the government would have a strong argument that a compelling interest does exist for not granting any exceptions to the act's requirements. Conversely, it also appears reasonable to argue that although the government's interest is strong, reasonable accommodations on religious grounds are still possible and are required by the First Amendment. Finally, some have argued that REAL ID is a violation of the First Amendment because the measure infringes upon a citizen's right to freely assemble, associate, and petition the government. The First Amendment states that "Congress shall make no law ... abridging the ... right of the people peaceably to assemble, and to petition the government for a redress of grievances." The argument appears to be that linking a state's issuance of enhanced identification documents to its citizen's ability to board a federally regulated aircraft prevents the full exercise of an individual's liberties, such as those provided by the First Amendment, that depend on a citizen's ability to freely move throughout the country. By imposing burdensome requirements on interstate travel the government has arguably prevented persons who wish to refrain from identifying themselves and/or submitting to enhanced security screening from exercising their constitutional rights. Although it appears that neither the Supreme Court nor any lower federal court has been presented with an analogous situation, the Court has indicated that anonymity is a concept protected by the First Amendment. For example, in Thomas v. Collins, Sheriff , the Court invalidated a Texas statute requiring labor organizers to register and obtain an organizer's card before making speeches to assembled workers as incompatible with the guarantees of the First Amendment. As recently as 2004, the Court has upheld the general notion that citizens have a right to anonymity especially in situations where a citizen is not suspected of a crime. In light of these precedents, it may be possible to challenge the identification requirement on the grounds that it violates the First Amendment right of citizens to be anonymous; however, claims made regarding the rights of association and petition of the government do not appear to have received the same support. Although it may be argued that a general right of anonymity exists, it is difficult to connect the implication of this right to the purpose of REAL ID. A strong argument exists that the regulations are in no way intended to impact a person's First Amendment rights; rather, the regulations at issue are aimed at preventing and deterring the use of fraudulent identification documents for federal purposes. Thus, these regulations can arguably be said to have, at most, an incidental or indirect effect on rights protected by the First Amendment. In cases where the regulation at issue was not specifically directed at First Amendment rights, the Court has held such regulations subject to First Amendment scrutiny only when "it was conduct with a significant expressive element that drew the legal remedy in the first place, ... or where a statute based on a non-expressive activity has the inevitable effect of signaling out those engaged in expressive activity." Given the indirect effect that these regulations may have on First Amendment rights, it would appear unlikely that challengers could establish the significant or substantial impact on their right to associate or petition the government that would be required to trigger First Amendment scrutiny. According to some advocacy groups, state and federal elected officials—including numerous commentators to the proposed regulations —and others, REAL ID imposes an unconstitutional "unfunded mandate" on the states. Generally speaking, the term "unfunded mandate" refers to requirements that one unit of government imposes on another without providing funds to pay for costs of compliance. In this instance, the argument has often been advanced that the federal government has imposed the requirements of REAL ID on the states without providing adequate funding to cover the implementation costs. Arguments related to "unfunded mandates" typically take two forms. First, is the argument that unfunded mandates are unconstitutional as violations of the Tenth Amendment. As indicated above, jurisprudence with respect to the Tenth Amendment is limited, and the federal courts have not to date specifically addressed the "unfunded mandate" issue. Second, "unfunded mandate" arguments refer to the statutory requirements of the Unfunded Mandates Reform Act of 1995 (UMRA). UMRA contains both legislative and regulatory reform provisions designed to limit or prohibit the number of unfunded mandates adopted by Congress and the regulatory agencies. The legislative reforms establish requirements for committees and the Congressional Budget Office (CBO) to study and report on the magnitude and impact of mandates in proposed legislation. In addition, the reforms include point-of-order procedures by which the requirements can be enforced, and by which the consideration of measures containing unfunded intergovernmental mandates can be blocked. With respect to regulations, UMRA requires federal agencies to prepare written statements identifying the costs and benefits of any federal mandate in excess of $100 million annually (adjusted annually for inflation) imposed through the rulemaking process. The written assessments must identify the law authorizing the rule, anticipated costs and benefits, the share of costs to be borne by the federal government, and the disproportionate costs on individual regions or components of the private sector. Additionally, the law requires that the assessments include estimates of the effect on the national economy, descriptions of consultations with non-federal government officials, and a summary of the evaluation of comments and concerns obtained throughout the promulgation process. Moreover, UMRA requires that federal agencies consider "a reasonable number" of policy options and select the most cost-effective or least burdensome alternative. Judicial review under UMRA is limited to ensuring that the agency complies with the procedural requirements of the statute. Courts may compel the agency to comply with the statute, but failure to do so cannot be used as a basis for invalidating a rule. Although it appears that REAL ID requires significant expenditures by the states to comply with its requirements, UMRA arguably exempts the REAL ID regulations from the statute's requirements. Specifically, Section 4 of UMRA excludes from the scope of the law final regulations that are "necessary for the national security." In addition, UMRA excludes regulations that "incorporate requirements specifically set forth in law." DHS relies on both of these provisions in its explanation as to why REAL ID is not an unfunded mandate. Nevertheless, in its explanatory statement accompanying the final rule, DHS indicated that it complied with the provisions of UMRA, noting that it analyzed the cost to the states, considered alternatives, and solicited input from state and local governments. In accordance with the effective date of the statute, on May 11, 2008, all drivers' licenses and personal identification cards from non-compliant states will no longer be accepted by federal officials for "official purposes," which includes access to federal facilities, boarding federally regulated commercial aircraft, entry into nuclear power plants, and such other purposes as established by the Secretary of Homeland Security. This general rule will take effect unless a state has requested an extension from DHS. Extensions of the May 11, 2008, deadline are authorized by § 205(b) of the REAL ID statute, specifically "to meet the requirements of [the act]." According to the final rule, however, the states requesting such an extension must have notified DHS by March 31, 2008. If granted, all extensions will be valid until December 31, 2009. As of the writing of this report, 49 states and the District of Columbia have been granted the initial extensions. The only state that has not yet received the extension is Maine. An issue that has arisen regarding the extensions is what constitutes "to meet the requirements of [the act]." Several states have made clear in their letters requesting the extension that either due to existing state law, or other concerns regarding REAL ID in general, that their request for an extension is not to be viewed as an indication that they intend to fully implement the requirements of REAL ID. Although it would appear that such an indication would arguably make the state ineligible for the extension, DHS has, to date, granted each of these extensions, despite such language in the state's request letter. In addition to the initial extension, states may request a second extension if, by October 11, 2009, states file with DHS a "Material Compliance Checklist" that demonstrates that the state is in "material compliance" with all of the benchmarks established by the final rule. This extension, if granted, will be valid until May 10, 2011. The final regulation does not indicate precisely what DHS considers to be "material compliance"; therefore, it appears that the decision to grant a second extension is solely at the discretion of the Secretary or his designee. According to the final rule, states must meet all of the REAL ID requirements by December 1, 2014, for drivers' licenses and personal identification cards issued to persons born after December 1, 1964, and by December 1, 2017, for persons born before December 1, 1964. Since its adoption in 2005, REAL ID has been a highly contested issue among state legislatures and governors. Prior to the publication of the NPRM in 2007, however, there was little activity at the state lawmaking level, primarily because officials were uncertain as to precisely what the implementation requirements were going to necessitate, either in terms of cost or potential changes to state law. Since the publication of the NPRM in 2007, there has been a dramatic increase in state responses to REAL ID and its requirements. To date, it appears that only six states—Indiana, Nevada, Ohio, Tennessee, Virginia, and Wisconsin—have affirmatively enacted legislation that in some form adopts, or requires to be adopted, the federal minimum standards that are articulated in REAL ID. These statutes, however, vary in type, and arguably in effectiveness. For example, in both Tennessee and Virginia, the language appears in annual appropriations acts, which arguably means that compliance may have to be reaffirmed during the state's next appropriations cycle, or it can be eliminated. Conversely, in Nevada, the legislature adopted into law new provisions of the state's motor vehicle code that appear to be intended to bring the state into full compliance with REAL ID. It also appears that an additional 12 states have statutory language pending that would require the appropriate state departments to come into compliance with the requirements of REAL ID. Conversely, there are nine states—Georgia, Idaho, Maine, Montana, Nebraska, New Hampshire, Oklahoma, South Carolina, and Washington—that have adopted state statutes that appear to indicate a refusal to comply with the requirements of REAL ID. These statutes vary in their terms and effectiveness as well. Montana, for example, appears to have adopted the strongest non-compliance law, which directs the Montana Department of Justice and the motor vehicle administration not to participate in the federal REAL ID Act and to report to the governor any attempts by DHS to secure implementation of REAL ID. In other examples, the Idaho legislature appropriated $0 for implementation in 2008, whereas the Georgia legislature authorized the governor to delay implementation unless certain conditions are met. In addition to the statutes directly prohibiting compliance, the legislative chambers in 15 states have adopted non-binding resolutions or memorials that urge Congress to either amend or repeal REAL ID, and/or that indicate the state's intent to not comply. All told, 24 states have passed legislation that either prohibits state compliance with the act or urges Congress to amend or repeal REAL ID. In addition to those states that have enacted either statutory commands or non-binding resolutions, there are a number of states that have such matters pending before their state lawmakers. Currently, it appears that 11 states have bills that would prohibit compliance pending before their legislatures, whereas another 20 states and the District of Columbia have non-binding resolutions or memorials awaiting action. The ramifications of having several states that do not opt to comply with the terms of REAL ID are far from clear. As previously discussed, the act itself is voluntary, binding only on federal agencies, not on the states. Thus, the statute contains no penalty for non-compliance. To the extent that there is a penalty for non-compliance by a state, it appears to be borne by the citizens of the non-compliant state. For example, after May, 11, 2008, the citizens of a state such as Montana—which has passed a law prohibiting compliance and has refused to file for an extension—will not be able to use their state-issued drivers' licenses or personal identification cards for official purposes. Therefore, after May 11, Montana citizens will not be able to show their Montana licenses to board a federally regulated aircraft or enter a federal building. Although this does not mean that citizens of the non-compliant states cannot engage in interstate travel via airplane—as many other forms of identification are acceptable by the Transportation Security Administration (TSA) (i.e., passport, military ID, other forms of state or federally issued identification)—or enter a federal court house or other federal building, it arguably does impose an additional burden on the citizen because the state has chosen not to comply. In addition, non-compliant states would apparently create holes in the scheme of state-to-state data sharing that is an integral part of REAL ID. Presumably, non-compliant states will not participate in the database creation or information-sharing system envisioned by the REAL ID regulations. Thus, it would appear that potential problems may arise if, for example, an applicant in a compliant state presents a document (i.e., birth certificate or other required paperwork) that requires verification from a non-compliant state. At this early stage of implementation, however, it is unclear precisely what effect this may have. Moreover, the existence of non-compliant states presents the potential for conflicts among the states, in addition to those between the non-compliant states and the federal government. For example, will a non-REAL ID-compliant driver's license or personal identification card issued by Montana continue to be a valid form if identification in Indiana, a state that has a specific compliance law in place? The converse question also exists; namely, will Montana accept forms of identification that comply with REAL ID as valid within its own jurisdiction? Currently, neither REAL ID itself, nor the existing state laws appear to expressly address these questions; however, they appear likely to arise as implementation advances. Finally, it has been noted that several of the states that have adopted statutes prohibiting compliance with REAL ID have also filed requests for extensions from DHS. According to DHS, Georgia, Nebraska, Oklahoma, and Washington have all requested the extensions. Although it appears possible to distinguish between a request for an extension and non-compliance, as indicated above, DHS's response to several states suggests that it is not strictly interpreting the statutory language that requires that extensions be granted only to those states evidencing an intent to comply. The final regulations promulgated by DHS on January 29, 2008, contained over 280 pages and responded to over 21,000 comments. This section contains a summary description and analysis of several of the major elements of the REAL ID regulations. Section 37.17 of the new regulations require that REAL ID-compliant drivers' licenses and personal identification cards contain the name that appears on the source documents presented by the applicant to establish identity. In other words, the name that must appear on a REAL ID-compliant card must be the same as the name that is on the identity document (passport, birth certificate, Social Security card, etc.) presented at the time an application for the card is submitted. The regulations do provide for an exception for persons whose names appear differently on identity documents due to "marriage, adoption, court order, or other mechanism permitted by State law or regulation." Commentators and critics of this approach have regularly pointed out that given the lack of a uniform convention with respect to this listing of names on federal documents this requirement is potentially burdensome to state officials who may be presented with numerous documents each with variations on the same name. In addition to the myriad of federal documents that utilize different naming conventions, there are foreign documents, each with their own naming rules and conventions, that may be presented as well. In short, the absence of any uniformity with respect to naming requirements makes the REAL ID standard burdensome to implement. Moreover, commentators noted that not all of the potential name variations will be covered by existing state laws or regulations. Thus, it remains possible that an individual could have their REAL ID application rejected because their name variation, while reasonable and perhaps practically justifiable, does not fall within a state's established legal exceptions. As a result, it appears that the burden may fall to the individual applicant to reconcile the names on their various documents before applying for a REAL ID. DHS has responded to these concerns by permitting any and all variations to the applicant's name that are accepted by the issuing state's laws or regulations. DHS also asserts that it has modified the language in the final rule so that it more closely adheres to the naming conventions utilized by the Social Security Administration, Department of State, and other document-issuing agencies. The final REAL ID regulations contain two provisions relevant to the applicant's "principal address." DHS has defined the phrase "principal residence" to mean the "location where the person is currently domiciled (i.e., presently resides even if at a temporary address)." The first provision relates to what the individual is required to show when applying for a REAL ID. According to § 37.11(f), "to document the address of principal residence, a person must present at least two documents of the State's choice that include the individual's name and principal residence." The second provision relates to what address is required to appear both on the face of the REAL ID and in the machine-readable portion. Pursuant to §37.17(f), the principal residence must appear on the REAL ID unless one of the following exceptions applies: (1) a State law, regulation, or DMV procedure permits display of an alternative address, or (2) Individuals who satisfy any of the following: (i) If the individual is enrolled in a State address confidentiality program which allows victims of domestic violence, dating violence, sexual assault, stalking, or a severe form of trafficking, to keep, obtain, and use alternative addresses; and provides that the addresses of such persons must be kept confidential, or other similar program; (ii) If the individual's address is entitled to be suppressed under State or Federal law or suppressed by a court order including an administrative order issued by a State or Federal court; or (iii) If the individual is protected from disclosure of information pursuant to section 384 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996. Several concerns continue to be raised about this provision. Among them are the impact on homeless and low-income individuals who may not have permanent residences; and the effect of the provision on those persons who, because of personal safety, confidentiality, or other reasons may have a legitimate need to keep their address off of identifying documents, but reside in a state that does not have a formal law, regulation, or DMV procedure permitting them to do so. With respect to the first concern, DHS has indicated that its final rule grants the states "wide latitude to address issues concerning an individual's address of principal residence within their State-specific exceptions process." In other words, according to DHS, the states will retain sufficient authority to issue REAL IDs to individuals, including those who are homeless, so long as the exceptions are properly documented in the state's issuing system. With respect to the second concern—personal security and confidentiality issues—DHS indicates that under the final rule the states have "broad authority to protect the confidentiality of the address of principal residence for certain classes of individuals." One commentator, however, noted that only 24 jurisdictions currently have formal confidentiality programs in place that will satisfy the rule's specific exception. Thus, in those states where formal programs do not currently exist, it is unclear how the confidentiality of those persons who may be placed at risk will be protected. Moreover, how those formal programs may come about, should jurisdictions opt to create them, will vary depending on existing laws and the required changes. For example, in some states it may be possible for confidential programs to be created either directly by the governor or by the agency responsible for issuing drivers' licenses and personal identification cards, whereas in other states legislative action may be required. REAL ID specifically requires states to verify the validity of the supporting documents presented by the applicant with the document's issuing agency. Section 37.13 of the final regulation provides the general standards for completing this verification. First, § 37.13(a) requires the states to "make reasonable efforts" to ensure that applicants do not have multiple REAL IDs issued under different identities. Second, § 37.13(b) requires the states to verify documents presented via electronic validation systems "as they become available or use alternative methods approved by DHS." The regulations proceed to provide for verification requirements for five different types of documents. First, with respect to documents presented by applicants that are issued by DHS, such as identity documents or documents establishing lawful presence in the United States, the regulations state that they can be verified using the Systemic Alien Verification System for Entitlements (SAVE). Second, concerning Social Security numbers (SSNs), the regulations require verification through either the Social Security Administration, or another method approved by DHS. One such alternative, according to DHS, is "AAMVAnet," which is the network system that the American Association of Motor Vehicle Administrators (AAMVA) operates to facilitate data verification for state motor vehicle departments and which appears to already support verification of both SSNs and birth certificates. Third, regarding birth certificate verification, the regulations indicate that states "should use the Electronic Verification of Vital Events (EVVE) system or other electronic systems whenever the records are available." In the explanatory section of the final rule, however, DHS acknowledges that EVVE is not yet ready for full implementation. Given the unavailability of the preferred electronic resource, the fact that birth records are retained by the individual states and not the federal government, and the wording of the regulation, it is unclear what other methods of birth-certification verification are available. Therefore, there remains an open question with respect to how the states are going to comply with this requirement. Fourth, with respect to documents issued by the Department of State (DOS), such as passports, the regulations require that the states verify the document with DOS or by means approved by DHS. No specific electronic system or preferred method, however, is indicated in the final rule. Finally, regarding REAL IDs issued by other states that may eventually be used as a form of identification, the regulations indicate that they will be required to be verified with the state of issuance. Similar to DOS documents, no specific verification system is mentioned or discussed. Presumably, the state-to-state information-sharing system envisioned by other sections of the regulations will provide a mechanism for the verification of these documents. Since no state is currently issuing REAL IDs, verification does not yet appear to be an issue. Although the regulations are silent with respect to the verification of an applicants "principal residence," the underlying REAL ID statute appears to include this requirement as well. Several commentators indicated concerns with respect to this, as they noted that no electronic means currently exist at either the state or federal level that will permit such a verification to occur. DHS concurs with this assessment and responds by noting that "[t]he rule gives States maximum flexibility in determining an individual's address of principal residence." Despite the statutory language, because the text of the final regulation is silent regarding verification of principal residence, it is unclear whether states will actually be required to perform this task to be considered in full compliance. Section 37.19 of the final regulation requires that—to meet the statutory requirement—all REAL IDs use compatible machine-readable technology. Specifically, the regulations state that "States must use the ISO/IEC 15438:2006(E) Information Technology—Automatic identification and data capture techniques—PDF417 symbology specification." In addition, the regulations require that the following data elements be contained on the bar code: (a) expiration date; (b) full legal name, unless the State permits an applicant to establish a name other than the name that appears on a source document, pursuant to § 37.11(c)(2); (c) date of transaction; (d) date of birth; (e) gender; (f) address as listed on the card pursuant to § 37.17(f); (g) unique driver's license or identification card number; (h) card design revision date, indicating the most recent change or modification to the visible format of the driver's license or identification card; (i) inventory control number of the physical document; (j) State or territory of issuance. The regulations also indicate that 45 states and the District of Columbia already utilize bar codes that comply with the PDF417 standard. However, it appears that a number of states may have to alter the type of information and method in which said information is stored to comply with the regulations. Contrary to the assertion of some REAL ID opponents, neither biometric technology nor radio-frequency identification (RFID) is required by the regulations to be used on REAL ID-compliant licenses or personal identification cards. Although these more advanced technologies are not required, the machine-readable requirement does raise security and personal privacy concerns that were addressed by DHS in the final rule. With respect to security of the information contained on the bar code, many commentators suggested that DHS prohibit the collection and storage of the data on the bar codes by third parties, specifically private businesses. DHS responded by noting that although the underlying statute does not provide them with the legal authority to prohibit such data collection, at least four states—California, Nebraska, New Hampshire, and Texas—currently have such provisions in place, and DHS is supportive of additional state efforts in this regard. As indicated above, § 202(d) of REAL ID requires states to employ technology to capture digital images of identity source documents and retain paper copies of source documents for a minimum of 7 years or digital images of source documents presented for a minimum of 10 years. Given that these are statutory requirements, § 37.31 of the final regulations contains the necessary language directing their implementation. In response to comments concerning the sensitive nature of storing a potentially vast amount of personally identifiable data, DHS has indicated that if requested by the applicant and permitted by state data retention laws, "a State shall record and retain the applicant's name, date of birth, certificate numbers, date filed, and issuing agency in lieu of an image or copy of the applicant's birth certificate." REAL ID requires states to ensure the physical security of locations where cards are produced and the security of document materials and papers from which drivers' licenses and identification cards are produced. In accordance with this statutory requirement, DHS has promulgated § 37.41, which mandates that the states submit a single security plan that addresses "[motor vehicle department] facilities involved in the enrollment, issuance, manufacturing and production of driver's licenses and identification cards." Specifically, these regulations call for the security plan to address the following: (1) physical security of the "[f]acilities used to produce driver's licenses and identification cards" as well as the "[s]torage areas for card stock and other materials used in card production;" (2) the security of personally identifiable information maintained at motor vehicle department locations that are involved in the enrollment, issuance, manufacturing, and production of drivers' licenses and identification cards; (3) document and physical security features of the card, consistent with the REAL ID regulations; (4) facility and information access controls; (5) periodic training requirements; (6) emergency and incident response plans; (7) internal audit controls; and (8) "affirmation that the State possesses both the authority and the means to produce, revise, expunge, and protect the confidentiality of REAL ID driver's licenses or [personal] identification cards issued in support of Federal, State, or local criminal justice agencies or similar programs that require special licensing or identification to safeguard persons or support their official duties." Although the regulations provide requirements for the security plans, several commentators noted the lack of standards and defined best practices. DHS indicated that it would be working with DOT, AAMVA, and the states to develop such recommended practices and preferred procedures. Other commentators raised concerns about the requirements for protection of personally identifiable information, especially given the mandate that state databases be interconnected. DHS responded that it believed its regulation provided sufficient guidance for the protection of the data, but indicated that the regulations were flexible enough to require additional protections without embarking on a new rulemaking. Although the statutory text appears to require the states to provide electronic access to their databases to all other states, it is unclear whether this requirement is contained in the final regulations. Section 37.33 entitled "DMV Databases" requires that the states must maintain a database that contains, at a minimum, the following elements: (1) all data fields printed on the face of the driver's license or personal identification card, individual serial numbers, and the applicant's SSN; (2) a record of the full legal name or recorded name without truncation; (3) all additional data fields included in the machine-readable zone but not printed on the card; and (4) all motor vehicle drivers' histories including points and/or suspensions. The provision makes no mention of interconnectivity or access to one state's database by either other states or the federal government. Other sections of the final regulations appear to indicate that the state-to-state data exchange and the document verification requirements are related. However, it is unclear what precisely DHS envisions with respect to interstate exchange of the information contained in the state databases. Section 37.45 of the final regulations governs the background checks required by the REAL ID statute on all state motor vehicle employees, including contract employees, who are involved in the "manufacture or production of REAL ID driver's licenses and [personal] identification cards, or who have the ability to affect the identity information that appears on the ... cards, or current employees who will be assigned to such positions." The contents of the check are to include the following: (1) both a name-based and fingerprint-based criminal history record check (CHRC) using, at a minimum, the FBI's National Crime Information Center (NCIC), the Integrated Automated Fingerprint Identification (IAFIS) database, and state repository records; (2) an employment-eligibility-status verification to ensure compliance with 8 U.S.C. § 1324a; and (3) a reference check, unless the employee has been employed for at least two consecutive years since May 11, 2006. Employees and applicants for employment can be disqualified if they have been convicted of, or found not guilty by reason of insanity, of any offense that is listed as a felony in 49 C.F.R. § 1572.103(a). In addition, a conviction of a crime as listed at 49 C.F.R. § 1572.103(b) if it was within seven years preceding the date of employment or release from incarceration within five years preceding the date of employment is grounds for disqualification. Finally, it is a violation for the state motor vehicle department to employ any individual whose employment eligibility under Section 247A of the Immigration and Nationality Act (8 U.S.C. § 1324a) cannot be verified. Opponents of REAL ID have argued that its implementation will create a de facto national identification card. Although these arguments have taken many forms, they appear to generally consist of three basic elements. First, opponents argue that the uniform issuance and verification standards imposed by the federal government will result in turning state workers into immigration enforcement officials by forcing them to check the citizenship status of each applicant and will move states away from the purpose of issuing a driver's license; namely, ensuring that operators of motor vehicles meet the minimum state requirements. Second, opponents point to both the machine-readable technology requirements and state data-sharing proposals as evidence of substantially increased federal government involvement in the traditionally state-run issuance of identification documents. Finally, opponents generally note that there appears to be an unlimited number of potential activities for which REAL ID-compliant licenses could be required. These could potentially include voting, firearm registration, employment, and receipt of subsidies and/or other federal or state benefits. In its discussion of the final rule, DHS specifically indicates that it "does not intend that REAL ID documents become a de facto national ID and does not support the creation of a national ID." In addition, DHS notes that it has limited the potential uses of REAL IDs to the purposes defined in the statute—accessing federal facilities, boarding federally regulated aircraft, and entering nuclear power plants—thereby limiting the functionality of the card. Finally, with respect to the database-creation issue, DHS notes that it "does not intend to own or operate a database on all driver's license and identification card holders." Although no uniformly accepted definition of a "national identification card" exists, it appears reasonable to argue that any such definition should include, at a minimum, that all of the cards be facially identical and that they all be issued by the same federal governmental entity. Under this standard, it appears difficult to argue that REAL ID is, or could potentially lead to, a national identification card. Moreover, as discussed above, participation by either the states or individuals in REAL ID is voluntary, not mandatory. In addition, the act contains specific restrictions on DHS's ability to regulate the design and/or appearance of the card. Finally, issuance will continue to take place on the state level, not by any entity of the federal government. By statute, REAL ID establishes a system of temporary licenses and identification cards that can be issued by the states to applicants who are not citizens of the United States, but can present evidence that they are "lawfully present" in the United States. Accordingly, § 37.21 of the final regulations implements these requirements. Thus, non-citizens in the United States who can demonstrate lawful presence in the United States are eligible to apply for and receive REAL IDs. However, the cards must be limited in validity commensurate with the time limit on the individual's lawful presence in the United States, and must clearly indicate, both on the face and machine-readable zone, that they are temporary or term-limited. Recently, some states—Oregon, Washington, and Maryland—have had attention drawn to the fact that by state law they permit the issuance of drivers' licenses and personal identification cards to any person, regardless of their immigration status in the United States. Other states such as New York, Michigan, and California, have indicated that they will either cease or not take legislative action to permit undocumented persons to receive drivers' licenses or personal identification cards— i.e., New York and California. It should be noted that even with the adoption and implementation of REAL ID, the decision to issue drivers' licenses or personal identification cards to persons regardless of their immigration status remains entirely with the issuing states. In other words, this choice of whom to issue non-REAL ID-compliant drivers' licenses and personal identification cards to does not appear to be altered or preempted. In fact, the statute clearly contemplates the issuance of documents by states that do not comply with REAL ID. Should states opt to do so, the law requires only that the non-compliant documents use a unique color identifier or design to alert officials that the document is not to be accepted for any official purpose. Thus, it appears that states may opt to issue multiple documents and still be in compliance with the law. For example, as reported, New York's proposal appeared to call for a three-tiered system, with state departments issuing REAL IDs in compliance with the regulations, enhanced drivers' licenses (EDLs) to citizens upon request, and non-compliant drivers' licenses and personal identification cards to those who either did not want or were not eligible for the other two types of documents. Such a scheme, while arguably costly and very complicated, nevertheless, appeared to be in full compliance with REAL ID and all other federal laws. The Western Hemisphere Travel Initiative, which can be found at § 7209 of the IRTPA, requires that the Secretary of Homeland Security, in consultation with the Secretary of State, expeditiously develop and implement a plan requiring that all travelers, including citizens of the Untied States, produce a passport, other document, or combination of documents, "deemed by the Secretary of Homeland Security to be sufficient to denote identity and citizenship ," when entering the United States. The use of the conjunctive "and" generally indicates that both elements, identity and citizenship, must be denoted by the documents presented. Although REAL ID contains increased security requirements for state-issued drivers' licenses and personal identification cards, these requirements appear to be focused on ensuring that the documents accurately reflect identity. REAL ID does not appear to require that the licenses or identification cards in any way "denote citizenship" in the United States. In fact, as noted above, REAL ID contains specific provisions that permit the issuance of licenses and identification cards to non-citizen residents of the United States who, by producing the required documentation and having it verified as authentic by the issuing agency, can demonstrate lawful presence in the country. Given the absence of requirements relating to citizenship, it does not appear that standing alone a driver's license or personal identification card would satisfy the statutory standard established by § 7209 for acceptable documents to be shown upon entrance to the United States. At this time, however, it remains unclear whether or not a driver's license or personal identification card, in conjunction with other presented documents may be considered sufficient to "denote identity and citizenship" as required by the statute. It should be noted, however, that the use of state-issued drivers' licenses or personal identification cards is not included in the Final WHTI Land/Sea Rule issued by the State Department and DHS on March 27, 2008. To implement WHTI, DHS and the Department of State have pursued the development of alternative identification documents that satisfy the standards as required by Congress. Most notably, WHTI requires that the documents shown denote "both identity and citizenship" to be compliant. At the time WHTI was enacted, the only U.S.-issued document that satisfied this requirement was a passport. Since WHTI's adoption, several jurisdictions have expressed interest in creating and issuing a document known as an enhanced driver's license (EDL). EDLs will contain on the face of the license as well as in the electronic components information relating to the holders citizenship; therefore, making the document WHTI compliant. Currently, the state of Washington has a pilot program in place that permits the issuing of EDLs to persons who provide verifiable proof of citizenship and pay an additional fee when they apply for issuance or renewal of their Washington driver's license. According to DHS's Final Rule for WHTI Land/Sea Entry, New York, Vermont, and Arizona are also states that have signed Memoranda of Understanding with DHS for EDL pilot programs of their own. Although EDLs and REAL ID are being implemented by the same agency, there are two major differences between the programs. First, unlike REAL ID, EDLs require that the cardholder be a U.S. citizen. Second, EDLs will implement radio-frequency identification (RFID) technology, whereas REAL IDs are only required to use a two-dimensional bar code system. Thus, although the two programs are related, they are not interchangeable. It may be possible, however, for an EDL to also qualify as a REAL ID, provided that the document satisfies the requirements of both programs. On the other hand, just because individuals have a REAL ID, it does not automatically follow that they qualify for an EDL, or can use their REAL ID as part of the WHTI program. One way of thinking about the relationship between these two programs may be that some EDLs will comply with REAL ID, but not all REAL IDs will qualify as WHTI-compliant EDLs. In other words, only after a careful review of the issuing requirements and document contents will one be able to determine whether a specific state-issued driver's license or personal identification card qualifies under neither, both, or only one of the two programs.
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In 2005, Congress addressed the issue of national standards for drivers' licenses and personal identification cards by passing The REAL ID Act of 2005 (REAL ID). The act contains a number of provisions relating to improved security for drivers' licenses and personal identification cards, as well as instructions for states that do not comply with its provisions. In general, while REAL ID does not directly impose federal standards with respect to states' issuance of drivers' licenses and personal identification cards, states nevertheless appear compelled to adopt such standards and modify any conflicting laws or regulations to continue to have such documents recognized by federal agencies for official purposes. Both at the time that REAL ID was debated in Congress, and during the regulatory comment period, questions about the constitutionality of the statute have been raised. There have been four main constitutional arguments made against REAL ID. First, because REAL ID cannot be premised on Congress's power to regulate interstate commerce, it is a violation of states' rights as protected by the Tenth Amendment. Second, the requirement that REAL IDs be used to board federally regulated aircraft impermissibly encroaches on citizens' right to travel. Third, specific requirements such as the digital photograph potentially violate the Free Exercise Clause of the First Amendment. Finally, REAL ID infringes upon a citizen's right under the First Amendment to freely assemble, associate, and petition the government. Since its adoption in 2005, REAL ID has been a highly contested issue among state legislatures and governors. According to some advocacy groups, state and federal elected officials—including numerous commentators to the proposed regulations—and other interested parties, REAL ID imposes an unconstitutional "unfunded mandate" on the states. Prior to the publication of the proposed rule in 2007, however, there was little activity at the state-lawmaking level, primarily because officials were uncertain as to precisely what the implementation requirements were going to necessitate, either in terms of cost or potential changes to state law. Since the publication of the proposed rule in 2007, there has been a dramatic increase in state responses to REAL ID and its requirements. The final regulations were promulgated by the Department of Homeland Security (DHS) on January 29, 2008, and contain 280 pages of explanation as well as responses to over 21,000 comments. This report contains a summary description and analysis of several of the major elements of the REAL ID regulations. Finally, this report will address REAL ID in relationship to other federal laws and identification programs. This report will be updated as events warrant.
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Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. The timetable associated with this process requires that the enactment of these regular appropriations bills occurs prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that time, continuing appropriations (often referred to as "continuing resolutions" or CRs) may be used to provide funding until the annual appropriations process has been concluded. A total of four CRs were enacted during the FY2014 appropriations process. No regular appropriations acts for FY2014 were enacted by the start of the fiscal year. A "narrow" CR to provide funds for certain Department of Defense (DOD) and Department of Homeland Security (DHS) activities in the absence of a "broad" CR or annual appropriations (the Pay Our Military Act; H.R. 3210 ; P.L. 113-39 , 113 th Congress) had become law. As a result, a funding gap commenced for affected projects and activities on October 1. During the funding gap, one additional CR was enacted (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91 ; P.L. 113-44 ), to provide appropriations for military death gratuities. After 16 full days, the funding gap was terminated on October 17 with the enactment of a "broad" CR that funded projects and activities funded in the previous fiscal year (the Continuing Appropriations Act, 2014; H.R. 2775 ; P.L. 113-46 ). This funding was to expire on January 15, 2014. To allow additional time to conclude the annual appropriations process, that funding was extended to January 18, 2014 (Making further continuing appropriations for fiscal year 2014, and for other purposes; H.J.Res. 106 ; P.L. 113-73 ). This report summarizes the components of the four FY2014 continuing resolutions. For information on the congressional consideration of FY2014 appropriations measures, including these four CRs, see CRS Report R43338, Congressional Action on FY2014 Appropriations Measures , by [author name scrubbed]. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2014, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by [author name scrubbed]. Table 1 summarizes the contents of the four FY2014 CRs with regard to their coverage, expiration, formula, anomalies, and estimated annualized amount of discretionary spending. C overage relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular and supplemental appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as "covering" that act. The duration of a CR refers to the period of time for which budget authority is provided for covered activities. This duration is limited by an expiration date, which may occur prior to the close of the fiscal year ("temporary" or "interim" continuing appropriations), or may extend through the end of the fiscal year ("full-year" continuing appropriations). That expiration date may be superseded by the enactment of annual appropriations or a further CR. A formula is typically used by CRs to provide budget authority at a restricted level without prescribing a specific amount. The formula is used to calculate an annualized rate of budget authority for each project and activity. Alternatively, a continuing appropriations act may provide specific amounts for covered projects and activities in the text of the act, or by reference. Anomalies are provisions in a CR that designate exceptions to the duration, formula, or purpose for which any referenced funding or other authority is extended. The Congressional Budget Office (CBO) has estimated the annualized discretionary spending for FY2014 under these CRs using two different measures: "total regular appropriations" and "total spending." Total regular appropriations is an estimate of only the annualized discretionary budget authority that is subject to the Budget Control Act (BCA) discretionary spending limits. Total spending is an estimate of annualized discretionary budget authority that includes budget authority not subject to the discretionary spending limits because it was designated for the purposes of Section 251(b) of the Balanced Budget and Emergency Control Act of 1985 (Title II of P.L. 99-177 , 2 U.S.C. 900-922; BBEDCA). The contents of these four FY2014 CRs are discussed further in the subsections below. The first CR to be enacted for FY2014 was an "automatic" CR, meaning that it provided funding for specified activities that would become available automatically during a FY2014 funding gap, and expire when an applicable regular appropriations act or CR was enacted. This CR provided a mechanism to cover projects and activities in three different categories: (1) Pay and allowances to members of the Armed Forces (as defined in section 101(a)(4) of title 10, United States Code), including reserve components thereof, who perform active service during such period; (2) Pay and allowances to the civilian personnel of the Department of Defense (and the Department of Homeland Security in the case of the Coast Guard) whom the Secretary concerned determines are providing support to members of the Armed Forces described in paragraph (1); and (3) Pay and allowances to contractors of the Department of Defense (and the Department of Homeland Security in the case of the Coast Guard) whom the Secretary concerned determines are providing support to members of the Armed Forces described in paragraph (1). The duration of the budget authority that was provided by this mechanism began on October 1, 2013, due to the absence of enacted regular or continuing appropriations, and terminated on October 17, 2013, with the enactment of the Continuing Appropriations Act of 2014 ( P.L. 113-46 ). The formula for this mechanism provided FY2014 funds for each day of a funding gap at an indefinite level for all covered projects and activities (i.e., "such sums as are necessary"). There were no anomalies in this CR. No CBO cost estimate was issued while the measure was under consideration. The second CR for FY2014 was the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014 ( H.J.Res. 91 ; P.L. 113-44 ), which was enacted on October 10, 2013. This CR provided funds to cover the following activities in the Department of Defense "Operation and Maintenance" and "Military Personnel" accounts: (1) The payment of a death gratuity under sections 1475-1477 and 1489 of title 10, United States Code. (2) The payment or reimbursement for funeral and burial expenses authorized under sections 1481 and 1482 of title 10, United States Code. (3) The payment or reimbursement of authorized funeral travel and travel related to the dignified transfer of remains and unit memorial services under section 481f of title 37, United States Code. (4) The temporary continuation of a basic allowance of housing for dependents of members dying on active duty, as authorized by section 403(l) of title 37, United States Code. The duration of funds under this CR began on October 10, 2013, and was to terminate on December 15, 2013, unless superseded by the enactment of a regular or continuing appropriations act. These funds were superseded by the enactment of P.L. 113-46 , on October 17, 2013. The funding formula for each covered project and activity was at the rate the projects and activities were funded in the previous year's appropriations act (the Department of Defense Appropriations Act, 2013; Division C of P.L. 113-6 ). This rate was calculated based on the amount of funding available for that project or activity under the terms of that act, including the effects of any provisions reducing FY2013 budget authority. The formula also included any reduction that applied to those FY2013 funds pursuant to the March 1 presidential sequestration order. There were no anomalies in this CR. According to CBO, the total amount of annualized budget authority for regular appropriations in this CR was $116 million. When spending was included in the calculation that was designated under Section 251(b) of the BBEDCA (for OCO/GWOT), the total CBO-estimated amount of annualized budget authority in the CR was $150 million. The third CR for FY2014 was the Continuing Appropriations Act, 2014 ( H.R. 2775 ; P.L. 113-46 ; hereinafter "the FY2014 CR"), which was enacted on October 17, 2013. This act superseded the funding provided under the two narrow FY2014 CRs. This CR broadly covered all 12 regular appropriations bills by providing budget authority for projects and activities funded in FY2013 by Divisions A-F of the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ; Hereinafter, "the FY2013 Consolidated Act"), with an exception. This included any FY2013 budget authority that was designated as for "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT), "continuing disability reviews and redeterminations," "health care fraud abuse control," and "disaster relief," and thus exempt from the statutory discretionary spending limits. Budget authority was provided by the FY2014 CR under the same authority and conditions, and to the same extent and manner, as was provided in the FY2013 Consolidated Act. In addition, under the terms of this CR, none of the funds provided were to be used to initiate or resume an activity for which budget authority was not available in FY2013. Effectively, this provision extended many of the provisions in the FY2013 Consolidated Act that stipulated or otherwise placed limits on agency authorities during FY2013. A goal of these and similar provisions in other CRs, as well as many of the other provisions discussed in the sections below, was to protect the ability for Congress to ultimately provide annual funding in the manner and for the purposes it chooses in whatever final appropriations measures are enacted. Funding in the FY2014 CR was effective as of October 1, 2013, and was to terminate on January 15, 2014. This CR also provided that budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to or on January 15. For projects and activities funded in the FY2014 CR that were not subsequently funded in the applicable full-year appropriations act enacted prior to or on January 15, budget authority under the CR would immediately cease upon such enactment. The FY2014 CR provided budget authority for projects and activities that were funded in the FY2013 Consolidated Act, at the rate that they were funded therein. This rate was calculated based on the amount of funding available under the terms of the previous year's appropriations act, including any provisions reducing FY2013 budget authority that were included in those acts. More broadly, this rate was also to reflect the impact of the across-the-board rescissions in Division G of the Consolidated and Further Continuing Appropriations Act of 2013 ( P.L. 113-6 ), as well as any reduction that occurred pursuant to the March 1 presidential sequestration order. Many of the anomalies in this CR affected the funding levels that would otherwise be provided by the formula for covered activities. For example, a provision in the CR stated, Notwithstanding section 101, amounts are provided for "The Judiciary—Courts of Appeals, District Courts, and Other Judicial Services—Salaries and Expenses" at a rate of operations of $4,820,181,000: Provided, That notwithstanding section 302 of Division C, of P.L. 112-74 as continued by P.L. 113-6 , not to exceed $25,000,000 shall be available for transfer between accounts to maintain minimum operating levels. In this and other such instances, an alternative amount of annualized funding is provided for a specified project or activity, which may be higher or lower than what the CR's formula would provide. Other anomalies affected the purpose for which funds could be spent with reference to the FY2013 appropriations acts, or the duration of the authority to spend such funds. For example, the CR provides, Notwithstanding any other provision of this joint resolution, the District of Columbia may expend local funds under the heading "District of Columbia Funds" for such programs and activities under title IV of H.R. 2786 (113 th Congress), as reported by the Committee on Appropriations of the House of Representatives, at the rate set forth under "District of Columbia Funds—Summary of Expenses" as included in the Fiscal Year 2014 Budget Request Act of 2013 (D.C. Act 20-127), as modified as of the date of the enactment of this joint resolution. In effect, this provision allowed for the District of Columbia to spend local funds for an alternative set of purposes (and amounts) than what would have been provided under Section 101, as well as to spend those funds beyond the expiration date in Section 106. Provisions in the CR also extended expiring statutory authorities. For example, the CR provided, The authority provided by sections 1205 and 1206 of the National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 ) shall continue in effect, notwithstanding subsection (h) of section 1206, through the earlier of the date specified in section 106(3) of this joint resolution or the date of the enactment of an Act authorizing appropriations for fiscal year 2014 for military activities of the Department of Defense. Extensions of statutory authorities in the CR, unless otherwise indicated, were in effect through January 15, 2014. According to CBO, the total amount of annualized budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) was $986.3 billion. When spending was included in the CBO estimate that was designated under Section 251(b) of the BBEDCA for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief, the total amount of annualized budget authority in the CR was $1.088 trillion. At the time it was enacted, the annualized levels of spending in the FY2014 CR would have exceeded one of the two statutory discretionary spending limits. While nondefense spending in the CR was estimated by CBO to be the equivalent of an annual level of $468.3 billion, which was about $1 billion below the existing nondefense limit, the estimate for defense spending was $518 billion, about $20 billion above the existing defense limit. The BCA limits, however, were not to be enforced until 15 calendar days after the congressional session adjourned sine die . In the interim, the Bipartisan Budget Act ( P.L. 113-67 ) amended the FY2014 limits to be $520.5 billion in defense spending, and $491.8 billion in nondefense spending (about $1.012 trillion total). Spending in the FY2014 CR was about $2.5 billion below the amended defense limit, and $23.5 billion below the amended nondefense limit. The fourth CR for FY2014 extended the expiration date of the previous CR ( P.L. 113-46 ) to January 18, 2014. No other amendments to the FY2014 CR were made by the act.
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Four continuing resolutions (CRs) were enacted during the FY2014 appropriations process, to provide temporary funding until the Consolidated Appropriations Act, FY2014, was enacted on January 17, 2014 (P.L. 113-76). The first two CRs were enacted before and during the FY2014 funding gap, which commenced on October 1, 2013, and terminated on October 17, 2013. Both of these were "narrow" CRs, in that they only funded certain prior year projects and activities. The first CR, the Pay Our Military Act (H.R. 3210; P.L. 113-39), was enacted on September 30, 2013. It provided funds for certain Department of Defense (DOD) and Department of Homeland Security (DHS) activities in the absence of a general CR or annual appropriations. An additional CR was enacted during the funding gap (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91; P.L. 113-44), to provide appropriations for military death gratuities. The funding gap terminated on October 17, 2013, through the enactment of a "broad" CR that funded the previous fiscal year's projects and activities through January 15, 2014 (the Continuing Appropriations Act, 2014; H.R. 2775; P.L. 113-46). The funding rate for these projects and activities was based upon the amount available under the previous year's appropriations acts, including any reductions to those amounts through provisions in those prior year acts. It also reflected the reductions that occurred pursuant to the March 1 presidential sequestration order. When accounting for the anomalies that were included in the CR, the Congressional Budget Office (CBO) estimated that the annualized budget authority subject to the statutory spending limits was $986.3 billion. The total amount of annualized budget authority (including spending designated for overseas contingency operations/global war on terror, continuing disability reviews and redeterminations, health care fraud abuse control, and disaster relief) was $1.088 trillion. To allow additional time to conclude the annual appropriations process, funding provided by the third CR was extended to January 18, 2014, through the enactment of a fourth CR (Making further continuing appropriations for fiscal year 2014, and for other purposes; H.J.Res. 106; P.L. 113-73).
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" No vehicles in the park. " For decades, lawyers have debated the proper scope of this hypothetical law. The rule at first appears admirably straightforward, but thought experiments applying the law quickly reveal latent complications. Does this law forbid bicycles? Baby strollers? Golf carts? Drones? Does it encompass the service vehicles of the park's caretakers, or an ambulance responding to a parkgoer's injury? Would it prevent the city from bringing in a World War II truck and mounting it on a pedestal as part of a war memorial? While many would read the hypothetical law to prohibit an enthusiastic mother from driving a minivan full of young soccer players into the park, it may not be so simple to justify that seemingly reasonable interperetation. If the soccer mom challenged the decision of a hypothetical Department of Parks and Recreation to prohibit her from entering, how would the Department's lawyers justify this position? Should they refer primarily to the law's text, or to its purpose? What tools should they use to discover the meaning of the text or the lawmaker's purpose? How does their theory of interpretation influence their answers to the harder problems of application? This deceptively simple hypothetical has endured because it usefully illustrates the challenges of statutory interpretation. Even a statutory provision that at first appears unambiguous can engender significant difficulties when applied in the real world. Supreme Court Justice Felix Frankfurter once aptly described the problem of determining statutory meaning as inherent in "the very nature of words." The meaning of words depends on the context in which they are used and might change over time. Words are "inexact symbols" of meaning, and even in everyday communications, it is difficult to achieve one definite meaning. These "intrinsic difficulties of language" are heightened in the creation of a statute, which is crafted by a complicated governmental process and will likely be applied to an unforeseeable variety of circumstances. Statutes are usually written in general terms, which may compound the difficulty of applying a provision to specific situations. However, this generality—and the ensuing ambiguity—is often intentional: statutes are frequently drafted to address " categories of conduct." The enacting legislature may have sought to ensure that the statute would be general enough to capture the situations it could not foresee, or may have intended to delegate interpretive authority to the agency responsible for enforcing the statute. Vague or ambiguous language might also be the result of compromise. Or a statute might be silent with respect to a particular application because Congress simply did not anticipate the situation. When a statute becomes the subject of a dispute in court, judges usually must interpret the law, ambiguous or not. As Chief Justice John Marshall stated in Marbury v. Madison : "It is emphatically the province and duty of the judicial department to say what the law is." Judicial pronouncements about statutes are generally the final word on statutory meaning and will determine how the law is carried out—at least, unless Congress acts to amend the law. In the realm of statutory interpretation, many members of the judiciary view their role in "say[ing] what the law is" as subordinate to Congress's position as the law's drafter. Indeed, the legitimacy of any particular exercise in statutory interpretation is often judged by how well it carries out Congress's will. Judges have taken a variety of approaches to resolving the meaning of a statute. The two theories of statutory interpretation that predominate today are purposivism and textualism. Proponents of both theories generally share the goal of adhering to Congress's intended meaning, but disagree about how best to achieve that goal. Judges subscribing to these theories may employ different interpretive tools to discover Congress's meaning, looking to the ordinary meaning of the disputed statutory text, its statutory context, any applicable interpretive canons, the legislative history of the provision, and evidence about how the statute has been or may be implemented. Understanding the theories that govern how judges read statutes is essential for Congress to legislate most effectively. As a practical matter, judicial opinions interpreting statutes necessarily shape the way in which those statutes are implemented. If Congress knows how courts ascribe meaning to statutory text, it might be able to eliminate some ambiguity regarding its meaning by drafting according to the predominant legal theories. If Congress follows courts' methodologies for statutory interpretation, it may better communicate its policy choices not only to courts, but also to the general public. Members of the public frequently interpret statutes in the same way as courts, whether because they look to courts as the final arbiters of statutes or because courts often intentionally mimic general understandings of how language is naturally interpreted. Finally, as this report discusses in detail, judges and legal scholars are engaged in an ongoing and evolving debate over the best way to determine the meaning of statutes. For Members of Congress and their staff to participate meaningfully in this discussion, they must be aware of the scope and intricacies of that debate. To help provide Congress with a general understanding of how courts interpret statutory languge, this report begins by discussing the general goals of statutory interpretation, reviewing a variety of contemporary and historical approaches. The report then describes the two primary theories of interpretation employed today, before examining the main types of tools that courts use to determine statutory meaning. The report concludes by exploring developing issues in statutory interpretation. Courts "say what the law is" by resolving legal disputes in individual cases. This is true whether a court is interpreting a positive law, such as a statute or regulation, or reasoning from a prior judicial precedent, drawing from a body of law known as the common law. With regard to the common-law tradition of making law through judicial opinions, a court reasons by example, applying general "principles of equity, natural justice, and . . . public policy" to the specific circumstances before the court. Case by case, a common-law court decides more or less anew whether each set of circumstances should follow the rule of a previous decision. But in resolving a statutory dispute, courts generally do not simply determine, based on equity or natural justice, what would have been a reasonable course of action under the circumstances. Instead, the court must "figure out what the statute means" and apply the statutory law to resolve the dispute. The predominant view of a judge's proper role in statutory interpretation is one of "legislative supremacy." This theory holds that when a court interprets a federal statute, it seeks "to give effect to the intent of Congress." Under this view, judges attempt to act as "faithful agents" of Congress. They "are not free to simply substitute their policy views for those of the legislature that enacted the statute." This belief is rooted in the constitutional separation of powers: in the realm of legislation, the Constitution gives Congress, not courts, the power to make the law. The judicial power vested in the courts entails only "the power to pronounce the law as Congress has enacted it." Accordingly, courts must remain faithful to what the legislature enacted. It was not always the case that judges described their role in statutory interpretation as being so constrained. This section broadly reviews the evolution of statutory interpretation in U.S. courts, noting the various schools of legal thought that predominated at particular periods in the nation's history. However, while these other interpretive theories no longer represent a majority view, all continue to exist in some form today, and critically, they influenced the development of the theories that do dominate modern legal theory. Legal thinking in this country's early years was influenced by the idea of natural law, which is the belief that law consists of a set of objectively correct principles derived "from a universalized conception of human nature or divine justice." The goal of judges in a natural law system is to "conform man-made law to those natural law principles." Accordingly, courts looked to "the equity of the statute," seeking to find "the reason or final cause of the law" in order to address "the mischief for which the common law did not provide," but the newly enacted statute did, "and to add life to the cure and remedy, according to the true intent of the makers of the act." A distinct, but not mutually exclusive, view of the law that gained popularity in the 19 th century, formalism, posits that "the correct outcome of a case could be deduced" scientifically from fundamental "principles of common law" contained in prior cases. These early formalists believed that they could use established forms of logic, based on these fundamental common-law principles, to determine the meaning of statutory text. Both natural law and formalism share the belief that the law provides one right answer to any question and lawmakers can discover that answer. For those who subscribe to these schools of thought, the source of this answer is neither the legislature nor the courts, but the higher principles of law themselves. When natural law and formalism dominated legal thinking, "it did not matter as much whether judges conceived of themselves as faithful agents of Congress or coequal partners in law elaboration." This is because under these theories, both courts and legislators are engaged in the same process of finding the one correct answer. And if courts discover the answer to the legal question presented, proponents of natural law and formalism contend that there is no need to defer to the legislature. Accordingly, under these theories, courts might resort to equity or reason over a strict construction of the language of the statute because this gloss on the legislative text amounts to a "correction" of a defective statute, a correction that would not have been necessary "if the original had been correctly stated." As a result, a prevalent view in the 19 th century was that the judge merely said "what the legislator himself would have said had he been present, and would have put into his law if he had known." Critically, then, the legitimacy of the theories that primarily governed early American jurisprudence hinged on the belief that a judge could divine the law by focusing on general principles of justice or logic. But as the school of legal realism gained traction in the early 20 th century, legal scholars began to question these assumptions and called for judges to more self-consciously justify the legitimacy of their rulings. The early legal realists sought to discover "how law 'really' operated," applying new insights from the fields of sociology and psychology to judicial decisionmaking. Legal realism led to the widespread recognition that judges sometimes make law, rather than discover it. As a result, judges more readily acknowledged that there were no "pre-established truths of universal and inflexible validity"—or at least, that they could not divine those truths and invariably derive from them the proper conclusion in any given case. For legal realists, there is "no single right and accurate way of reading one case." Accordingly, the need arose for judges to more openly justify the law that they announced in any given case. In the field of statutory interpretation in particular, legal scholars and judges responded to legal realism in part by distinguishing the law-making role of the legislature from the law-interpreting role of the court. In this realm especially, "law" was not some platonic ideal, but instead was the statute that Congress had passed. Justice Oliver Wendell Holmes famously expressed this shift in prevailing legal theory when he stated, "[t]he common law is not a brooding omnipresence in the sky but the articulate voice of some sovereign or quasi sovereign that can be identified . . . ." Judges noted that the Constitution itself restrained judicial discretion by designating Congress, not the courts, as the lawmaking branch. And because Congress made the law, judges argued that they should restrain themselves to act "as merely the translator of another's command." As Justice Frankfurter asserted: "In a democracy the legislative impulse and its expression should come from those popularly chosen to legislate, and equipped to devise policy, as courts are not." Rather than seeking to discover foundational principles of the law, as determined by judges, many legal theorists argued that courts should instead attempt "to discover the rule which the law-maker intended to establish; to discover the intention with which the law-maker made the rule, or the sense which he attached to the words wherein the rule is expressed." To do otherwise was to risk attempting to make policy, usurping the legislative function. Today it is widely accepted that it is inappropriate for judges to prioritize their own policy views over the policy actually codified by the legislature. This general view undergirds both modern purposivism and modern textualism. Not all legal scholars and judges, however, reacted to legal realism by adopting a view of legislative supremacy in statutory interpretation. A smaller but influential number argued instead that if judges make law, they should openly embrace this role and seek to make good law. This school of thought, which continues today, points out that the Constitution has granted to judges the power of interpretation and argues that the constitutional duty of interpretation entails a meaningful duty to shape the law. For example, legal scholar William Eskridge has claimed that the Constitution purposefully "divorces statutory interpretation (given to the executive and the courts in articles II and III) from statutory enactment (by Congress under article I)," in order to ensure "that statutes will evolve because the perspective of the interpreter will be different from that of the legislator." At least one commentator has characterized Eskridge's theory of "pragmatic dynamism" as a revival of the natural law tradition of equitable interpretation. Judge Guido Calabresi, while a professor at Yale Law School, argued that judges should take an active role in determining whether statutes are "out of phase with the whole legal framework," and should have "the authority to treat statutes as if they were no more and no less than part of the common law." Former federal judge Richard Posner, another pragmatist, has similarly argued that judges should take into account their "intuitions" or "preconceptions," and look to the practical consequences of their decisions in determining how to read a statute. The two predominant theories of statutory interpretation today are purposivism and textualism. As discussed, both theories share the same general goal of faithfully interpreting statutes enacted by Congress. This goal is grounded in the belief that the Constitution makes the legislature the supreme lawmaker and that statutory interpretation should respect this legislative supremacy. Interpretive problems arise, however, when courts attempt to determine how Congress meant to resolve the particular situation before the court. The actual intent of the legislature that passed a given statute is usually unknowable with respect to the precise situation presented to the court. Accordingly, purposivists and textualists instead seek to construct an objective intent. Purposivists and textualists, however, disagree about the best way to determine this objective intent. This disagreement is based in large part on distinct views of the institutional competence of the courts. The concept of "institutional competence" assumes that each branch of government "has a special competence or expertise, and the key to good government is not just figuring out what is the best policy, but figuring out which institutions should be making which decisions and how all the institutions should interrelate." "[T]he rules of [statutory] interpretation allocate lawmaking power among the branches of government, and those rules should reflect and respect what, if anything, the Constitution has to say about that allocation." Consequently, because purposivists and textualists have different views of how judges can best act to advance the will of the legislature, they advocate different modes of interpretation and turn to different tools for evidence of Congress's objective intent. Purposivists argue "that legislation is a purposive act, and judges should construe statutes to execute that legislative purpose." Purposivists often focus on the legislative process, taking into account the problem that Congress was trying to solve by enacting the disputed law and asking how the statute accomplished that goal. They argue that courts should interpret ambiguous text "in a way that is faithful to Congress's purposes." Two preeminent purposivists from the mid-20 th century, Henry Hart and Albert Sacks, advocated the "benevolent presumption . . . that the legislature is made up of reasonable men pursuing reasonable purposes reasonably." But there was a caveat to this presumption: it should not hold if "the contrary is made unmistakably to appear" in the text of the statute. Purposivists believe that judges can best observe legislative supremacy by paying attention to the legislative process. The Constitution "charges Congress, the people's branch of representatives, with enacting laws," and accordingly, purposivists contend that courts should look to "how Congress actually works." As such, they argue that to preserve the "integrity of legislation," judges should pay attention to "how Congress makes its purposes known, through text and reliable accompanying materials constituting legislative history." Courts should take into consideration any "institutional device that facilitates compromise and helps develop the consensus needed to pass important legislation." As one purposivist judge has said, "[w]hen courts construe statutes in ways that respect what legislators consider their work product, the judiciary not only is more likely to reach the correct result, but also promotes comity with the first branch of government." To discover what a reasonable legislator was trying to achieve, purposivists rely on the statute's "policy context," looking for "evidence that goes to the way a reasonable person conversant with the circumstances underlying enactment would suppress the mischief and advance the remedy." Purposivists are more willing than textualists to consider legislative history. But arguably, the core of purposivism is "reasoning by example" and asking whether various specific applications of the statute further its general purpose. As a result, purposivists maintain that courts should first ask what problem Congress was trying to solve, and then ask whether the suggested interpretation fits into that purpose. Hart and Sacks suggested that judges should seek "to achieve consistency of solution . . . to make the results in the particular cases respond to . . . some general objective or purpose to be attributed to the statute." Judges should look for interpretations that promote "coherence and workability." Detractors argue that it is likely impossible to find one shared intention behind any given piece of legislation, and that it is inappropriate for judges to endeavor to find legislative purpose. Such critics claim that judges are not well-equipped to understand how complex congressional processes bear on the law finally enacted by Congress—not least because the records of that process, in the form of legislative history, are often internally contradictory and otherwise unreliable. Opponents of purposivism also sometimes argue that the theory is too easily manipulable, allowing the purposivist to ignore the text and "achieve what he believes to be the provision's purpose." In contrast to purposivists, textualists focus on the words of a statute, emphasizing text over any unstated purpose. Textualists argue courts should "read the words of that [statutory] text as any ordinary Member of Congress would have read them." They look for the meaning "that a reasonable person would gather from the text of the law, placed alongside the remainder of the corpus juris [the body of law]." Textualists care about statutory purpose to the extent that it is evident from the text. Accordingly, textualists "look at the statutory structure and hear the words as they would sound in the mind of a skilled, objectively reasonable user of words." Textualists believe that "judges best respect[] legislative supremacy" when they follow rules that prioritize the statutory text. For textualists, focusing on the text alone and adopting the "presumption that Congress 'means . . . what it says' enables Congress to draw its lines reliably—without risking that a court will treat an awkward, strange, behind-the-scenes compromise as a legislative error or oversight." As Judge Frank Easterbrook stated, "[s]tatutes are not exercises in private language," but are "public documents, negotiated and approved by many parties." Textualism focuses on the words of a statute because it is that text that survived these political processes and was duly enacted by Congress, exercising its constitutional power to legislate. Textualists have argued that focusing on "genuine but unexpressed legislative intent" invites the danger that judges "will in fact pursue their own objectives and desires" and, accordingly, encroach into the legislative function by making, rather than interpreting, statutory law. To discover what a reasonable English-speaker would think a statute's text means, textualists look for evidence of the statute's "semantic context," seeking "evidence about the way a reasonable person conversant with relevant social and linguistic practices would have used the words." Many textualists decline to use legislative history under most circumstances. Instead, textualist judges generally seek to discover "the shared conventions" that are inherent in the statutory language, asking what "assumptions [were] shared by the speakers and the intended audience." As evidence of these shared assumptions, textualists might turn to rules of grammar, or to the so-called "canons of construction" that "reflect broader conventions of language use, common in society at large at the time the statute was enacted." Critics of textualism argue that the theory is an overly formalistic approach to determining the meaning of statutory text that ignores the fact that courts have been delegated interpretive authority under the Constitution. Opponents of textualism sometimes claim that Congress legislates with this background understanding, expecting courts to pay attention to legislative processes and the law's purpose when applying it to specific circumstances. As a result, textualism's detractors argue that considering evidence of a statute's purpose can be more constraining on a judge than merely considering the text, divorced from evidence of legislative intent. The distinctions between these two theories were illustrated in the Supreme Court case of Arlington Central School District Board of Education v. Murphy . The case arose out of a suit in which a student's parents had successfully sued a school district under the Individuals with Disabilities Education Act. As relevant to the case, that Act provided that "a court 'may award reasonable attorneys' fees as part of the costs' to parents who prevail in an action brought under the Act." The parents sought to recover fees paid to an expert in education who had provided assistance throughout the proceedings. The issue before the Court was whether the Act "authorized the compensation of expert fees." In a textualist opinion written by Justice Alito, the majority of the Court concluded that the Act did not authorize the compensation of expert fees. Emphasizing that courts must "begin with the text" and "enforce [that text] according to its terms," the Court stated that the provision "provides for an award of 'reasonable attorneys' fees,'" without "even hint[ing]" that the award should also include expert fees. The majority opinion rejected the parents' arguments that awarding expert fees would be consistent with the statute's goals and its legislative history, "in the face of the [Act's] unambiguous text." By contrast, Justice Breyer's dissenting opinion embodied a purposivist approach to interpreting the statute. He concluded that the disputed term "costs" should be interpreted "to include the award of expert fees" for two reasons: "First, that is what Congress said it intended by the phrase. Second, that interpretation furthers the [Act's] statutorily defined purposes." Justice Breyer relied on the bill's legislative history and the Act's "basic purpose"—to guarantee that children with disabilities receive quality public education—as primary evidence of the statute's meaning. He did not agree that the statute's text was unambiguous. Although he noted that a literal reading of the provision would not authorize the costs sought by the parents, he concluded that this reading was "not inevitable." Instead, he concluded that his reading, "while linguistically the less natural, is legislatively the more likely." Many judges, however, do not necessarily identify as pure purposivists or textualists; or even if they do, in practice, they will often employ some elements from each theory. Some scholars have argued that even the theoretical gap between these two theories is narrowing. Most modern purposivists consider the statutory text to be both a starting point and an ultimate constraint. And most textualists will look past the plain text, standing alone, to discover the relevant context and determine what problem Congress was trying to address. One Supreme Court case issued in 2017 demonstrates the increasing similarities between the two factions, as well as the remaining distinctions. In NLRB v. SW General, Inc. , the Supreme Court considered whether the service of the Acting General Counsel of the National Labor Relations Board violated a statute that limits the ability of federal employees to serve as "acting officers." The case presented a question of statutory interpretation, and the majority and dissenting opinions both began their analysis with the statutory text before proceeding to consider many of the same sources to determine the meaning of the disputed statute. The majority opinion in SW General , authored by Chief Justice John Roberts, principally represents a textualist point of view, although it also includes some elements of purposivism. In describing the facts of the case, the Chief Justice began with an explanation of the problem that Congress faced when it first enacted the disputed statute, and, in so doing, considered the original version of that statute and subsequent amendments intended to address continuing disputes over the ability of federal employees to serve as acting officers. The Court began its analysis with the statutory text, considering its meaning by looking to the ordinary meaning of the words, rules of grammar, and statutory context. The Court emphasized two "key words" in the disputed provision. The majority then noted that it did not need to consider the "extra-textual evidence" of "legislative history, purpose, and post-enactment practice" because the text was clear. Nonetheless, the Court went on to evaluate and reject this evidence as "not compelling." Ultimately, the majority held that the acting officer's service violated the relevant statute. In dissent in SW General, Justice Sonia Sotomayor concluded that the "text, purpose, and history" of the statute suggested the opposite conclusion. Like the majority opinion, the dissent began by considering the meaning of the text, and acknowledged that "taken in isolation," certain words could support the majority's reading. However, Justice Sotomayor concluded that two textual canons of construction implied that the statute should be read differently in light of the full statutory context. Additionally, while the dissenting opinion similarly considered "the events leading up to" the enactment of the relevant statute, Justice Sotomayor also placed some weight on the historical practice of the executive department after the passage of the statute. The dissent used the provision's legislative history to inform its understanding of the historical practice under the statute, in its earlier and current forms, and reached a different conclusion from the majority opinion. As a result, the dissent represents a more purposivist view of the case, but one that still concentrated on the statutory text. As SW General illustrates, the particular tools a judge uses to discover evidence about the meaning of the statute, and the weight that the judge gives to that evidence, can influence the outcome of a case. In contrast to the opinions of Justices Alito and Breyer in Arlington Central School District , the two opinions in SW General considered many of the same interpretive tools, and the text of the statute was central to both opinions. However, like the textualist majority opinion in Arlington Central School District , the textualist majority opinion in SW General noted that legislative history is disfavored where the text is clear, giving less weight to this tool than the dissenting opinion. These cases demonstrate that if a judge's theory of statutory interpretation counsels that some tools should be preferred over others, that theory can change the way the judge resolves a particular dispute. Judges use a variety of tools to help them interpret statutes, most frequently relying on five types of interpretive tools: ordinary meaning, statutory context, canons of construction, legislative history, and evidence of the way a statute is implemented. These tools often overlap. For example, a judge might use evidence of an agency's implementation of a statute to support her own understanding of a word's ordinary meaning. And basic principles about understanding statutory context are sometimes described as canons of construction. Some theories of statutory interpretation counsel that certain tools are generally disfavored; for example, textualism teaches that judges should only rarely look to legislative history. Consequently, a judge's interpretive theory might influence which tools she uses. Different judges, then, might unearth different evidence about the meaning of a particular statute, and even if they find the same evidence, they might consider it in different ways. However, in practice, judges will often draw on whatever tools provide useful evidence of the meaning of the statute before them. Courts often begin by looking for the "ordinary" or "plain" meaning of the statutory text. Where a term is not expressly defined in the statute, courts generally assume "that Congress uses common words in their popular meaning, as used in the common speech of men." Thus, for example, in the context of a case that raised the question of what it meant to "use" a gun, Justice Scalia stated the following in a dissenting opinion: To use an instrumentality ordinarily means to use it for its intended purpose. When someone asks, "Do you use a cane?," he is not inquiring whether you have your grandfather's silver-handled walking stick on display in the hall; he wants to know whether you walk with a cane. Similarly, to speak of "using a firearm" is to speak of using it for its distinctive purpose, i.e. , as a weapon. The Supreme Court has also referred to this exercise as seeking a word's "natural meaning," or its "normal and customary meaning." However, this "ordinary meaning" presumption can be overcome if there is evidence that the statutory term has a specialized meaning in law or in another relevant field. Judges may use a wide variety of materials to gather evidence of a text's ordinary meaning. In many cases, "simple introspection" suffices, as judges are English speakers who presumably engage in everyday conversation like the rest of the general public. Judges also turn to dictionaries to help inform their understanding of a word's normal usage. Judges may then have to choose between multiple definitions provided by the same dictionary or by different dictionaries. Courts have also turned to books to discover a word's ordinary meaning, drawing from works such as Moby Dick or the Bible as well as Aesop ' s F ables and the work of Dr. Seuss. Finally, judges may look for evidence of normal usage elsewhere in the law, such as in judicial decisions or in other governmental materials. The idea that courts should generally give the words of a statute their "usual" meaning is an old one. This principle straddles judicial philosophies: for example, all current members of the Supreme Court have regularly invoked this rule of ordinary meaning. If Congress does in fact generally use words as they would be normally understood, this interpretive tool helps judges act as faithful agents of Congress by ensuring that judges and Congress—along with the ordinary people governed by statutes—are looking to the same interpretive context: "normal conversation." Although there is wide judicial consensus on the general validity of this rule, disputes arise in its application. To say that a statutory word should be given the same meaning that it would have in "everyday language" serves only as a starting point for debate in many cases. The ordinary meaning of a term may often be "clear," or uncontroversial in its application to some core set of circumstances. Some have argued that invoking a word's plain meaning in these cases is tautological, equivalent to saying that "[w]ords should be read as saying what they say." Moreover, at the margins, when a court is no longer considering a prototypical example of the disputed statutory term, the judge is called upon to explain how the statute applies to the facts before the court. Therefore, in some cases, merely adverting to the ordinary meaning tool may not help illuminate a statutory term. There are also a number of theoretical criticisms of the "ordinary meaning" standard. Some have argued that judges might invoke "ordinary meaning" merely to mask their own policy preferences. As Judge Easterbrook has claimed, frequently, "[t]he invocation of 'plain meaning' just sweeps under the rug the process by which meaning is divined." Because "ordinary meaning" invites judges to refer to their own experiences as English speakers, it is arguably susceptible to the importation of personal policy preferences. As a result, if a judge fails to justify an assertion about the ordinary meaning of a term, the underlying opinion could be vulnerable to attack on that basis. Often, a statutory dispute will turn on the meaning of only a few words. Courts will interpret those words, though, in light of the full statutory context. To gather evidence of statutory meaning, a judge may turn to the rest of the provision, to the act as a whole, or to similar provisions elsewhere in the law. As the Supreme Court said in one opinion, "Statutory construction . . . is a holistic endeavor. A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme. . . ." For instance, a court might look to see whether the disputed language is used in another statutory provision. Courts will generally try to give identical terms the same meaning throughout a statute, and another provision may offer context that illuminates the meaning of the relevant term. However, this rule calling for words to be defined consistently is defeasible, again depending on the context: "A given term in the same statute may take on distinct characters from association with distinct statutory objects calling for different implementation strategies." A judge might also look to the rest of the statute to find whether Congress used different language in other provisions. If Congress elsewhere used language that more clearly captured an interpretation urged by one of the parties, it might suggest that the disputed term should not be given that construction. Courts will generally read as meaningful "the exclusion of language from one statutory provision that is included in other provisions of the same statute." Thus, statutory context can supply evidence of semantic, or text-focused, context. In Smith v. United States , for example, a defendant challenged his sentence following conviction for a drug trafficking offense during which he offered to trade a gun for cocaine. The Supreme Court had to decide whether the defendant should be subject to a sentence enhancement that applied to any "'use' of a firearm 'during and in relation to . . . [a] drug trafficking crime.'" The defendant argued that this enhancement should apply only when a firearm was "used as a weapon," not when it was used to barter for drugs. The Supreme Court disagreed. During the course of its analysis, the Court investigated how Congress had employed the term "use" in other provisions of the statute. The Court found it compelling that a different subsection of the statute called for forfeiture of a firearm that was "used" in an interstate transfer of a firearm or in a federal offense involving the exportation of a firearm. In the eyes of the Court, this other provision clearly contemplated that firearms could be "used" "as items of commerce rather than as weapons," suggesting the same interpretation of "used" should apply to the disputed sentence enhancement. The Court also noted that Congress had used the phrase "involved in" instead of the word "use" elsewhere in the statute. Specifically, a different provision allowed the seizure of a firearm that was "'involved in' . . . the making of a false statement material to the lawfulness of a gun's transfer." The Court reasoned that this distinction demonstrated that Congress found it was necessary in the other provision to use more expansive language because "making a material misstatement in order to acquire or sell a gun is not 'use' of the gun." By contrast, Congress "did not so expand the language for offenses in which firearms were 'intended to be used ,' even though the firearms in many of those offenses function as items of commerce rather than as weapons." Therefore, according to the majority opinion, "Congress apparently was of the view that one could use a gun by trading it." Statutory context can also help a court determine how the disputed terms fit into the rest of the law, illuminating the purpose of a provision. Courts may consider statutory declarations of purpose as well as the broad functioning of the statutory scheme. Judges sometimes weigh the practical consequences of the various proposed interpretations. It could be that "only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law." This use of statutory context often implicates the broader debate between purposivism and textualism, as well as arguments over when judges should use practical consequences to determine statutory meaning. Over time, courts have created the "canons of construction" to serve as guiding principles for interpreting statutes. The canons supply default assumptions about the way Congress generally expresses meaning, but are not "rules" in the sense that they must invariably be applied. A judge may decline to interpret a statute in accordance with any given canon if the canon's application is not justified in that case. Some judges, especially purposivists and some pragmatists, may even doubt the general validity of the canons as interpretive rules. However, the canons are widely used and defended. Just as the justifications for using the canons of construction vary, so may judges disagree on what qualifies as a valid canon, either as a matter of theory or historical fact. These disagreements will sometimes stem from a judge's individual theory of statutory interpretation. This report's Appendix combines two preeminent anthologies of the canons of construction, providing a list of the widely accepted canons of construction. However, even the authors of these prominent lists disagree about whether certain canons are valid. This report does not attempt to set out a definitive compilation of the canons of construction, but merely describes the canons generally, giving examples where appropriate. Generally, legal scholars and judges divide the canons into two groups: semantic and substantive canons. The semantic, or textual, canons represent "rules of thumb for decoding legal language." Because these canons focus on statutory text, they are often favored by textualists. The semantic canons frequently reflect the rules of grammar that govern ordinary language usage. Consequently, these rules may overlap with indicators of a provision's ordinary meaning —and indeed, some authors label the principle that words should be given their ordinary meaning as a semantic canon. But there are a greater number of semantic canons beyond the ordinary meaning rule, several of which are discussed below. For example, the "grammatical 'rule of the last antecedent'" states that "a limiting clause or phrase . . . should ordinarily be read as modifying only the noun or phrase that it immediately follows." In Barnhart v. Thomas , the Supreme Court illustrated this canon with the following hypothetical: Consider, for example, the case of parents who, before leaving their teenage son alone in the house for the weekend, warn him, "You will be punished if you throw a party or engage in any other activity that damages the house." If the son nevertheless throws a party and is caught, he should hardly be able to avoid punishment by arguing that the house was not damaged. The parents proscribed (1) a party, and (2) any other activity that damages the house. The last-antecedent canon tells the reader of the parents' edict that the descriptive clause "that damages the house" refers to the "nearest reasonable antecedent": here, "any other activity." Accordingly, that clause modifies only the phrase "any other activity," and not "party," a more remote antecedent. In a more recent case, Lockhart v. United States , the Supreme Court applied the last-antecedent canon to interpret a federal criminal statute that imposed a 10-year mandatory minimum sentence on any person convicted of violating a statute prohibiting the possession of child pornography, if that person had "a prior conviction . . . under the laws of any State relating to aggravated sexual abuse, sexual abuse, or abusive sexual conduct involving a minor or ward." The question before the Court was "whether the limiting phrase that appears at the end of that list—"involving a minor or ward"—applies to all three predicate crimes preceding it in the list or only the final predicate crime." Invoking the rule of the last antecedent, the Court concluded that the limiting phrase "modifies only the phrase that it immediately follows: 'abusive sexual conduct.'" The dissenting opinion in Lockhart argued that a different semantic canon, the "series-qualifier canon," applied instead of the last-antecedent canon. The "series-qualifier" canon provides that under certain circumstances, a modifier should be applied to all terms in a list. Because the modifying clause "involving a minor or ward" followed "a list of multiple, parallel terms," the dissent claimed that it should apply to the entire series. In the dissenters' view, "the reference to a minor or ward applies as well to sexual abuse and aggravated sexual abuse as to abusive sexual conduct." By contrast, the majority of the Court believed the series-qualifier canon was inapplicable, concluding that the disputed provision "does not contain items that readers are used to seeing listed together or a concluding modifier that readers are accustomed to applying to each of them." Further, the majority argued, "the varied syntax of each item in the list makes it hard for the reader to carry the final modifying clause across all three." Another semantic canon, the rule against surplusage, relies less on the niceties of grammar and more on the general principles underlying how courts assume Congress conveys meaning. The surplusage canon requires courts to give each word and clause of a statute operative effect, if possible. Stated another way, courts should not interpret any statutory provision in a way that would render it or another part of the statute inoperative or redundant. Accordingly, for example, when a court is faced with a statutory list of terms, it generally will read each term to convey some distinct meaning. In Bailey v. United States , the Supreme Court considered a statute that imposed a five-year mandatory minimum sentence on a person who "uses or carries a firearm" during a crime of violence or drug trafficking crime. The Court refused to give the term "use" such a broad reading that "no role remains for 'carry.'" Instead, the Court assumed "that Congress used two terms because it intended each term to have a particular, nonsuperfluous meaning," and gave "use" a more limited connotation that "preserve[d] a meaningful role for 'carries' as an alternative basis for a charge." But elsewhere, judges have questioned whether the assumption underlying the surplusage canon is true or whether instead it is more likely that Congress sometimes does use redundant language, possibly to make doubly sure that a statute covers certain circumstances. In contrast to the semantic canons, the substantive canons express "judicial presumption[s] . . . in favor of or against a particular substantive outcome." Some of these canons, primarily those that protect constitutional values, are frequently described as "clear statement rules" because courts will favor certain outcomes unless the statute makes a "clear statement" that unambiguously dislodges the presumption. The substantive canons "look to the legal consequences of interpretation rather than to linguistic issues alone." If a statute is susceptible to more than one meaning, they may tip the scale toward a particular result. Accordingly, invocation of the substantive canons frequently invites judicial disagreement. The canon of constitutional avoidance provides a good example of how even a well-established substantive canon can provoke debate. The canon of constitutional avoidance provides that if one plausible reading of a statute would raise "serious doubt" about the statute's constitutionality, a court should look for another, "fairly possible" reading that would avoid the constitutional issue. Thus, for instance, the constitutional-avoidance canon might lead a court to adopt a limiting construction of a statutory provision, if a broader interpretation would allow the government to exercise a constitutionally problematic amount of power. The constitutional-avoidance canon may allow a court to adopt a "reasonable alternative interpretation" even if it is not otherwise "the most natural interpretation" of the disputed statute. For example, in Bond v. United States , the Supreme Court interpreted a statute making it a crime for a person to use "any chemical weapon." The Court noted that the "expansive language" of the statute could be read to encompass the conduct of the defendant, who had placed toxic chemicals on the car door, mailbox, and door knob of a friend after discovering that the friend had become pregnant by the defendant's husband. However, the Court decided that it would not interpret the statute "to reach purely local crimes" because such an interpretation would intrude on powers traditionally reserved for the states, implicating constitutional concerns about the balance of power between the federal government and the states. Instead, the Court read the statute more narrowly, to exclude the defendant's conduct. Of course, judges may disagree on whether an alternative reading that avoids a constitutional problem is "fairly possible." As the Supreme Court recently emphasized, the constitutional-avoidance canon "does not give a court the authority to rewrite a statute as it pleases." Many of the substantive canons entail difficult judgments in determining whether triggering threshold conditions have been met. In the case of the canon of constitutional avoidance, a court need not conclude that a suggested reading of the statute in fact would render the statute unconstitutional; the canon requires only that there is a "serious doubt" about the constitutionality of the proferred interpretation. Judges disagree, however, on how much constitutional "doubt" must be present before a court may use the constitutional-avoidance canon to support a certain interpretation of a statute. As one treatise puts it: "How doubtful is doubtful?" More generally, judges frequently disagree about whether substantive canons are appropriately used to interpret statutes, both in theory and in practical application. This disagreement sometimes stems from different beliefs about the general justifications for using the canons. To the extent that the substantive canons suggest that a judge should read a statute in a way that is not immediately evident from the statute's text or purpose, both textualists and purposivists may be wary of employing these canons. Consequently, most courts will not apply the substantive canons unless they conclude that after consulting other interpretive tools, the statute remains ambiguous. Again, however, such a conclusion often presents a debatable question about whether a statute is sufficiently ambiguous to call for the application of a substantive canon. Judges may choose not to apply a canon to resolve a statutory ambiguity if they disagree with the justifications generally proffered to justify that canon, or if they simply believe that those general justifications do not warrant its extension to the case before them. The canons of construction were a disfavored tool of statutory interpretation for a significant portion of the 20 th century. This view was reflected in an influential article written by legal scholar Karl Llewellyn in 1950, in which he argued that the canons were not useful interpretive tools because of their indeterminacy. He compiled a table of "thrusts" and "parries" that purported to demonstrate that for every canon, there was an opposing canon on the same point. For example, one thrust declares that "[w]ords and phrases which have received judicial construction before enactment are to be understood according to that construction," while the parry counters, "[n]ot if the statute clearly requires them to have a different meaning." Some modern judges have agreed with this criticism, arguing that judges effectively "need a canon for choosing between competing canons." Others, however, have challenged Llewellyn's list, questioning the validity of the rules that he claimed were canons. Scholars and judges have also cast doubt on whether his thrusts and parries are truly contradictory, arguing that many of his pairs instead represent two halves of one rule, the thrust giving the general rule, and the parry, the exception or condition. By and large, the canons of construction have been rehabilitated among jurists and legal scholars, primarily by textualists, who have argued on a number of bases that the canons represent "sound interpretive conventions." The foregoing criticisms, however, have forced many judges to more diligently justify their use of the canons. One scholar, Caleb Nelson, has placed the canons into two categories based on the justifications given for their canonization. For Nelson, the first group of canons is descriptive; such canons "simply reflect broader conventions of language use, common in society at large at the time the statute was enacted." Judges invoke these canons because, according to this scholar, they are so often accurate descriptions of the way that all people use words. As a result, courts expect that these principles will also apply to legislative drafting. Nelson describes the second group of canons as normative. These normative canons are "used primarily by lawyers" rather than society at large and "relate specifically to the interpretation of statutes." Courts may think that these canons, as well, accurately capture insights about congressional behavior. But judges might also apply these canons as a matter of historical practice, or because they believe the canons reflect good policy, or because they believe the canons provide principles that limit judicial deference and promote predictability in judicial decisionmaking. Defenders of the canons have argued that they help judges act as faithful agents of the legislature, either because they reflect legislative drafting practices or because they provide coordinating background rules that can guide Congress when drafting legislation. For example, the constitutional-avoidance canon is frequently said to respect legislative supremacy —although judges do not always agree on the reasons why. The Court has, at times, said that the constitutional-avoidance canon reflects what Congress meant because Congress would not have wanted to enact an unconstitutional statute. Choosing a reasonable alternative interpretation "recognizes that Congress, like [the courts], is bound by and swears an oath to uphold the Constitution." Others have argued that even if the canon does not reflect actual congressional practice, it properly represents a judicial policy judgment "that courts should minimize the occasions on which they confront and perhaps contradict the legislative branch." Some judges, however—primarily purposivists—have argued for greater caution in deploying the canons of construction, warning that insofar as they do not reflect the reality of legislative drafting, they may not respect legislative supremacy. Even if a judge agrees that a particular canon is generally valid, the court may still doubt that it should control the interpretation of a particular statute. Modern theory acknowledges that the application of a particular canon in any case is highly context-dependent. The canons merely supply "one indication" of meaning, suggesting only that "a particular meaning is linguistically permissible, if the context warrants it." Judges sometimes describe the canons as akin to rebuttable presumptions. Judges will weigh application of the canon against the evidence of statutory meaning discovered through other interpretive tools and may disagree about whether a canon is so contrary to other indicators of meaning that it should not be applied. The use of the canons "rest[s] on reasoning," and their application should be justified in any given case. A judge's willingness to deploy a particular canon, generally or in a specific case, may also depend on that judge's particular theory of interpretation. Many judges will turn to the canons only if their most favored tools fail to resolve any ambiguity. For example, Justice Clarence Thomas, who is generally described as a textualist, has stated the following: [C]anons of construction are no more than rules of thumb that help courts determine the meaning of legislation, and in interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. Acccordingly, in a decidedly textualist opinion for the Court in Connecticut Nat iona l Bank v. Germain , Justice Thomas concluded that because the statutory text was clear, the canon against surplusage was inapplicable. In a similar vein, Justice William Brennan argued that it was unnecessary to invoke the canon of constitutional avoidance in his dissenting opinion in NLRB v. Catholic Bishop of Chicago . In particular, he contended that the alternative reading adopted by the majority was not a "fairly possible" interpretation of the statute, relying heavily on the statute's legislative history to demonstrate that Congress intended to foreclose the majority opinion's construction. Thus, although a particular canon might facially operate to resolve a particular statutory ambiguity, judges may disagree about whether a canon's application is appropriate, if another interpretive tool suggests the statute should bear another meaning and if a particular jurisprudential methodology counsels for reliance on that particular tool. Where the text of the statute alone does not answer the relevant question, judges have at times turned to a statute's legislative history, defined as the record of Congress's deliberations when enacting a law. One of the Supreme Court's most famous—and perhaps infamous —invocations of legislative history came in United Steelworkers v. Weber . In that case, the Court considered whether Title VII of the Civil Rights Act of 1964, which "make[s] it unlawful to 'discriminate . . . because of . . . race' in hiring" and training employees, prohibited a private employer from adopting an affirmative action plan intended to increase the number of black employees in one of its training programs. The Court noted that "a literal interpretation" of the relevant statutory provisions arguably would forbid such plans, since they "discriminate[d] against white employees solely because they [were] white." Nonetheless, the Court concluded that in this case, such a "literal construction" was "misplaced." Instead, writing for the majority, Justice Brennan used the legislative history of Title VII to uncover evidence of the statute's purpose, examining a number of statements from individual Senators as well as the committee report. He concluded that the law sought to "address centuries of racial injustice," and Congress could not have "intended to prohibit the private sector from taking effective steps to accomplish the goal that Congress designed Title VII to achieve." In Justice Brennan's view, the private employer's plan mirrored the purposes of the statute by seeking "to abolish traditional patterns of racial segregation and hierarchy," and the legislative history demonstrated that Congress intended to leave an "area of discretion" for just such a plan. The use of legislative history has generated significant debate over the past century. In its most controversial applications, legislative history has been deployed in opinions that cite a statute's purpose to override arguably clear text, as demonstrated by Weber . Most frequently, however, when judges use legislative history, it is not necessarily to contradict a clear text, but to discover evidence of an ambiguous statute's underlying purpose. As with the substantive canons, courts have suggested that legislative history should not be examined unless the statutory text is ambiguous. Of course, judges may disagree whether the text is sufficiently ambiguous to warrant recourse to a statute's legislative history. Judges have also used legislative history to support a textual interpretation. Judges do not always use legislative history to determine a statute's purpose . Even textualist judges may use legislative history to determine whether a statutory term has a specialized meaning or to determine whether a seemingly incongruous result nonetheless aligns with congressional intent. Some judges may also use legislative history to determine the scope of a statute and ascertain whether Congress sought to address the particular problem before the court at all. Thus, for example, in FDA v. Brown & Williamson Tobacco Corp . , the Court reviewed the history of various "tobacco-specific legislation that Congress ha[d] enacted over the past 35 years," along with the history of the disputed provision located in the agency's organic statute, the Federal Food, Drug, and Cosmetic Act (FDC&A). In the Court's view, the fact that the other legislative acts specifically concerned the issue of tobacco bore directly on the meaning of the FDC&A, which did not expressly address tobacco. The Court concluded that Congress did not intend to give the FDA jurisdiction to broadly regulate tobacco products in the FDC&A. To the extent that legislative history is used to determine statutory purpose, purposivists and textualists may disagree about whether legislative history is a permissible tool of statutory interpretation. Many purposivists defend the use of legislative history on the grounds that these deliberative materials can illuminate the context and purpose of a statutory provision. Purposivists emphasize legislative process, and legislative history provides a record of that process. Defenders of legislative history generally argue that in statutory interpretation, judges should respect the processes Congress has established and should pay attention to those materials that Congress itself has used to memorialize the lawmaking process. Thus, the central argument in favor of the use of legislative history is grounded in the purposivist view of legislative supremacy. By contrast, many textualists argue that legislative history should be used sparingly. The first and perhaps most persistent objection is theoretical: as Justice Scalia argued, the use of legislative history improperly "assumes that what [judges] are looking for is the intent of the legislature rather than the meaning of the statutory text." Accordingly, to the extent legislative history enables a judge to elevate a judgment about "background purposes" above "the clear import of an enacted text," textualists disagree with the use of this tool. Textualists frequently claim that using legislative history in this way is inappropriate because "as a formal matter," it is this text, and not the "committee reports and floor statements," that are "the law enacted by Congress." Textualists' primary objections to legislative history are therefore rooted in their own distinct view of how courts best observe legislative supremacy. Many textualists also harbor more practical concerns about the reliability of legislative history. Justice Scalia has frequently argued that "[e]ven if legislative intent did exist, there would be little reason to think it might be found in the sources that the courts consult." Even committee reports do not necessarily represent the understanding of the full Congress, given that they are created by a minority of Members, making it dangerous to draw assumptions about the whole body's understanding of the statute from such documents, in the view of textualists. Justice Scalia also warned that legislative history is subject to intentional manipulation and gamesmanship, making it even less likely that these documents reflect legislative intent. Finally, judges have pointed out that due to the multiplicity of actors, "legislative history is often conflicting," making it difficult to determine which parts of the record should be heeded. Judge Harold Leventhal once observed that using legislative history can be like "looking over a crowd and picking out your friends." These concerns about the reliability of legislative history may apply whether the tool is used to discover a statute's purpose or for another reason. In light of these criticisms, judges who see value in examining legislative history to discern the legislature's intent have begun using such materials in more nuanced ways. Courts review legislative history in light of the text ultimately enacted, and in conjunction with other interpretive tools. Many judges also view some types of legislative history as more reliable than others, drawing from their understanding of congressional procedure. One group of prominent legal scholars created a hierarchy of legislative history derived from federal case law, shown in Figure 1 . Justice Sotomayor mirrored these views in a recent opinion, maintaining that committee reports "are a particularly reliable source" of legislative history because they are circulated with a bill to Members and their staff, and are viewed by those people as reliable indicators of the bill's meaning. By contrast, the Court has noted that floor debates are a weaker form of legislative history because they "reflect at best the understanding of individual Congressmen." The preceding discussion does not account for a special form of legislative history—one that courts will generally presume holds significant weight in determining a statute's meaning: a history of amendment. Like the other forms of legislative history discussed in this report, legislative action amending a statute provides a record of congressional deliberation prior to the enactment of the disputed statute. However, unlike the other forms of legislative history, a prior version of a statute is itself formally enacted, and to many, therefore provides stronger evidence of a statute's evolution. The Supreme Court has said, "When Congress acts to amend a statute, we presume it intends its amendment to have real and substantial effect." As a result, a statute's amendment history can even overcome other evidence of statutory meaning. Finally, courts frequently investigate how a statute actually works, asking what problem Congress sought to address by enacting the disputed provision, and how Congress went about doing that. As a result, courts have assessed whether the consequences of an asserted interpretation align with the statutory scheme. Although a focus on practical consequences is, at least academically, most closely aligned with the so-called dynamic theories of interpretation and as such, is a generally disfavored view, scholars have maintained that "practical considerations play an important role in the [Supreme] Court's statutory cases." Courts sometimes look for such evidence in materials from the agencies that are charged with implementing the disputed statute, but they also rely on their own understandings of how the statute works. Administrative agencies are frequently the first official interpreters of statutes: in the course of implementing a statutory scheme, interpretive questions arise and must be resolved in order for the agency to do its work. When courts interpret a statute, they sometimes consider these agency interpretations, whether the agency's views are asserted through administrative rulings or a pattern of action. A judge might cite an agency's unofficial but public interpretation of a statutory term to support other evidence justifying a particular interpretation. Or a judge might use evidence of the way an administrative agency has implemented a statute to gain a sense of the problem that Congress sought to address and how the statutory scheme generally works to address that problem. This use of an agency's interpretation of a statute is distinct from the special weight, called Chevron deference, that a court will sometimes give to an agency interpretation. Chevron deference generally applies when a court is reviewing an agency's official interpretation of a statute that the agency is charged with administering. In such a situation, if a statute is silent or ambiguous with respect to the specific issue being litigated, then Chevron instructs a court to give the agency's construction controlling weight, so long as it is reasonable. But courts will consider an agency's interpretation even when a court is determining for itself the best reading of the statute, outside the context of Chevron deference. Courts may view the agency's interpretation as evidence that the statute can bear a particular meaning, similar to a dictionary definition. The legal scholars Hart and Sacks suggested that "popular" constructions of a statute, especially those embodied in the actions of those entities implementing that law, should be entitled to some special weight. According to Hart and Sacks, evidence of how a law has been implemented does not show merely "peoples' understanding of the [disputed] term . . . in the abstract," as a dictionary would, but gives "evidence of the understanding upon which people had acted ," and sometimes the ways in which people have acted against their own interests. In this sense, they contend that interpreters should give special weight to "action by the primary addressees who were required by the very nature of the arrangement to make the initial decisions under it." This view accords with one of the central justifications given for deferring to agency interpretations under Chevron : courts should give special weight to agency constructions of statutes that they administer because they have special expertise in that subject area, and because Congress itself, by charging the agency with implementation authority, has said that the agency has a special role in interpreting the statute. Notwithstanding these considerations, however, judges regularly reject agency interpretations if they are contrary to the text of the statute or other strong evidence of the statute's meaning. Judges may also rely on their own understandings of how a statute should be implemented to interpret the statute's meaning. Even textualists, who generally protest the use of consequentialist reasoning, do regularly invoke policy consequences to evaluate the validity of a proffered interpretation. If a court believes that the practical consequences of a particular interpretation would undermine the purposes of the statute, the court may reject that reading even if it is the one that seems most consistent with the statutory text. Similarly, judges will refer to concerns of administrability when interpreting statutes. Judges may also rely on policy considerations to limit the reach of a statute, if one possible construction would seem to expand the government's authority beyond what the judge believes to be reasonable. In one prominent example, the Supreme Court concluded in King v. Burwell that "the context and structure of the [Patient Protection and Affordable Care] Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase." The disputed statutory provision provided that the availability of certain tax credits rested in part on whether a taxpayer had "enrolled in an insurance plan through 'an Exchange established by the State .'" At issue was whether these tax credits were "available in States that have a Federal Exchange rather than a State Exchange." The Court acknowledged that based solely on this statutory text, "it might seem that a Federal Exchange cannot fulfill [the] requirement" of being "established by the State." But, based on the statutory context and the "broader structure of the Act," the Court concluded that a strict textualist approach to interpreting the statute was not the best reading of the statute. The Court reviewed as a whole the reforms that the Act aimed to achieve and considered how the exchanges would actually operate under this plain-text reading. The Court noted that a reading that would deny tax credits to most individuals "could well push a State's individual insurance market into a death spiral." Ultimately, the Court decided that it was "implausible that Congress meant the Act to operate in this manner." Justice Scalia authored the dissent in King , arguing that it was "quite absurd" to read "Exchange established by the State" to mean "Exchange established by the State or the Federal Government." Arguing that "[w]ords no longer have meaning if an Exchange that is not established by a State is 'established by the State,'" the dissent described the majority opinion as "rewriting the law under the pretense of interpreting it." The majority opinion itself recognized that "[r]eliance on context and structure in statutory interpretation is a 'subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.'" But in the dispute before it, the Court argued, such reliance was warranted "to avoid the type of calamitous result that Congress plainly meant to avoid." The Court concluded by asserting that it was required to "respect the role of the Legislature, and take care not to undo what it has done." While King's discussion of an interpretation's practical consequences was quite obvious, courts may also consider the policy consequences of a particular interpretation in more subtle ways. Courts frequently will discuss pragmatic concerns in the context of a discussion of another interpretive tool. Many of the substantive canons, for instance, explicitly favor certain policy outcomes, inviting judges to choose the reading that comports with that outcome. The academic debate between purposivism and textualism is often framed in terms of the tools of interpretation that provoke the most debate. Broadly speaking, purposivists tend to advocate for the use of legislative history, while textualists are more likely to defend the canons of construction. As a result, the conventional wisdom pits purposivism and legislative history against textualism and the canons of construction. Recent scholarship has focused on the legitimacy of these tools and what the use of these tools says about the theoretical distinctions between the two camps. As discussed above, both purposivist and textualist judges seek to act as faithful agents of the legislature, although in their search for statutory meaning, they both seek an objective legislative intent, rather than an actual one. There is broad consensus that a statute's text is primary, in that a court should start its interpretive task with the words of a statute and should also end there if the text is unambiguous. But courts frequently disagree about what types of context are fairly deemed inherent in that text and about which interpretive tools may help discover the context that is necessary to understand the statute's meaning. Purposivists argue that judges, in attempting to effectuate a statute's purpose, should attempt to figure out what Congress did, requiring a focus on legislative process. In their view, legislative history promises to illuminate this process, shedding light on what Congress sought to accomplish and how they went about doing that. The canons, by contrast, are judicially created, and not necessarily rooted in actual legislative processes. Thus, many purposivists believe that "reliable legislative history" acts as a better constraint than the canons to ensure that a court's decision reflects "what Congress had in mind," rather than a judge's own preferences. Conversely, textualists maintain that judges, in focusing on a statute's text, should seek to figure out what Congress said, using the construct of ordinary meaning and drawing from the field of linguistics. Textualists doubt that judges have the capacity to determine a statute's purpose and, accordingly, seek to "develop effective rules of thumb to resolve the doubts that inevitably arise out of statutory language." The canons provide background rules for legislative drafting that are "traditional and hence anticipated." Thus, even if the canons do not reflect Congress's "actual" intent in a given case—and textualists doubt that such an intent is discoverable, if it even exists—textualists believe that the canons are nonetheless justified because they impose a greater constraint on a judge's discretion than does legislative history. This theoretical disagreement, as reflected in the use of legislative history versus canons of construction, may persist. However, a number of scholars have recently argued that this divide is not so stark as it appears—or, at least, that the choice to use legislative history or the canons may not neatly track judges' legal philosophies. In one empirical study of the Supreme Court's decisions issued between 2006 and 2012, the scholar Anita Krishnakumar concluded that "despite textualism's thirty-year-old campaign against legislative history . . . substantive canons have not displaced legislative history on the modern Supreme Court." She noted that while the use of legislative history had decreased since the era of the Burger Court, which ended in 1986, this overall decline in legislative history use was not accompanied by an equivalent increase in the use of the substantive canons. A distinct study from legal scholar Nina Mendelson of "the first ten years of the Roberts Court—October Terms 2005 to 2014," showed that all of the Justices "engaged very regularly" with both substantive and textual canons. This research indicates that even the Court's "conservative, textualist-leaning Justices" are still referencing legislative history, and the Court's more purposivist-leaning Justices are employing the canons of construction. Another recent study surveyed federal appellate judges, asking them to describe their interpretive approaches and asking which tools of interpretation they use to decide cases. The authors of that study concluded that none of the judges surveyed could be characterized as "extreme" textualists or "extreme" purposivists. They found that all of the judges but one used legislative history, and all of the judges used the canons. Relying on this data, the authors argued that the assumption "that purposivist judges use legislative history, while textualist judges use canons . . . should be put to rest." Legal scholarship has also called for the refinement of the tools described in this report. Some of the most prominent recent challenges from academia have asked whether the tools described above achieve the goals set for them—whether judges' conceptions of ordinary meaning in fact align with how people usually use language, whether the canons of construction reflect how Congress actually drafts statutes, and whether judges' use of legislative history reflects a proper understanding of how a bill is passed. Using empirical data, scholars have raised questions about whether judges can—or should—alter the way in which they use these tools to better adapt their interpretations to actual legislative intent. When judges explore a word's "ordinary meaning," they frequently revert to their own understandings of how they would use that word, in the context of the dispute before them. As a consequence, legal scholars have argued that the ordinary meaning construct is not as constraining as its defenders claim. Perhaps to defend against such charges, judges have cited dictionaries and other books as evidence of a word's ordinary meaning. But these books arguably provide evidence only that a word can be used to mean a certain thing, and do not necessarily prove conclusively that the suggested meaning is "ordinary," in the sense that it is commonly used in a specific context. That is, dictionaries demonstrate "the outer boundaries of appropriate usage," and any given dictionary might be more or less complete in distinguishing a term's "core meaning" from its "periphery." Some scholars—and judges—have turned to corpus linguistics as a source of concrete data for determining the most common meanings of statutory phrases. "Corpus linguistics" uses large "collections of naturally occurring language called corpora" to study "language function and use." Courts can use these corpora to gather empirical evidence of "the common usage of a given term in a given context." For example, in Muscarello v. United States , the Supreme Court searched "computerized newspaper databases" to find sentences in which the disputed statutory terms appeared. At issue in that case was whether criminal defendants had "carrie[d]" a firearm by transporting it in a vehicle. The Court's search revealed that "many, perhaps more than one third" of the results were "sentences used to convey the meaning at issue here, i.e. , the carrying of guns in a car." For the majority of the Court, this provided solid evidence that this connotation of "carry"—to refer to a person carrying a gun in a car—was an "ordinary" use of the word. Courts have also used an even more linguistically oriented database: the Corpus of Contemporary American English (COCA), "the largest freely-available corpus of English." Advocates drew evidence from COCA in arguments before the Supreme Court in the 2011 case of FCC v. AT&T , and some have argued that this linguistic evidence ultimately influenced the Court's opinion in that case. One state supreme court recently drew evidence from COCA to determine the meaning of the word "information." At issue was a statute that prohibited using "information" derived from certain statements of law enforcement officers against them in criminal proceedings, and the question before the court was whether the operative word should be interpreted to refer only to truthful information. The court concluded that the word "information" did not exclude false statements, noting that "empirical data from the COCA" showed that "[i]n common usage, 'information' is regularly used in conjunction with adjectives suggesting it may be both true and false." However, some have called for judges, who are not professional linguists, to be cautious in using these databases. Others have argued that using corpus linguistics may run contrary to standard judicial concerns about affording litigants notice. These notice concerns are enshrined in the ordinary meaning inquiry: by asking how an ordinary person would understand the statute, judges seek to ensure that this ordinary person had notice of the laws governing their conduct. Using corpus linguistics to determine how frequently newspapers or other periodicals have used a term in a certain way does not necessarily align with the understanding of the ordinary person, and can thus create notice concerns. Additionally, the databases themselves may have certain limitations that mean a particular meaning is absent from the corpus even though it is in fact a usual meaning of the word. Even those who generally defend the use of corpora note that they cannot definitely resolve the normative question of whether a particular meaning is "ordinary" in the context of the particular statute at issue. Other scholars have challenged various judicial assumptions about how Congress drafts statutes by conducting empirical studies of legislative drafting. As previously noted, most judges today try to act as faithful agents of the legislature when they interpret statutes, and they justify the interpretive tools they use along those terms. Some view canons as imitating the way Congress uses language and goes about achieving its policy goals. Likewise, others defend legislative history as revealing Congress's methods and purposes. Arguably then, if these tools do not reflect Congress's actual drafting practices, they are subject to attack on the basis that they do not help judges to act as Congress's faithful agents. The most influential of recent studies on these issues was conducted by the scholars Abbe Gluck and Lisa Schultz Bressman, who surveyed 137 congressional staffers, mostly "committee counsels with drafting responsibility." They asked whether these drafters were aware of various judicial doctrines of statutory interpretation and whether the drafters actually complied with those doctrines. Their findings demonstrated a wide range of awareness and use of the various semantic and substantive canons. For instance, the authors found that legislative drafters were largely unaware of the canon of constitutional avoidance as a judicial presumption—but also discovered that the concept underlying the canon did in fact influence drafters, suggesting that the assumption that "Congress tries to legislate within constitutional bounds" is an accurate one. By contrast, the majority of staffers did know the canon against surplusage by name, but stated that this assumption is "rarely" accurate because drafters often "intentionally err on the side of redundancy." Gluck and Bressman also asked these legislative drafters about many of the judicial assumptions underlying both the use and nonuse of legislative history. Their findings suggested that in contrast to some of the academic arguments against legislative history, both Members and their staff valued legislative history and believed that it "was an important tool for legislative drafters and courts alike." Further, they found that drafters believed that legislative history was a "tool that limited—rather than expanded—judicial discretion." The staffers also confirmed the judicial consensus that committee reports are generally the most reliable form of legislative history. However, some have pointed out that Gluck and Bressman's study may not provide a complete view of the federal lawmaking process —and indeed, the authors themselves recognized many of the limitations in their study. As previously discussed, many judges, predominantly textualists, doubt whether courts are competent to understand the complicated processes that go into federal lawmaking. It remains to be seen whether these new empirical data will influence the way judges use well-established interpretive tools such as ordinary meaning, canons, and legislative history. In theory, both purposivism and textualism seek the most objectively reasonable meaning of a statute, rather than attempting to discern Congress's actual intent with respect to the question before the court. Purposivists ask what a reasonable legislator would have been trying to achieve by enacting this statute, while textualists ask what a reasonable English-speaker would have been trying to convey. By design, these theories are already removed from Congress's "actual intent." Accordingly, judges might conclude that evidence of actual practice, whether it is evidence from linguistic corpora of common usage, or evidence from congressional staffers of legislative drafting practices, is irrelevant. But, as the reform-minded scholars have pointed out, if the way judges use various tools to construct statutory meaning is contrary to how Congress generally uses words or goes about achieving its policy goals, then using these tools undermines judges' claims that they are acting as Congress's faithful agents. Indeed, as noted above, judges have already begun to use linguistic corpora, as a source of empirical data, to refine the ways that they seek ordinary meaning. Similarly, judges have cited Gluck and Bressman's study to support the proposition that courts should give special weight to committee reports because of the evidence that committee staffers view them as reliable sources of legislative purpose. Other judges, including Justice Elena Kagan, have cited Gluck and Bressman's study to reject application of the canon against surplusage. In response to the new scholarship on statutory interpretation, one prominent textualist judge has suggested that courts should "shed" any semantic canons that do not in fact "reflect the meaning that people, including Members of Congress, ordinarily intend to communicate with their choice of words." Therefore, it is possible that further scholarship about actual legislative processes, and particularly legislative drafting practices, could affect the way that some judges read statutes. These studies may also reveal a need for Congress to learn more about how courts interpret statutes so that it can draft according to the prevailing interpretive conventions. However, as other scholars have pointed out, there are a number of other factors driving the federal drafting process, and it might not be feasible for Congress to make certain changes solely to cater to the courts. Nonetheless, because courts act as the arbiters of statutory meaning and necessarily shape the way a statute is implemented, Congress may be able to eliminate at least some misunderstandings by legislating with judges in mind. A continued dialogue between the courts and Congress can help ensure that laws are applied consistently with the intentions of the drafters. This appendix draws from two different works to present an exemplary list of the canons of construction. The two works take different approaches to compiling the canons, and sometimes disagree on what counts as a legitimate canon of construction. In their book Reading Law: The Interpretation of Legal Texts , Justice Antonin Scalia and Bryan Garner took an "unapologetically normative" approach to this task, collecting only those canons that they deemed valid under their approach to textualism. By contrast, a casebook authored by law professor William Eskridge and others took a more descriptive approach, compiling the canons "invoked by" the Supreme Court from 1986 to 2014. This appendix does not intend to stake out a position in any ongoing debates about the validity of the canons, and where feasible, notes disagreement among the authors. Some editorial choices were made in the process of combining and reproducing the authors' lists. These edits include some generalization and consolidation of canons. The list also omits a number of canons that are too specific or otherwise outside the scope of this report, which aims to provide a general overview of how courts interpret statutes. The appendix likewise excludes canons that seem to represent substantive legal principles rather than assumptions about how to read statutes. This appendix names and briefly describes each canon, citing either or both of the two lists and applicable cases as appropriate. In many cases, the canon includes both the general rule and any relevant exceptions, in accord with the modern understanding that the application of a canon is highly context-dependent. The list distinguishes semantic canons from substantive canons, but does not further group the canons. The canons are listed in alphabetical order. Semantic Canons 1. " Artificial-Person Canon ": "The word person includes corporations and other entities, but not the sovereign." 2. Casus Omissus : A matter not covered by a statute should be treated as intentionally omitted ( casus omissus pro omisso habendus est ). 3. " Conjunctive/Disjunctive Canon ": "And" usually "joins a conjunctive list," combining items, while "or" usually joins "a disjunctive list," denoting alternatives. 4. Ejusdem Generis : A general term that follows an enumerated list of more specific terms should be interpreted to cover only "matters similar to those specified." 5. Expresio Unius : "The expression of one thing implies the exclusion of others ( expressio unius est exclusio alterius )." This canon is strongest "when the items expressed are members of an 'associated group or series,' justifying the inference that items not mentioned were excluded by deliberate choice, not inadvertence." 6. " Gender/Number Canon ": Usually, "the masculine includes the feminine (and vice versa) and the singular includes the plural (and vice versa)." 7. " General/Specific Canon ": Where two laws conflict, "the specific governs the general ( generalia specialibus non derogant )." That is, "a precisely drawn, detailed statute pre-empts more general remedies," and conversely, "a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum." 8. " General-Terms Canon ": "General terms are to be given their general meaning ( generalia verba sunt generaliter intelligenda )." 9. Grammar Canon : Statutes "follow accepted standards of grammar." 10. " Harmonious-Reading Canon ": "The provisions of a text should be interpreted in a way that renders them compatible, not contradictory." 11. " Irreconcilability Canon ": "If a text contains truly irreconcilable provisions at the same level of generality, and they have been simultaneously adopted, neither provision should be given effect." 12. Legislative History Canons : "[C]lear evidence of congressional intent" gathered from legislative history "may illuminate ambiguous text." The most "authoritative source for finding the Legislature's intent lies in the Committee Reports on the bill." Floor statements, especially those made by a bill's sponsors prior to its passage, may be relevant, but should be used cautiously. "[T]he views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one." 13. " Mandatory/Permissive Canon ": "Shall" is usually mandatory and imposes a duty; "may" usually grants discretion. 14. " Nearest-Reasonable-Referent Canon ": "When the syntax involves something other than a parallel series of nouns or verbs, a prepositive or postpositive modifier normally applies only to the nearest reasonable referent." 15. Noscitur a Sociis : "Associated words bear on one another's meaning . . . ." 16. Ordinary Meaning Canon : Words should be given "their ordinary, everyday meanings," unless "Congress has provided a specific definition" or "the context indicates that they bear a technical sense." 17. Plain Meaning Rule and Absurdity Doctrine : "Follow the plain meaning of the statutory text, except when a textual plain meaning requires an absurd result or suggests a scrivener's error." 18. " Predicate-Act Canon ": "The law has long recognized that the '[a]uthorization of an act also authorizes a necessary predicate act.'" 19. " Prefatory-Materials " and " Titles-and-Headings " Canons : Preambles, purpose clauses, recitals, titles, and headings are all "permissible indicators of meaning," though they generally will not be dispositive. 20. Presumption of Consistent Usage : "Generally, identical words used in different parts of the same statute are . . . presumed to have the same meaning." Conversely, "a material variation in terms suggests a variation in meaning." 21. " Presumption of Nonexclusive ' Include ' ": "[T]he term 'including' is not one of all-embracing definition, but connotes simply an illustrative application of the general principle." 22. " Presumption of Validity ": "An interpretation that validates outweighs one that invalidates ( ut res magis valeat quam pereat )." Stated another way, courts should construe statutes to have effect. 23. " Proviso Canon ": "A proviso," or "a clause that introduces a condition," traditionally by using the word "provided," "conditions the principal matter that it qualifies—almost always the matter immediately preceding." 24. Punctuation Canon : Statutes "follow accepted punctuation standards," and "[p]unctuation is a permissible indicator of meaning." 25. Purposive Construction : "[I]nterpret ambiguous statutes so as best to carry out their statutory purposes." 26. Reddendo Singula Singulis : "[W]ords and provisions are referred to their appropriate objects . . . ." 27. Rule Against Surplusage : Courts should "give effect, if possible, to every clause and word of a statute" so that "no clause is rendered 'superfluous, void, or insignificant.'" 28. Rule of the Last Antecedent : "[A] limiting clause or phrase . . . should ordinarily be read as modifying only the noun or phrase that it immediately follows . . . ." 29. " Scope-of-Subparts Canon ": "Material within an indented subpart relates only to that subpart; material contained in unindented text relates to all the following or preceding indented subparts." 30. Series-Qualifier Canon : "'When there is a straightforward, parallel construction that involves all nouns or verbs in a series,' a modifier at the end of the list 'normally applies to the entire series.'" 31. " Subordinating/Superordinating Canon ": "Subordinating language (signaled by subject to ) or superordinating language (signaled by notwithstanding or despite ) merely shows which provision prevails in the event of a clash—but does not necessarily denote a clash of provisions." 32. " Unintelligibility Canon ": "[A] statute must be capable of construction and interpretation; otherwise it will be inoperative and void." 33. " Whole-Text Canon ": Courts "do not . . . construe statutory phrases in isolation; [they] read statutes as a whole." Substantive Canons 1. Canon of Constitutional Avoidance : "[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress." 2. " Dog that Didn ' t Bark " Presumption : A "prior legal rule should be retained if no one in legislative deliberations even mentioned the rule or discussed any changes in the rule." 3. Federalism Canons : Courts will generally require a clear statement before finding that a federal statute "alter[s] the federal-state balance." Thus, for example, courts require Congress to speak with "unmistakeable clarity" in order to "abrogate state sovereign immunity." 4. In Pari Materia : "[S]tatutes addressing the same subject matter generally should be read 'as if they were one law.'" 5. " Mens Rea Canon ": Courts should "presume that a criminal statute derived from the common law carries with it the requirement of a culpable mental state—even if no such limitation appears in the text—unless it is clear that the Legislature intended to impose strict liability." In the context of civil liability, "willfulness . . . cover[s] not only knowing violations of a standard, but reckless ones as well." 6. Nondelegation Doctrine : Courts should presume that "Congress does not delegate authority without sufficient guidelines." 7. " Penalty/Illegality Canon ": "[A] statute that penalizes an act makes it unlawful . . . ." 8. " Pending-Action Canon ": "When statutory law is altered during the pendency of a lawsuit, the courts at every level must apply the new law unless doing so would violate the presumption against retroactivity." 9. Presumption Against Extraterritoriality : Courts should presume, "absent a clear statement from Congress, that federal statutes do not apply outside the United States." 10. " Presumption Against Hiding Elephants in Mouseholes ": "Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes." 11. Presumption Against Implied Repeals : "[R]epeals by implication are not favored." 12. Presumption Against Implied Right of Action : Courts should not imply a private remedy "unless . . . congressional intent [to create a private remedy] can be inferred from the language of the statute, the statutory structure, or some other source." Without such intent, "a cause of action does not exist." 13. Presumption Against Retroactive Legislation : "[C]ourts read laws as prospective in application unless Congress has unambiguously instructed retroactivity." 14. Presumption Against Waiver of Sovereign Immunity : A waiver of sovereign immunity "cannot be implied but must be unequivocally expressed." 15. Presumption for Retaining the Common Law : "'[W]hen a statute covers an issue previously governed by the common law,' [courts] must presume that 'Congress intended to retain the substance of the common law.'" 16. Presumptions in Favor of Judicial Process : Courts sometimes require clear statements from Congress in order to bar judicial review of certain claims. 17. " Presumption of Continuity ": "Congress does not create discontinuities in legal rights and obligations without some clear statement." 18. Presumption of Legislative Acquiescence : "[A] long adhered to administrative interpretation dating from the legislative enactment, with no subsequent change having been made in the statute involved, raises a presumption of legislative acquiescence . . . ." This also applies to judicial interpretations of the statute. If Congress reenacts a statute without any change, it incorporates any settled judicial constructions of the statute "so broad and unquestioned that [a court] must presume Congress knew of and endorsed it . " However, "[o]rdinarily, . . . courts are slow to attribute significance to the failure of Congress to act on particular legislation." 19. Presumption of Narrow Construction of Exceptions : "An exception to a 'general statement of policy' is 'usually read . . . narrowly in order to preserve the primary operation of the provision.'" 20. " Presumption of Purposive Amendment ": Courts should assume that Congress intends any statutory "amendment to have real and substantial effect." 21. " Repeal-of-Repealer Canon ": "The repeal or expiration of a repealing statute does not reinstate the original statute." 22. " Repealability Canon ": "[O]ne legislature is competent to repeal any act which a former legislature was competent to pass; and . . . one legislature cannot abridge the powers of a succeeding legislature." 23. Rule of Lenity : "Ambiguity in a statute defining a crime or imposing a penalty should be resolved in the defendant's favor."
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In the tripartite structure of the U.S. federal government, it is the job of courts to say what the law is, as Chief Justice John Marshall announced in 1803. When courts render decisions on the meaning of statutes, the prevailing view is that a judge's task is not to make the law, but rather to interpret the law made by Congress. The two main theories of statutory interpretation—purposivism and textualism—disagree about how judges can best adhere to this ideal of legislative supremacy. The problem is especially acute in instances where it is unlikely that Congress anticipated and legislated for the specific circumstances being disputed before the court. While purposivists argue that courts should prioritize interpretations that advance the statute's purpose, textualists maintain that a judge's focus should be confined primarily to the statute's text. Regardless of their interpretive theory, judges use many of the same tools to gather evidence of statutory meaning. First, judges often begin by looking to the ordinary meaning of the statutory text. Second, courts interpret specific provisions by looking to the broader statutory context. Third, judges may turn to the canons of construction, which are presumptions about how courts ordinarily read statutes. Fourth, courts may look to the legislative history of a provision. Finally, a judge might consider how a statute has been—or will be—implemented. Although both purposivists and textualists may use any of these tools, a judge's theory of statutory interpretation may influence the order in which these tools are applied and how much weight is given to each tool. This report begins by discussing the general goals of statutory interpretation, reviewing a variety of contemporary as well as historical approaches. The report then briefly describes the two primary theories of interpretation employed today, before examining the main types of tools that courts use to determine statutory meaning. The report concludes by exploring developing issues in statutory interpretation.
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From 1988 until 2008, the State Department designated the government of North Korea, officially known as the Democratic People's Republic of Korea (DPRK), as a state sponsor of terrorism. Since the Bush Administration's October 2008 removal of the DPRK from the three state sponsors of terrorism lists (see " Listing a Country as a State Sponsor of Terrorism ," below), provocative actions by North Korea periodically have been followed by calls for the Obama Administration to redesignate Pyongyang as a terrorism sponsor. The state sponsors lists include governments that the Secretary of State determines have "repeatedly provided support for acts of international terrorism." As of January 2015, the governments of Cuba, Iran, Sudan, and Syria are on the lists. The calls to redesignate North Korea were particularly intense in 2010, following the sinking of a South Korean naval vessel, as well as in late 2014, following a cyberattack against Sony Pictures Entertainment and a threat against theater-goers to Sony's movie, The Interview. The film depicts the fictional assassination of North Korean leader, Kim Jong-un. U.S. and foreign government sources have implicated North Korea in all three incidents. Interdictions of North Korean missile and conventional arms shipments to Iran and Syria, and from Cuba—as well as reports of North Korean arms sales to and training of known terrorist actors such as Hezbollah and Hamas—also have fueled the calls to redesignate the DPRK government as a state sponsor of terrorism. Since 2008, Members of Congress have made several legislative attempts to challenge the Bush Administration's decision to remove North Korea's state sponsor of terrorism designation. In the 114 th Congress, H.R. 204 expresses the sense of Congress that the Secretary of State should redesignate North Korea as a state sponsor of terrorism. H.R. 1771 , the North Korea Sanctions Enforcement Act from the 113 th Congress, would have imposed many of the restrictions on the DPRK that would be triggered if it were redesignated as a state sponsor of terrorism. The House passed H.R. 1771 in July 2014, and many expect that a similar bill will be introduced in the 114 th Congress. The Bush Administration's removal of the DPRK from the state sponsor of terrorism lists does not appear to have provided Pyongyang with significant tangible economic benefits. Two main reasons are North Korea's widely perceived lack of appeal as a trade and investment partner and the numerous U.S. legal restrictions on doing business with and in North Korea. Commercial U.S.-DPRK trade has remained virtually at zero, as in the years before the delisting. The U.S. Department of Commerce continues to treat North Korea as a supporter of terrorism when it considers export license applications for dual-use and restricted goods and services; Commerce's Bureau of Industry and Security keeps North Korea in its most restricted trade categories. Annual foreign assistance appropriations laws continue to prohibit direct bilateral aid to North Korea; the United States withholds contributions to United Nations programs proportionate to U.N. spending in the DPRK. Although some U.S. companies, including DHL and the Associated Press, have opened offices in North Korea since 2008, the number and scope of these operations appear to be small in scale, and likely would require a special license from the Treasury Department's Office of Foreign Assets Control if the North Korean government is redesignated. Thus, redesignating the DPRK as a terrorism sponsor appears unlikely to inflict significant direct economic punishment on North Korea, particularly in the short term. However, even if redesignation directly causes only a small practical effect, North Korea-watchers who want to increase pressure on North Korea may favor such a move because the Kim regime likely would perceive it as a sign of a tougher U.S. approach. For a number of reasons, a decision to redesignate the DPRK as a state sponsor of terrorism could have a significant impact on diplomacy with North Korea. The Kim regime has been promoting a two-track policy (the so-called byungjin line) of nuclear development and economic development, with the latter goal partially dependent upon influxes of foreign investment. Some analysts of North Korea have pointed to signs that the Kim regime is pursuing economic reforms more earnestly than commonly is thought and is poised to accelerate the reforms in 2015. The DPRK could be particularly sensitive to a redesignation, which could be perceived as a threat to the potential economic gains the North Korean government expects from its byungjin policy. Therefore, those who wish to encourage North Korea's economic reforms, in the belief that they eventually would lead to changes in the government and/or the government's behavior, may oppose redesignating the DPRK. In contrast, those who wish to increase economic pressure on North Korea by undercutting the byungjin line may favor redesignating the DPRK. For more on U.S.-North Korea relations, see CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation , by [author name scrubbed] and [author name scrubbed]. Placing North Korea back on the lists could forestall any future diplomatic initiatives between the United States and North Korea. One of North Korea's long-standing foreign policy goals is improving relations with the United States, particularly if this can be accomplished on Pyongyang's terms and can be paired with economic benefits. Many analysts interpreted Pyongyang's decision in the fall of 2014 to release three U.S. detainees as a sign that North Korea is seeking a new diplomatic breakthrough with Washington, part of a broad outreach that also included overtures to South Korea, Japan, and Russia. Redesignation could be interpreted by North Korean leaders, as well as officials in other countries, as a sign that the Obama Administration is not interested in dialogue. Additionally, given previous patterns of North Korean behavior, it is possible that Pyongyang would respond to a redesignation by taking additional provocative actions, such as more nuclear-weapon or long-range-missile tests. North Korea has not conducted such tests since early 2013. Additionally, North Korean leaders might try to use a redesignation to convince other countries, particularly China, that the United States is to blame if tensions between Pyongyang and Washington increase. Even without encouragement from North Korea, China may be inclined to use redesignation as a pretext for opposing U.S. and South Korean efforts to increase pressure on North Korea through other means. Although the South Korean government of Park Geun-hye has maintained a relatively hard line towards North Korea, she has made improved relations with Pyongyang a signature goal for her term and has pressed North Korea to improve relations and open negotiations over various issues. Returning Pyongyang to the terrorism sponsor list could complicate these initiatives, particularly her desire to encourage multinational companies to invest in the inter-Korean Kaesong Industrial Complex, which operates in North Korea. Nonetheless, many people in South Korea—as well as in Japan—who favor adopting a tougher approach to North Korea likely would welcome the DPRK's redesignation as a terrorism sponsor. One proponent of redesignating the DPRK argues that if the U.S. government explicitly links the North Korean government to terrorism, it would give encouragement to North Korean refugees, helping them to resist intimidation. North Korean refugees have become an important source of information about and insights into North Korean politics, economics and society. Additionally, some see these defectors as a means to spread news about the outside world into North Korea, such as through operating radio stations in Seoul, some of which have received U.S. democracy assistance funds. There have been reports that North Korean agents have targeted some refugees for harassment, kidnapping, and assassination. If redesignated, North Korea might make removal from the list a precondition for cooperation in any future talks over its nuclear, missile, chemical, biological, or cyber weapons programs. Redesignation could create both an obstacle to future talks and a possible bargaining lever for the United States if negotiations restart. CRS Report R43835, State Sponsors of Acts of International Terrorism—Legislative Parameters: In Brief , by [author name scrubbed], provides more information and analysis about the state sponsors of terrorism lists. The Secretary of State can designate a government of a country as a state sponsor of acts of international terrorism pursuant to three laws: Section 6(j) of the Export Administration Act of 1979; Section 40 of the Arms Export Control Act; and Section 620A of the Foreign Assistance Act of 1961. Thus, there effectively are three state sponsors of terrorism "lists." None of the three Acts defines the overarching term "international terrorism." However, Section 140 of the Foreign Relations Authorization Act, Fiscal Years 1988 and 1989, in its requirement that the Secretary of State report annually to Congress on foreign governments supporting international terrorism, defines "terrorism" as "premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents.... " Criteria considered by the Secretary of State when assessing whether a foreign government should be added to the lists include, but are not limited to: supplying a terrorist organization with planning, training, logistics, and lethal material support; providing direct or indirect financial assistance; abetting the proliferation of weapons of mass destruction; or providing other types of assistance that could provide material support for the terrorist organization's activities. Supplying weapons or weapons technology to governments designated as state sponsors of terrorism generally has not been considered justification for designating the supplier government as a state sponsor of terrorism. Laws that seek to deter weapons proliferation, however, might come into play. 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 United States should designate a foreign government as a state sponsor of terrorism. Some 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 government on the list. In North Korea's case, diplomatic and policy considerations appear to have weighed heavily in the designation of the DPRK from 2000 to 2007, as well as in the decision to remove the designation in 2008. Originally, the government of North Korea was added to the lists because it was implicated in the in-flight bombing of Korean Air flight 858 on November 29, 1987, which killed all 115 passengers and crew on board. For years before 2008 the State Department's annual reports on global terrorist activities stated that North Korea was not known to have sponsored any terrorist acts since the Korean Air attack. However, the Department's reports listed a number of other factors that merited North Korea's continuation on the state sponsors lists, including: the abductions of Japanese citizens in the 1970s and 1980s; the harboring of several Japanese Red Army terrorists who participated in a jet hijacking in 1970; the failure to take "substantial steps" to cooperate in efforts to combat international terrorism; the maintenance of ties to terrorist groups; and developing a capability to manufacture weapons of mass destruction that could be acquired by other terrorist states or non-state entities. In 2008, the Secretary of State removed North Korea from the lists despite little change in most of the above conditions. Instead, the decision appears to have been made primarily for diplomatic reasons: removing the government of North Korea from the terrorism lists was part of the 2007 deal that the Bush Administration made with Pyongyang as part of the Six-Party Talks seeking to disable North Korea's nuclear program. Under the 2007 deal, North Korea agreed to disable its nuclear installations at the Yongbyon site and provide the other five countries with a "complete and correct" declaration of its nuclear programs. Some analysts have argued that the subsequent collapse of the Six-Party process, along with North Korea's advances in its nuclear programs, have erased the original diplomatic justification for removing North Korea from the state sponsor of terrorism lists. During a January 13, 2015, House Foreign Affairs Committee hearing on North Korea, the State Department's Special Representative for North Korea Policy, Sung Kim, said that the Department has an "ongoing process" to assess whether North Korea meets the criteria for being designated as a state sponsor of terrorism. A foreign government on the state sponsors of terrorism lists is subject to restrictions on trade, investment, and assistance. (See Table 1 .) A listed country is subject to U.S. export controls—particularly of dual-use technology—and trade in defense goods and services 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 agriculture, medicine, and medical supplies. Providing most foreign aid under the Foreign Assistance Act of 1961 and the Millennium Challenge Act is also prohibited. There are exceptions to address unanticipated humanitarian disasters; the United States provided hundreds of millions of dollars in food, energy, and medical assistance to North Korea while Pyongyang was on the terrorism lists. 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 foreign government on the U.S. terrorism lists. Additionally, U.S. citizens are prohibited from conducting transactions with designated governments without a license from the Office of Foreign Assets Control. There are two possible paths for removing a foreign government from designation as a state sponsor of terrorism. The first procedure requires the President to provide a written certification to Congress stating that there has been a fundamental change in the leadership and policies of the designated government, that it is not supporting acts of international terrorism, and that the current government leaders have given assurances to the United States that the country will not support terrorism in the future. The second procedure, which the Bush Administration used in North Korea's case, requires the President to submit, 45 days prior to removing the designated foreign government from the list, a written report to Congress certifying that it has not provided support to terrorism-related activities during the preceding six months and that current government leaders have provided assurances that it will not support terrorism-related activities in the future. Congress may pass a joint resolution blocking a government's removal from the list, though such legislation would require the President's signature to become law. In the 110 th Congress (2007-2008), Members introduced at least three measures objecting to the Bush Administration's delisting of the DPRK. None was enacted. The issue of removing North Korea from the U.S. lists of state sponsors of terrorism appears to have first become a significant issue in U.S.-North Korean diplomacy in 2000. In U.S.-DPRK negotiations that year over North Korea's long-range missile program, Pyongyang demanded that it be removed from the list of terrorism-sponsoring governments as well as from the restrictions required under the Trading with the Enemy Act (TWEA). 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 lists: (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. Although the two countries issued a joint statement on September 27, 2000, in which North Korea restated its opposition to terrorism, the issue largely lapsed in this phase of U.S.-North Korean diplomacy, as the Clinton Administration rejected North Korean demands that it be delisted. The discussions were revisited in 2003-2004, during the first stages of the Six-Party Talks over the North Korean nuclear issue. Removal from the terrorism support list was near the top of North Korean demands for concessions that the United States provide in return for North Korean concessions, such as a "freeze" of its plutonium nuclear programs. The Bush Administration resisted these demands, giving significant emphasis to the Japanese abduction issue. The final phase of negotiations over North Korea's inclusion on the terrorism lists occurred in the 2006-2008 period, following North Korea's first nuclear test in October 2006. In February 2007, the six parties reached an agreement under which North Korea agreed to freeze and then disable its nuclear programs, and the United States agreed to take steps that included removing North Korea from the terrorism sponsor list. On January 22, 2008, Dell Dailey, the State Department's coordinator for counterterrorism, reportedly stated that it appeared that North Korea had complied with the criteria for removal from the terrorism support lists 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." Later that year, after considerable back-and-forth in the nuclear negotiations, the Bush Administration removed North Korea from the terrorism sponsorship lists, as well as from the TWEA strictures. Since the United States removed North Korea from the terrorist list, Pyongyang has taken or been linked to a number of actions that have led to calls to place the North Korean government back on the list of state sponsors of terrorism. These actions have included multiple nuclear and missile tests, in violation of United Nations Security Council resolutions, and the 2010 attacks against a South Korean naval vessel, the Cheonan , and Yeonpyeong Island. Since 2008, the State Department has responded to questions about whether to re-list North Korea by answering that although North Korea's actions are being continually reviewed, they do not fit the criteria for inclusion on the list. For instance, in response to North Korea's April 2009 long-range missile test and May 2009 nuclear weapon test, Assistant Secretary of State for Public Affairs Philip Crowley said that North Korea's tests of a nuclear weapon and long-range missile (in April 2009) did not meet the legal definition of terrorism." In June 2010, following the determination that a North Korean submarine had sunk the Cheonan , the State Department issued a press release indicating that North Korea had not been placed back on the terrorism lists because it had not "repeated[ly] provide[d] support for acts of international terrorism," as required by statute. Furthermore, 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." Events in late 2014 again led to calls to redesignate the government of North Korea as a state sponsor of terrorism. In June 2014 North Korean officials reacted to Sony Pictures Entertainment's forthcoming film, The Interview , about the fictional assassination of North Korean leader Kim Jong-un. North Korea's Foreign Ministry said that "a movie of a plot to hurt our top-level leadership is the most blatant act of terrorism and war" and threatened a "merciless countermeasure" if The Interview was released. On November 24, Sony Pictures Entertainment experienced a cyberattack that disabled its IT systems, destroyed data, and released to the public internal emails. North Korea denied involvement in the attack, but praised the hackers, who called themselves the "Guardians of Peace," as having done a "righteous deed." Weeks later, anonymous emails threatened "9/11-style" terrorist attacks on theaters showing the film, leading some theaters to cancel screenings and subsequently to Sony's cancelling the film's scheduled widespread Christmas Day release. In responding to the possibility of such attacks, Department of Homeland Security Secretary Jeh Johnson noted that the United States has "no specific, credible intelligence of a plot to launch attacks on movie theaters." Sony later announced the film would be shown in a small number of theaters and available on some online streaming services. As concerns about the violent threats and challenge to freedom of expression grew in U.S. media, the U.S. government more publicly weighed in on the incident. The Federal Bureau of Investigation (FBI), which had been investigating the cyberattacks, and the Director of National Intelligence (DNI) declared that North Korean government was responsible for the intrusions into Sony's systems. During a December 19, 2014, press conference, President Obama pledged to "respond proportionally" against North Korea. In an interview with CNN, Obama called the incident "cyber-vandalism," implying that it was not an act of war. On December 20, cyber analysts and news media reported that the North Korean network providing access to the Internet faltered and then eventually went offline for approximately 10 hours. Many cyber analysts said the disruption pointed to an attack on North Korea's network, although they could not rule out either an overload or a preventive shutdown by North Korea. Two groups linked to the hacker collective Anonymous claimed responsibility for shutting down North Korea's Internet connection using denial-of-service attacks. U.S. officials would not comment on whether this constituted the "proportional response" promised by Obama. On January 2, 2015, the White House issued an Executive Order authorizing additional sanctions on North Korean individuals and entities, calling it a "first aspect" of its proportional response. Pyongyang denied any responsibility for the cyberattack on Sony, and some cybersecurity experts expressed skepticism that the North Korean government executed the attack, while others point to evidence of growing North Korean capabilities in cyber warfare. The FBI claimed that the Sony attack used the same malware as previous attacks attributed to North Koreans, but some cyber experts say that evidence is circumstantial and speculative. Administration officials have claimed that other intelligence used to make the determination is classified and unavailable for public consumption. On January 7, 2015, at a cybersecurity conference in New York City, FBI Director James Comey, in discussing whether North Korea was behind the cyberattack, stated "There is not much in this life that I have high confidence about—I have very high confidence about this attribution, as does the entire intelligence community." At this same event DNI James Clapper noted that this cyberattack was "the most serious ever against U.S. interests." As of January 2015, a cyber-related incident directed at the United States has never been used as justification for inclusion on the state sponsors of terrorism lists. It could be argued that current laws relating to the state sponsor of terrorism lists may be viewed as sufficiently broad and ambiguous to allow for the inclusion of cyber-based incidents as a designation criterion. Conversely, it might be argued that the laws supporting the state sponsor of terrorism designation were focused on physical acts of politically motivated violence and amendments to existing legislation would be required to include unauthorized cyber-based intrusions of networks owned by U.S. entities as a viable criterion. However, changing current legislation to include cyber-related incidents as acts of terrorism could lead to calls for designating other governments as state sponsors of terrorism. For instance, on May 19, 2014, the U.S. Department of Justice indicted five Chinese military hackers for computer hacking and economic espionage directed at six American victims in the U.S. nuclear power, metals, and solar products industries. In discussing the details related to this indictment, U.S. Department of Justice Attorney General Eric Holder stated "this is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking." A suggestion to add the government of China to the state sponsors of terrorism lists does not appear to have been voiced after this incident. Since 2003, the State Department's annual report on global terrorist activities has stated that North Korea has not been conclusively linked to any terrorist acts since the 1987 KAL bombing. Some observers have questioned the basis for the State Department's claims. They point to several pieces of evidence and reports, which generally fall in five categories. For more on North Korea's relationship with the Iranian, Syrian, and Libyan ballistic missile and nuclear programs, see CRS Report R43480, Iran-North Korea-Syria Ballistic Missile and Nuclear Cooperation , coordinated by [author name scrubbed]. P roliferation of weapons of mass destruction , including: U.S. government statements that North Korea helped Syria build the Al Kibar nuclear reactor, which Israel destroyed in 2007, and could have been used to produce plutonium for nuclear weapons. Three seizures—in October 2009, November 2009, and April 2013—of shipments of North Korean chemical protective suits, gas indicator ampoules, and gas masks to Syria, which had an active chemical weapons program. Press reports that North Korea and Iran are cooperating in developing nuclear capabilities or nuclear weapons. U.S. officials have stated publicly that there is no nuclear cooperation between Iran and North Korea. U.S. government statements that North Korea provided nuclear materials to Libya in the early 2000s. Missile sales to and co-development with other countries , including: Long-standing statements by various U.S. government officials that North Korea and Iran maintain a close working relationship on various missile programs, including ballistic missile systems; U.S. government accounts of North Korea missile sales and transfers to Syria, buttressed by the seizure by Japanese, South Korean, Thai and other government authorities of North Korean missile parts heading to Syria and Burma (Myanmar); Conventional a rms s ales and t ransfers , including: The July 2013 interdiction in Panama of the Chong Chon Gang , a North Korean cargo ship carrying fighter aircraft parts and engines, surface-to-air missile parts, ammunition, and other military equipment from Cuba. The Cuban government claimed the materials were to be "repaired" in North Korea before being returned to Cuba, though some analysts have expressed skepticism that some of the weapons systems were meant to be returned; and Reports of North Korean arms shipments to Iran, as well as to Syria via Iran and via Turkey. Ties to Hezbollah and Hamas , both of which the State Department has designated as foreign terrorist organizations. See the text box below for more information. Kidnapping, a ssassination, and other d irect a ctivities against c ivilians , including: Accounts of attempted and successful assassinations and kidnappings of North Korean refugees, critics of the DPRK, and foreigners attempting to help North Koreans defect. Notable accounts include December 2014 news reports of North Korean agents attempting to murder a North Korean refugee in Denmark, 2013 news reports of an attempt to kidnap a North Korean student in Paris, and accounts of the abduction and murder of the Reverend Kim Dong-shik, a Korean-American, in 2000. Since the DPRK was removed from the state sponsors of terrorism lists in 2008, actions that North Korea has taken and been accused of taking have fueled an ongoing discussion about whether it should be re-listed. To date, cyber-related incidents such as the late 2014 attack on Sony have not been used as justification for inclusion on the state sponsors of terrorism lists. The 2009 and 2013 seizures of chemical protection equipment bound for Syria appear to be the only DPRK actions since 2008 that both (1) were recognized by official U.S. or U.N. bodies, and (2) conceivably could have met the statutory criteria for relisting. Official U.S. government and United Nations sources have concluded that the DPRK sold missile parts and conventional weapons to a variety of countries, including a number of state sponsors of terrorism. North Korea also has launched a conventional military attack against a South Korean island that killed civilians, and has been implicated in a torpedo attack against a South Korean naval vessel. However, none of these activities are included in the statutory criteria for adding a government to the state sponsors of terrorism lists. The same is true of cyberattacks, such as the 2014 attack on Sony that rekindled the debate over whether to re-list the DPRK. The North Korean government has been linked to a number of other actions—such as helping designated terrorist organizations as well as conducting kidnappings and assassinations in foreign countries—that some have argued should be grounds for returning the DPRK to the state sponsors of terrorism lists. As of early 2015, the information to support these claims has not been presented by the U.S. government. Of these alleged activities, perhaps the most significant are North Korea's reported weapons sales to and training of Hezbollah and Hamas. As discussed earlier, historically, diplomatic and policy considerations appear to have played a prominent role in the State Department's decisions about the DPRK's place on the state sponsors of terrorism lists. Thus, even if the North Korean government's actions are deemed to meet the re-listing criteria, the State Department is likely to weigh the prospective positive and negative consequences that re-listing would have on international diplomacy with North Korea.
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From 1988 until 2008, the United States designated the government of North Korea, officially known as the Democratic People's Republic of Korea (DPRK), as a state sponsor of terrorism. The Reagan Administration designated the DPRK after it was implicated in the 1987 bombing of a South Korean airliner, in which more than 100 people died. The George W. Bush Administration removed the designation from the DPRK in 2008, one of the measures the United States took in exchange for North Korea's agreement to take steps to disable its nuclear program. As of early 2015, only the governments of Cuba, Iran, Sudan, and Syria remain on the lists. The State Department can designate a government as a state sponsor of acts of international terrorism pursuant to three laws: the Export Administration Act of 1979; the Arms Export Control Act; and the Foreign Assistance Act of 1961. Thus, there effectively are three state sponsors of terrorism "lists." The State Department can use a variety of criteria when assessing whether a government should be added to and removed from the lists. In North Korea's case, policy considerations appear to have weighed heavily in the designation of the DPRK from 1988-2007, as well as in the decision to remove the designation in 2008. In the 114th Congress, H.R. 204 expresses the sense of Congress that the State Department should redesignate the DPRK as a state sponsor of terrorism. According to the State Department, North Korea has not been conclusively linked to any terrorist acts since 1987. Some observers have questioned the Department's claim. These observers support their contention by citing seizures of cargo ships carrying North Korean missile parts and conventional weapons, apparently to Syria and Burma (Myanmar). U.S. government agencies have stated that North Korea helped Syria build a nuclear reactor, and that North Korea and Iran cooperate closely in missile development. According to press reports, North Korea has provided support to Hamas and Hezbollah, and has targeted North Korean refugees living overseas for kidnapping and assassination. The 2010 sinking of a South Korean naval vessel also triggered calls to redesignate the DPRK. To date, cyber-related incidents such as the late 2014 attack on Sony have not been used as justification for designation as a state sponsor of terrorism. The 2009 and 2013 seizures of chemical protection equipment bound for Syria appear to be the only DPRK actions since 2008 that both (1) were recognized by official U.S. or U.N. bodies, and (2) conceivably could have met the statutory criteria for designation. Redesignating the DPRK as a terrorism sponsor appears unlikely to inflict significant direct economic punishment on North Korea, particularly in the short term. However, a decision to redesignate North Korea as a state sponsor of terrorism could have a significant impact on international diplomacy with North Korea. The Kim regime could perceive redesignation as a threat to its two-track policy of nuclear development and economic development, with the latter goal partially dependent upon influxes of foreign investment. Placing North Korea back on the lists could forestall future diplomatic initiatives between Washington and Pyongyang, particularly if North Korean leaders—as well as Chinese leaders—interpret it as a sign that the United States is not interested in dialogue. Given previous patterns of North Korean behavior, it is possible that Pyongyang would respond to a redesignation by taking additional provocative actions, such as more nuclear-weapon or long-range-missile tests. North Korea has not conducted such tests since early 2013. Returning Pyongyang to the terrorism sponsor lists also could complicate the South Korean government's initiatives to improve relations with North Korea. Assessing the merits of these implications depends heavily on whether or not one believes the United States should adopt a harsher stance toward Pyongyang.
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Questions often have arisen over the years about (1) whether sufficient workers are available domestically to meet the seasonal employment demand of perishable crop producers in the U.S. agricultural industry and (2) how, if at all, the Congress should change immigration policy with respect to farm workers. Immigration policy has long been intertwined with the labor needs of crop (e.g., fruit and vegetable) growers, who rely more than most farmers on hand labor (e.g., for harvesting) and consequently "are the largest users of hired and contract workers on a per-farm basis." Since World War I, the Congress has allowed the use of temporary foreign workers to perform agricultural labor of a seasonal nature as a means of augmenting the supply of domestic farm workers. In addition, a sizeable fraction of immigrants historically have found employment on the nation's farms. More recently, attention has focused on the growing share of the domestic supply of farm workers that is composed of aliens who are not authorized to work in the United States. The U.S. Department of Labor (DOL) estimated that foreign-born persons in the country illegally accounted for 37% of the domestic crop workforce in FY1994-FY1995. Shortly thereafter (FY1997-FY1998), unauthorized aliens' share of workers employed on crop farms reached 52%. By FY1999-FY2000, their proportion peaked at 55% before retreating somewhat to 53% in the first half of the current decade. Although a number of studies found that no nationwide shortage of domestic farm labor existed in the past decade, a case has been made that the considerable presence of unauthorized foreign-born workers in seasonal agriculture implies a lack of legal workers relative to employer demand. Arguably, the purported imbalance between authorized-to-work farm labor and employer demand would become more apparent were the supply of unauthorized workers curtailed sufficiently—a fear that has plagued growers for some time. Crop producers and their advocates have testified at congressional hearings and asserted in other venues that they believe the latest risk of losing much of their labor force comes from efforts by the Bureau of Citizenship and Immigration Services and the Bureau of Immigration and Customs Enforcement within the Department of Homeland Security (DHS) to step-up employment verification and enforcement activities, in concert with mailings of no-match letters by the Social Security Administration (SSA). Growers have asserted that these activities disrupt their workforces by increasing employee turnover and therefore, decreasing the stability of their labor supply. The perception that government actions negatively affect U.S. agriculture has prompted a legislative response in the past. This report first examines the composition of the seasonal agricultural labor force and presents the arguments of grower and farm worker advocates concerning its adequacy relative to employer demand. The report next analyzes trends in employment, unemployment, time worked, and wages of authorized and unauthorized farm workers to determine whether they are consistent with the existence of a nationwide shortage of domestically available farm workers. The farm labor supply-demand situation by geographic area at peak harvest time is examined as well, to ascertain whether spot shortages might exist. Immigration legislation sometimes has been crafted to take into account the purported labor requirements of U.S. crop growers. In 1986, for example, Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603 ) to curb the presence of unauthorized aliens in the United States by imposing sanctions on employers who knowingly hire individuals who lack permission to work in the country. In addition to a general legalization program, P.L. 99-603 included two industry-specific legalization programs—the Special Agricultural Worker (SAW) program and the Replenishment Agricultural Worker (RAW) program —that were intended to compensate for the act's expected impact on the farm labor supply and encourage the development of a legal crop workforce. These provisions of the act have not operated in the offsetting manner that was intended, however, as substantial numbers of unauthorized aliens have continued to join legal farm workers in performing seasonal agricultural services (SAS). On the basis of case studies that it sponsored, the Commission on Agricultural Workers concluded in its 1992 report that individuals legalized under the SAW program and other farm workers planned to remain in the agricultural labor force "indefinitely, or for as long as they are physically able." According to the DOL's National Agricultural Workers Survey, two-thirds of so-called SAWs stated that they intended to engage in field work until the end of their working lives. For many SAWs, the end of their worklives—at least their worklives in farming—may now be near at hand. The diminished physical ability generally associated with aging in combination with the taxing nature of crop tasks could well be prompting greater numbers of SAWs to leave the fields. The Commission on Agricultural Workers noted that the typical SAW in 1990 was a 30-year-old male who "is likely to remain in farm work well into the 21 st century," but DOL estimated the average age of SAW-legalized workers in 2007 was 47. Because relatively few farm workers are involved in crop production beyond the age of 44, and even fewer beyond the age of 54, it appears that the 1986 legalization program has become less useful over time in fulfilling the labor requirements of crop producers. A combination of factors likely has contributed to the decrease in SAWs' share of agricultural employment. While the share of IRCA-legalized farm workers has been falling over time due to aging and the availability of nonfarm jobs, the leading factor probably is the substantially increased presence of illegal aliens. In the first half of the 1990s, unauthorized workers rose from 7% to 37% of the SAS labor force. Their share climbed to 55% by FY1999-FY2000, before settling at 53% in FY2005-FY2006. Moreover, the number of SAS workdays performed by unauthorized aliens more than tripled between FY1989 and FY2002. In addition, of the many foreign-born newcomers to the sector in FY2000-FY2002, 99% were employed without authorization. Unauthorized aliens, arguably, have been displacing legal workers from jobs in the agricultural industry. Farm worker advocates assert that crop producers prefer unauthorized employees because they have less bargaining power with regard to wages and working conditions than other employees. Growers counter that they would rather not employ unauthorized workers because doing so puts them at risk of incurring penalties. They argue that the considerable presence of unauthorized aliens in the U.S. farm labor force implies a shortage of legal workers. Farm worker groups and some policy analysts contend that even if the previously mentioned DHS and SSA activities were to deprive farmers of many of their unauthorized workers, the industry could adjust to a smaller supply of legal workers by (1) introducing labor-efficient technologies and management practices, and (2) raising wages which, in turn, would entice more authorized workers into the farm labor force. Grower advocates respond that further mechanization would be difficult to develop for many crops and that, even at higher wages, not many U.S. workers would want to perform physically demanding, seasonal farm labor under variable climactic conditions. Moreover, employer representatives and some policy analysts maintain that growers cannot raise wages substantially without making the U.S. industry uncompetitive in world markets which, in turn, would reduce farm employment. In response, farm worker supporters note that wages are a small part of the price consumers pay for fresh fruits and vegetables and accordingly, higher wages would result in only a slight rise in retail prices. These remain untested arguments as perishable crop growers have rarely, if ever, had to operate without unauthorized aliens in their workforces. Trends in the farm labor market generally do not suggest the existence of a nationwide shortage of domestically available farm workers, in part because the government's statistical series cover authorized and unauthorized workers. This overall finding does not preclude the possibility of spot shortages of farm labor in certain areas of the country at various times of the year. Caution should be exercised when reviewing the statistics on farm workers' employment, unemployment, time worked and wages that follow. The surveys from which the data are derived cover somewhat different groups within the farm labor force (e.g., all hired farm workers as opposed to those engaged only in crop production or workers employed directly by growers as opposed to those supplied to growers by farm labor contractors), and they have different sample sizes. A household survey such as the Current Population Survey (CPS) could well understate the presence of farm workers because they are more likely to live in less traditional quarters (e.g., labor camps) and of unauthorized workers generally because they may be reluctant to respond to government enumerators. And, some of the surveys have individuals as respondents (e.g., the CPS and DOL's National Agricultural Workers Survey) while others have employers as respondents (e.g., the U.S. Department of Agriculture's National Agricultural Statistics Service Farm Labor Survey, FLS). Surveys that query employers are more likely to pickup unauthorized employment than are surveys that query individuals. Estimating whether the number of workers in the United States is sufficient to fulfill employer demand is difficult because there is no agreed-upon definition of a labor shortage. Economists believe labor markets reach a balance between supply and demand, with a lag, absent government policies that prevent a shortage or surplus from occurring. For example, economic theory posits that firms needing more workers to fill jobs in a particular occupation will initially raise wages to attract employees from elsewhere in the economy and thereby restore equilibrium between supply and demand in the occupation. In contrast, businesses tend to think there is a shortage in a given occupation if as many workers as they want cannot be obtained at the current wage being offered. Estimating shortages or surpluses also is not straight-forward because the supply of and demand for labor generally cannot be measured directly. There is no proxy for the supply of workers to most occupations. An oft-used measure of demand is employment. Accordingly, an increase in an occupation's employment denotes that employers have increased their demand for labor and may be moving toward—but have not reached—a shortfall of workers, while a decrease in an occupation's employment signals that employers either have (1) reduced their demand for labor and may be moving away from a shortage, or (2) maintained or increased their demand but may have exhausted the supply of readily available workers. The trend in wages commonly is used to clarify the latter situation: if employment in an occupation falls despite employers substantially bidding up wages, it is assumed that the number of workers readily available to fill jobs in the occupation may have reached its limit. Other measures that can be examined to shed additional light on the relationship between labor supply and demand include unemployment and time worked. Both these indicators are analyzed below to supplement trends in farm employment and wages. Although the employment of hired workers engaged in crop or livestock production (including contract workers) has fluctuated erratically over time, the trend overall has been downward (see columns 3 and 7 in Table 1 ). The employment pattern among crop workers hired directly by growers (i.e., excluding those supplied by farm labor contractors and crew leaders) regularly rose and then fell back during the 1990s, but to a higher level through 2000 (column 4). This ratcheting upward of employment produced a 12% gain over the 1990-2000 period. In contrast, other wage and salary workers experienced steady and robust job growth over almost the entire period: from 1990 to 2000, wage and salary employment in nonfarm industries advanced by 18%. These divergent employment patterns suggest that hired farm workers did not share equally in the nation's long economic expansion of the 1990s and appear to be inconsistent with the presence of a nationwide farm labor shortage at that time. Nonfarm wage and salary employment showed signs of revival from the 2001 recession in 2003. It continued to rise until the decade's second recession began in December 2007. In contrast, the various measures of farm worker employment fluctuated erratically between the two recessions and generally ended the period down from their initial level. The disparate patterns again suggest that hired farm workers did not share equally in the nation's latest economic expansion and appear to be inconsistent with the existence of a nationwide farm labor shortage. (See columns 3 and 7 of Table 1 . ) Farm employment is subject to considerable seasonal variation, which annual average data masks, however. Demand for crop workers in particular typically peaks in July when many fruits and vegetables are ready to be harvested. Farm employment also varies greatly by geographic area. July data for the past few years disaggregated by geographic area available from the FLS are examined below to assess whether demand at its peak has produced shortages of hired farm workers and agricultural service workers in some parts of the country. Because the FLS provides data for both worker groups only in California and Florida, the data in Table 2 is limited to those states. Recall that the data on hired farm workers are for a broader group than crop workers, covering livestock as well as field workers. Employment of hired farm (field and livestock) workers and agricultural service workers rose in California between July 2006 and July 2007, and again between July 2008 and July 2009. (See Table 2 .) While the rate of increase in total farm employment was below the national average during the latest peak period, the rate of increase was above the national average during the earlier period. The substantial growth rate suggests that California growers faced a tighter labor market in July 2007. In contrast, total farm employment between the two periods fell considerably. As previously noted, a decrease in employment such as occurred in California in July 2008 could indicate that the state's farmers had either reduced their demand for workers or had maintained or increased their demand but were unable to find sufficient workers to meet it. Variable climate conditions may explain a good deal of the long-standing yearly fluctuations in farm employment not only in California but also in other states. For example, drought or hurricanes could severely curtail crop production in a given area in one year, which would greatly reduce labor requirements; the following year the same area could have more normal weather conditions that would produce a larger crop and, hence, a greater demand for labor. In the case of California in July 2008, "lack of available irrigation water caused much acreage to be left fallow. Planted acreage of cotton, dry beans, and sugar beets declined sharply from 2007. Therefore, the demand for field workers was considerably lower." Another example involves Washington state. Different weather conditions in 2006 than 2005 affected when demand peaked for harvesting cherries, which in turn affected the supply of labor to other growers in the state. As a result of the delayed surge in demand for labor among cherry producers in 2006, many workers who usually would have switched to working for apple growers in August instead continued to harvest cherries. Their analysis led Ernst W. Stromsdorfer and John H. Wines to conclude that "dramatic year-to-year seasonal changes explain much of the concern of agricultural producers over the adequacy and timeliness of the supply of seasonal agricultural workers. Employment data paint an incomplete picture of the state of the labor market. At the same time that employment in a given occupation is decreasing or increasing relatively slowly, unemployment in the occupation might be falling. Employers would then be faced with a shrinking supply of untapped labor from which to draw. A falling unemployment rate or level would offer some basis for this possibility. As shown in Table 3 , the unemployment rate of hired farm workers engaged in crop or livestock production (including contract labor) is quite high. Even the economic boom that characterized most of the 1990s did not reduce the group's unemployment rate below double-digit levels, or about twice the average unemployment rate in the nation at a minimum. Discouragement over their employment prospects in agriculture or better opportunities elsewhere (e.g., the housing construction industry) may have prompted some unemployed farm workers to leave the sector as evidenced by their reduced number over the years (see column 4 of the table). Others have examined the unemployment rates in counties that are heavily dependent on the crop farming industry. The GAO, for example, found that many of these agricultural areas chronically experienced double-digit unemployment rates that were well above those reported for much of the rest of the United States. Even when looking at monthly unemployment rates for these areas in order to take into account the seasonality of farm work, the agency found that the agricultural counties exhibited comparatively high rates of joblessness. These kinds of findings imply a surplus rather than a shortage of farm workers. Another perspective on the availability of untapped farm labor comes from the DOL's National Agricultural Worker Survey (NAWS). During FY2001-FY2002, the typical crop worker spent two-thirds of the year performing farm jobs. The remainder of the year, these farm workers either were engaged in nonfarm work (10% of the year) or not working (16%) while in the United States, or they were out of the country (7%). This pattern also suggests an excess supply of labor, assuming that the workers wanted more farm employment. Alternatively, grower advocates contend that the pattern is a manifestation of working in a seasonal industry. Even in a month of peak industry demand, however, only a small majority of farm workers hold farm jobs. Another indicator of supply-demand conditions is the amount of time worked (e.g., hours or days). If employers are faced with a labor shortage, they might be expected to increase the amount of time worked by their employees. Recent data reveal no discernible year-to-year variation in the average number of weekly hours that hired farm workers are employed in crop or livestock production. According to the FLS, the average workweek of hired farm workers has ranged narrowly around 40.0 hours since the mid-1990s. Thus, neither the annual trend in employment nor that in work hours implies the existence of a farm labor shortage. There also is not much variability in demand over the course of a year based on hours worked. In 2008, for example, the average week of hired farm workers was 38.4 hours in mid-January, 40.8 hours in mid-April, 40.5 hours in mid-July and 41.3 hours in mid-October. Another measure of time worked available from the FLS is "expected days of employment" (i.e., farm operators are asked the number of days they intend to utilize their hired farm workers over the course of a year). As shown in Table 4 , they anticipated a low of 557,000 farm workers on their payrolls for at least 150 days in 2008 and a high of 679,000 (un)authorized workers in 2002. These "year-round" workers typically have accounted for at least three-fourths of hired farm workers in the current decade. As previously stated, economic theory suggests that if the demand for labor is nearing or has outstripped the supply of labor, firms will in the short-run bid up wages to compete for workers. Consequently, earnings in the short-supply field would be expected to increase more rapidly than earnings across all industries or occupations. The ratio of, in this instance, farm to nonfarm wages would accordingly be expected to rise if the farm labor supply were tight. Based upon the data in Table 5 , the average hourly earnings of field (excluding contract) workers typically have increased to the same extent as those of other non-management employees in the private sector. As a result, field workers still earn little more than 50 cents for every dollar paid to other non-management employees in private sector industries. An over-the-year comparison of farm and nonfarm wage data in the peak demand month of July suggests the presence of a tight labor market for California growers in 2007, but not in 2008 or 2009. As shown in Table 6 , California growers raised the hourly wages of field workers (7.6%) and agricultural service workers (5.4%) at rates well above those earned by nonfarm employees in other private sector industries (3.9%) between July 2006 and July 2007. These above-average wage increases likely contributed to the comparatively large increase in farm (field and livestock) employment in the state between July 2006 and July 2007, as previously shown in Table 2 . Between July 2007 and July 2008, however, California growers raised the wages of field workers to a lesser extent than other private sector employers increased their workers' wages (2.6% and 3.6%, respectively); in the case of agricultural service workers, hourly wages in the state were unchanged. The previously discussed reduced demand for farm labor in the state in July 2008, which was related in part to crop land being left fallow due to a lack of water for irrigation, is a likely explanation for the comparatively small wage increase. Between July 2008 and July 2009, California growers raised the wages of field workers about as much as they had between July 2007 and July 2008, and to a slightly lower extent than other private sector employers increased their workers' wages ( 2.5% and 2.7%, respectively); as for agricultural service workers, they experienced an increase compared to the lack of a raise in the prior year. Farmers in California may have found it easier to attract workers from other sectors of the economy because of ongoing deterioration in the construction industry, in particular, and the recession that began in December 2007, in general. In summary, indicators of supply-demand conditions generally are inconsistent with the existence of a nationwide shortage of domestically available farm workers in part because the measures include both authorized and unauthorized employment. This finding does not preclude the possibility of farm worker shortages in certain parts of the country at various times during the year. The analysis does not address the adequacy of authorized workers in the seasonal farm labor supply relative to grower demand. Whether there would be an adequate supply of authorized U.S. farm workers if new technologies were developed or different labor-management practices were implemented continues to be an unanswered question. Whether more U.S. workers would be willing to become farm workers if wages were raised and whether the size of the wage increase would make the industry uncompetitive in the world marketplace also remain open issues. These matters remain unresolved because perishable crop growers have rarely, if ever, had to operate without unauthorized aliens being present in the domestic farm workforce.
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The connection between farm labor and immigration policies is a longstanding one, particularly with regard to U.S. employers' use of workers from Mexico. The Congress periodically has revisited the issue during debates on guest worker programs, increased border enforcement, and employer sanctions to curb the flow of unauthorized workers. Two decades ago, the Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603) to reduce illegal entry into the United States by imposing sanctions on employers who knowingly hire persons who lack permission to work in the country. In addition to a general legalization program, IRCA included legalization programs specific to the agricultural industry that were intended to compensate for the act's expected impact on the farm labor supply and encourage development of a legal crop workforce. These provisions of the act have not operated in the offsetting manner that was intended: substantial numbers of unauthorized aliens have continued to join legal farm workers in performing seasonal agricultural services (SAS). A little more than one-half of the SAS workforce is not authorized to hold U.S. jobs. Crop growers contend that their sizable presence implies a shortage of native-born farm workers. Grower advocates argue that farmers would rather not employ unauthorized workers because doing so puts them at risk of incurring penalties. Farm worker advocates counter that crop growers prefer unauthorized workers because they are in a weak bargaining position. If the supply of unauthorized workers were curtailed, it is claimed, farmers could adjust to a smaller workforce by introducing labor-efficient technologies and management practices, and by raising wages, which, in turn, would entice more U.S. workers to accept farm jobs. Growers respond that further mechanization would be difficult for some crops, and that much higher wages would make the U.S. industry uncompetitive in world markets without expanding the legal farm workforce. These remain untested arguments because perishable crop growers have rarely, if ever, operated without unauthorized foreign-born workers. Trends in the agricultural labor market generally do not suggest the existence of a nationwide shortage of domestically available farm workers, in part because the government's databases cover authorized and unauthorized workers. While total nonfarm wage and salary employment generally increased between the two recessions of the current decade, for example, the number of farm jobs fluctuated erratically and ended down for the period. The length of time hired farm workers are employed has changed little or fallen over the years as well. Their unemployment rate has varied slightly and remains well above the U.S. average. Underemployment among farm workers also remains substantial. In addition, the earnings of farm workers has changed little over time relative to other nonmanagement employees in the private sector. This assessment does not preclude the possibility of labor shortages in particular geographic areas at particular times of the year. Some statistical evidence suggests that California growers experienced a tighter labor market in July 2007 compared to peak harvest season a year earlier, for example.
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A Commission to Assess the Threat from High Altitude Electromagnetic Pulse (EMP commission) was established by Congress in FY2001 after several experts expressed concern that the U.S. critical infrastructure and military were vulnerable to EMP attack. On July 20, 2008, the Commission presented a report to the House Armed Services Committee (HASC) assessing the effects of an EMP attack on U.S. critical national infrastructures. The 2008 report contained analysis of results of tests for modern electronics and telecommunications equipment for public networks supported by the power grid and by temporary isolated power supplies, including cell phones, computer servers, and Internet routers and switches. The report also made recommendations for preparation, protection, and recovery of U.S. critical infrastructures from EMP attack. The Commission reported that the ubiquitous dependency of society on the electrical power system, coupled with the EMP's particular damage mechanisms, creates the possibility of long-term, catastrophic consequences for national security. Comparison was made to hurricane Katrina in 2005, where the protracted power blackout exhausted the limited fuel supplies for emergency generators. However, in the case of an EMP attack, a widespread collapse of the electric power grid could lead to cascading effects on interdependent infrastructures, possibly lasting weeks or months. The Commission stated, "Should significant parts of the electrical power infrastructure be lost for any substantial period of time ... many people may ultimately die for lack of the basic elements necessary to sustain life in dense urban and suburban communities ... [and] the Federal Government does not today have sufficiently robust capabilities for reliably assessing and managing EMP threats." At a prior hearing, on July 22, 2004, panel members from the EMP commission stated that as U.S. military weapons and control systems become more complex, and as portions of the military's administrative communications systems continue to rely on the U.S. civilian infrastructure for support, they may be increasingly vulnerable to the effects of EMP. The consensus of the Commission in 2004 was that a large-scale, high-altitude EMP attack could possibly cause widespread damage to unprotected civilian and military electronic equipment for an extended period. However, the consensus of the EMP commission in 2008 was that the United States need not remain vulnerable to catastrophic consequences of an EMP attack, and that the nation's vulnerability can be reasonably reduced by coordinated and focused effort between the private and public sectors. The Committee stated that the cost for improved security in the next three to five years would be modest, especially when compared with the costs associated with the war on terror and the value of the national infrastructures threatened. The EMP commission's reports in both 2004 and 2008 focused only on the effects of High Altitude EMP (HEMP), and not necessarily the effects High Power Microwave (HPM) devices, which are non-nuclear Radio-Frequency (RF) weapons that can also produce damaging EMP, but with different characteristics and covering a smaller geographic area. Both types of EMP are discussed below. The widely published vulnerability of U.S. civilian and some military electronics to EMP, along with technical accessibility and lower cost, could make smaller-scale HPM weapons attractive in the future as weapons for terrorist groups. Also, some observers argue that unless the United States openly describes how it is taking action to reduce EMP vulnerabilities within critical infrastructures, perceived inaction will increase the likelihood that a rogue nation will seek to employ the asymmetric effects of HEMP against our computer systems. The EMP commission was reestablished by P.L. 109-163 , the National Defense Authorization Act for FY2006. The new Commission to Assess the Threat to the United States from Electromagnetic Pulse Attack (note that the new title no longer includes the phrase "High Altitude", and adds the new word "Attack") continues with the same membership, and the Secretary of Defense is authorized to appoint a new member in the event of a vacancy. The EMP commission is tasked to monitor, investigate, and make recommendations about the vulnerability of electric-dependent systems of the Department of Defense, government agencies, and the private sector. On July 22, 2004, members of the EMP commission testified before the House Armed Services Committee and presented a report consisting of the following five volumes: Volume 1 is an unclassified Executive Summary. Volume 2 is a classified Threat Assessment. Volume 3 is an unclassified Assessment of the U.S. Critical Infrastructure. Volume 4 is a classified discussion of Military Topics. Volume 5 is a classified Assessment of Potential Threats. The report stated that High Altitude EMP is capable of causing catastrophic consequences for the nation, and that the current vulnerability of our critical infrastructures, which depend so heavily on computers and electronics, can both invite and reward attack if not corrected. Specifically referring to the U.S. military, the report states: EMP test facilities have been mothballed or dismantled, and research concerning EMP phenomena, hardening design, testing, and maintenance has been substantially decreased. However, the emerging threat environment, characterized by a wide spectrum of actors that include near-peers, established nuclear powers, rogue nations, sub-national groups, and terrorist organizations that either now have access to nuclear weapons and ballistic missiles or may have such access over the next 15 years have [sic] combined to place the risk of EMP attack and adverse consequences on the U.S. to a level that is not acceptable.... Our increasing dependence on advanced electronics systems results in the potential for an increased EMP vulnerability of our technologically advanced forces, and if unaddressed makes EMP employment by an adversary an attractive asymmetric option." The EMP commission's 2004 report proposed a five-year plan for protecting critical infrastructures from EMP and from other large-scale terrorist attacks. The five-year plan is briefly summarized in Volume 3 of the report. However, some portions of the five-year plan that are related to military equipment may remain classified. The Commission is currently preparing a review of the DOD response to recommendations made in 2004. Testimony at the 2004 hearing included questions such as (1) how would the United States respond to a limited HEMP attack against the U.S. homeland or against U.S. forces, where there is loss of technology, but no directly caused loss of life; (2) does the current lack of U.S. preparedness invite adversaries to plan and attempt a HEMP attack; and (3) are the long-term effects of a successful HEMP attack, leading to possible widespread starvation and population reduction, potentially more devastating to the U.S. homeland than an attack by surface nuclear weapons? The 2008 EMP Commission report discussed vulnerabilities and interdependencies among 10 U.S. critical infrastructures. Findings showed that only limited EMP vulnerability testing had previously been done for modern electronic systems that help support these infrastructures. In addition, the Commission expressed concern that widespread use of automated supervisory and control data acquisition (SCADA) systems for the critical infrastructure had allowed companies and agencies to systematically reduce the size of their work forces having the necessary technical knowledge needed to support manual operations of these infrastructure control systems, as might be needed during a prolonged emergency. The Commission concluded, after reviewing national capabilities to manage the effects of nuclear weapons (and EMP) on modern systems, that "the Country is rapidly losing the technical competence in this area that it needs in the Government, National Laboratories, and Industrial Community." Experts on the Commission have asserted that little has been done by the private sector to protect against the threat from electromagnetic pulse, and that commercial electronic systems in the United States could be severely damaged by EMP attack. Commercial electronic surge arresters commonly used for lightning strikes reportedly cannot be relied on because most do not clamp fast enough to protect against the near-instantaneous effects of EMP (see section below on " Electromagnetic Pulse Overview "). In March 2007, a survey of state Adjutants General who oversee National Guard units throughout the country found that most state-based emergency responders are not actively preparing against an attack on the United States by electromagnetic pulse. The survey, entitled "Missile Defense and the Role of the States", was conducted jointly by the Anchorage-based Institute of the North and the Claremont Institute of Claremont, California. Survey questions were sent to Adjutants General of all 50 states, with more than half responding. Although 96% of state Adjutants General indicated significant concern over an EMP attack, the majority had done little or no analysis of the effects of an overhead EMP attack, and little or no training, or preparation to harden electronic equipment. None of the Adjutants General surveyed indicated that they were actively involved in a formal planning process for response to an EMP attack. Some analysts discount the likelihood of a large-scale EMP attack against the United States in the near term, and the extent of possible damage, stating that the critical infrastructure reportedly would survive, and that military communications would continue to operate and a high percentage of civilian phone calls would continue to connect. The argument is that limited testing has shown that modern commercial equipment may be surprisingly resistant to the effects of electromagnetic pulse, and that some military systems using commercial equipment are also retrofitted to be made more EMP resistant before they are fielded. However, other analysts maintain that some past testing done by the U.S. military may have been flawed, or incomplete, leading to faulty conclusions about the level of resistance of commercial equipment to the effects of EMP. These analysts also point out that EMP technology has been explored by several other nations, and as circuitry becomes more miniaturized, modern electronics become increasingly vulnerable to disruption. They argue that, depending on the targeted area and power of an EMP attack, it could possibly take years for the United States to recover fully from the resulting widespread damage to electronics and the power grid. Commission members have stated at hearings that, as time passes without a visible effort to show the world that we are protecting our computer systems and critical infrastructures, the perceived inaction may actually invite a possible EMP attack. In the past, the threat of mutually assured destruction provided a lasting deterrent against the exchange of multiple high-yield nuclear warheads. However, a single, low-yield nuclear explosion high above the United States, or over a battlefield, can produce a large-scale, high-altitude EMP effect resulting in widespread loss of electronics, but possibly without direct fatalities. Therefore, an EMP attack directed against the United States involving no violent destruction, nor instant death for large numbers of U.S. citizens, may not necessarily evoke massive nuclear retaliation by the U.S. military, where, for example, large numbers of innocent civilians of a nation with a rogue leader might be killed. Such a perceived lower risk of assured destruction by the United States, and widespread knowledge about the vulnerability of U.S. civilian and military computers to the effects of an EMP attack, could actually create a new incentive for other countries or terrorist groups to develop, or perhaps purchase, a nuclear capability. Electromagnetic energy, characterized as weapon potentially threatening to national security, can be created as a pulse traditionally by two methods: overhead nuclear burst and microwave emission. High-Altitude Electromagnetic Pulse (HEMP) is a near-instantaneous electromagnetic energy field that is produced in the atmosphere by the power and radiation of a nuclear explosion, and that is damaging to electronic equipment over a very wide area, depending on power of the nuclear device and altitude of the burst. High-Power Microwave (HPM) electromagnetic energy can be produced as a near-instantaneous pulse created through special electrical equipment that transforms battery power, or powerful chemical reaction or explosion, into intense microwaves that are also very damaging to electronics, but within a much smaller area. In addition, while HEMP weapons are large in scale and require a nuclear capability along with technology to launch high altitude missiles, HPM weapons are smaller in scale, and can involve a much lower level of technology that may be more easily within the capability of some extremist groups. HPM can cause damage to computers similar to HEMP, although the effects are limited to a much smaller area. HEMP is produced when a nuclear weapon is detonated high above the Earth's surface, creating gamma-radiation that interacts with the atmosphere to create an instantaneous intense electromagnetic energy field that is harmless to people as it radiates outward, but which can overload computer circuitry with effects similar to, but causing damage much more swiftly than, a lightning strike. The effects of HEMP became fully known to the United States in 1962 during a high-altitude nuclear test (code named "Starfish Prime") over the Pacific Ocean, when radio stations and electronic equipment were disrupted 800 miles away throughout parts of Hawaii. The HEMP effect can span thousands of miles, depending on the altitude and the design and power of the nuclear burst (a single device detonated at an appropriate altitude over Kansas reportedly could affect all of the continental United States) , and can be picked up by metallic conductors such as wires, or overhead power lines, acting as antennas that conduct the energy shockwave into the electronic systems of cars, airplanes, or communications equipment. A high altitude nuclear explosion (that creates HEMP) produces three major energy components that arrive in sequence, and which have measurably different effects that can be cumulatively damaging to electronic equipment. The first energy component is the initial energy shockwave, which lasts up to 1 microsecond, and is similar to extremely intense static electricity that can overload circuitry for every electronic device that is within line of sight of the burst. A secondary energy component then arrives, which has characteristics that are similar to a lightning strike. By itself, this second energy component might not be an issue for some critical infrastructure equipment, if anti-lightning protective measures are already in place. However, the rise time of the first component is so rapid and intense that it can destroy many protective measures, allowing the second component to further disrupt the electronic equipment. The third energy component is a longer-lasting magnetohydrodynamic (MHD) signal, about 1 microsecond up to many seconds in duration. This late time pulse, or geomagnetic signal, causes an effect that is damaging primarily to long-lines electronic equipment. There are two components to this third late time energy pulse, which experts call "blast" and "heave." The "blast" results from a distortion of the earth's magnetic field lines by the expanding, fully conductive fireball. The "heave" comes from the heating and ionization of a patch of atmosphere directly below the bomb that rises and, being conductive, also distorts the earth's magnetic field. Both of these are considered MHD signals and are termed "slow" because they depend on the dynamics of cloud or fireball expansion. As the fireball expands, a localized magnetic effect builds up on the ground throughout the length of long transmission lines and then quickly collapses, producing the MHD "late-time" power surge, which can overload equipment connected to the power grid and telecommunications infrastructure. This late-time effect can add to the initial HEMP effect, and systems connected to long-lines power and communications systems may be further disrupted by the combined effects. Smaller isolated systems do not collect so much of this third energy component, and are usually disrupted only by the first energy component of HEMP. It is also important to note that this third, late-time pulse depends on the total energy of the nuclear detonation and therefore is usually associated only with larger yield nuclear weapons. However, the first energy pulse is a saturation-limited effect and is produced by all nuclear weapons, both small and large yield. Microwaves are characterized by electromagnetic energy with wavelengths as small as centimeters or millimeters, and can be used at moderate power levels for radio frequency communications or for radar. High-power microwaves can be created as an instantaneous electromagnetic pulse, for example, when a powerful chemical detonation is transformed through a special coil device, called a flux compression generator, into an intense electromagnetic field. Other methods can also be used to create a reusable HPM weapon, such as combining reactive chemicals or using powerful batteries and capacitors to create EMP. HPM energy can be focused using a specially-shaped antenna, or emitter, to produce effects similar to HEMP within a confined area, or over a limited distance. Unlike HEMP, however, HPM radiation uses shorter wave forms at higher-frequencies which make it highly effective against electronic equipment and more difficult to harden against. A mechanically simple, suitcase-sized device, using a chemical explosive and special focusing antenna, might theoretically produce a one-time, instantaneous HPM shockwave that could disrupt many computers within a 1-mile range. Also, HPM energy at higher power levels (megawatts), and powered for a longer time interval, reportedly could cause physical harm to persons near the source emitter, or possibly in the path of a narrowly focused energy beam. Studies related to the effects of electromagnetic energy used as weapons have been published infrequently, or remain classified. Nevertheless, it is known that a powerful HEMP field as it radiates outward can interfere with radio frequency links and instantly produce damaging voltage and currents in electronic devices thousands of miles from the nuclear explosion. Effectiveness is increased if the electronic devices are connected to any other metal that could also act as an antenna. Because infrastructure computer systems are interconnected, a widespread HEMP effect could lead to possible long-term disruption of the power grid, fuel distribution, transportation systems, food and water supplies, and communications and equipment for hospitals and first responders, as well as military communications systems which utilize the civilian infrastructure. An HPM weapon has a shorter possible range than HEMP, but it can induce currents large enough to melt circuitry, or it can cause equipment to gradually fail over a period of minutes, days, or even weeks. In 2001, a U.S. Comanche helicopter, flying in New York while performing a radar test involving HPM weapons, generated a low-level energy pulse that reportedly disrupted for two weeks the global positioning systems (GPS) being used to land commercial aircraft at a nearby airport in Albany, New York. A HEMP attack directed against the Unites States continent might involve a one-megaton nuclear warhead, or a smaller one, using a burst several hundred miles above the mid-western states to affect computers on both coasts. However, creating a HEMP effect over an area 250 miles in diameter, an example size for a battlefield, might only require a rocket with a modest altitude and payload capability that could loft a relatively small nuclear device. If a medium or higher range missile with a nuclear payload were launched from the deck of a freighter at sea, the resulting HEMP could reportedly disable computers over a wide area of the coastal United States. The disruptive effects of both HEMP and HPM reportedly diminish with distance, and electronic equipment that is turned off is only less likely to be damaged. To produce maximum coverage for the HEMP effect, a nuclear device must explode very high in the atmosphere, too far away from the earth's surface to cause injury or damage directly from heat or blast. Also, HEMP produced by the nuclear explosion is instantaneous—too brief to start current flowing within a human body—so there is no effect on people. However, microwave energy weapons (HPM) are smaller-scale, are delivered at a closer range to the intended target, and can sometimes be emitted for a long duration. These characteristics of HPM can sometimes cause a painful burning sensation or other injury to a person directly in the path of the focused power beam, or can even be fatal if a person is too close to the microwave emitter. Both HEMP and HPM can permanently immobilize vehicles with modern electronic ignition and control systems. However, older electrical components, such as vacuum tubes and induction coils for spark ignition, are generally built more massively, and are more tolerant of EMP. As modern electronics shrink in size, circuitry is becoming increasingly tiny and more vulnerable to electromagnetic interference. Therefore, countries with infrastructure that relies on older technology may be less vulnerable to the disabling effects of HEMP or HPM than countries that rely on a higher level of technology. The simultaneous loss of communications and power that would likely result from an EMP attack would also complicate the restoration of systems. Without communications, it would be difficult to ascertain the nature and location of damage, or to order personnel out to make repairs. The estimated recovery times for various elements of the electrical system are provided in a list that appears on pages 50-51 of the 2008 Commission report. The report states that the continuing business need to improve and expand the electric power system provides an opportunity to improve both the security and reliability of the entire system in an economically acceptable manner. The Commission reported that the seriousness of loss of the electric power grid could be reduced through focused coordination between industry and government. The Commission recommended that the federal government, according to standards it determines, should validate proposed enhancements to protect systems against damage from EMP attack, and fund those security related elements. In September 2007, the Sage Policy Group of Baltimore and Instant Access Networks (IAN) published a study of the potential economic impact of a HEMP attack on the Baltimore-Washington-Richmond area. The study focuses on the economic effects of EMP experienced by a region after a high-altitude EMP pulse generated by a nuclear device detonated between 30-80 miles above ground impacting an area at least 500 miles in radius. In these instances of high-altitude EMP, no one would feel the heat or blast but merely experience the effects of the disruption or damage to the electronic and power infrastructure. The Baltimore-Washington-Richmond area likely comprises only one-tenth of the economic loss that would occur for the total geographic area affected by a regional EMP event. The report was presents a range of low, medium, and high estimates of economic damage, all within bounds accepted by a broad range of EMP experts. The methodology relied on assumptions about disruption and damage to the regional electrical power system, communications systems, system control and data acquisition (SCADA) devices, and other critical infrastructure that might occur as a result of an EMP, and on the time required to repair that damage and fully restore economic activity. These assumptions were used in combination to estimate the ultimate effects of an EMP on the region's economy. The cumulative effect of an EMP on critical infrastructure was assumed to be largely determined by effects on the electrical grid and communications systems. Cumulative damage was then determined by multiplying the remaining capacity of the electrical grid by the remaining capacity of communication systems under three scenarios. For example, under the high case, an EMP damages 50% of the capacity of the electric grid and 50% of the capacity of communication systems. The analysis assumed that the economy was then able to operate at only 25% of capacity (i.e., 50% multiplied by 50%). The study concluded that an EMP attack affecting the Baltimore-Washington-Richmond region could result in economic output loss potentially exceeding $770 billion, or 7% of the nation's annual gross domestic product. Even under the most favorable assumptions, including both shielded and unshielded critical infrastructure, an EMP might still result in damage that would require one month of recovery and economic loss of $9 billion and $34 billion respectively. Source: Instant Access Networks and Sage Policy Group, "Initial Economic Assessment of Electromagnetic Pulse (EMP) Impact upon the Baltimore-Washington-Richmond Region," September 10, 2007, Exhibit 2, p. 5, at http://www.pti.org/docs-safety/EMPecon_9-07.pdf . In the worst case, according to the study, not only is the damage from EMP widespread, but the duration of disrepair lasts for years. In such cases, there are numerous complicating factors that could slow the recovery process. The quantity of replacement equipment needed to restore the economy may quickly exhaust readily available supplies and, in extreme cases, existing manufacturing capacity. In such cases, the availability of skilled labor to replace and restore key infrastructure elements may also be in extraordinarily short supply. High-altitude EMP would also affect much larger parts of the region than the immediate Baltimore-Washington-Richmond area, further complicating recovery efforts. It is unlikely that restoration would occur in an orderly, linear fashion. More likely, restoration efforts would start slowly and gather speed as basic infrastructure is gradually brought on line. Electronic equipment may be made more resistant to EMP by surrounding it with protective metallic shielding, which routes damaging electromagnetic surges away from highly sensitive electrical components. This method, commonly known as Faraday cage protection, is often used to protect electronic equipment from a lightning strike. However, these devices must be constructed carefully. Any wires running into the protected area could act as antennae and conduct the electromagnetic shockwave into the equipment. These points of entry into a shielded area must be protected from EMP by using specially designed surge protectors, special wire termination procedures, screened isolated transformers, spark gaps, or other types of specially designed electrical filters. Additionally, an EMP surge from a very powerful nuclear blast, possibly involving a 200 Kilovolts/meter electric field, could pass through some protective shielding. Microsoft, Sun Microsystems, and other vendors have recently marketed a new product commonly called a "Portable Data Center" (PDC) where computer equipment is placed on racks that are pre-grouped inside a modular room, which can be moved and connected to other portable computer room modules, as needed. For example, a portable module can hold as many as 1,200 servers along with power supply and a cooling system. All this computer equipment fits into a box that can be placed inside a 40-foot standard freight shipping container, which can also be mounted on a truck for portability. This new method for housing computers is intended to reduce the cost for computer facility installation. However, additional features may also transform a PDC into an effective method for making U.S. computer equipment less vulnerable to EMP attack. For example, Instant Access Networks (IAN), a specialized technology vendor, now offers a portable modular equipment room that reportedly can meet military specifications for EMP protection. The IAN product uses welded metal enclosures of precise composition and thickness. A recently filed patent application involves a unique construction method to block different EMP frequencies and also reduce weight for easier portability. This type of portable module, built and tested according to strict specifications, could possibly be mass-produced and deployed as an effective way to protect existing and future U.S. computer systems from EMP attack. For example, a single module placed at a remote critical location could possibly operate as an EMP-protected SCADA system, or multiple shielded modules could be connected together at a central headquarters location for a high-capacity protected computing. DOD has also published Mil-Standard 188-125, which describes methods for protecting against High-Altitude Electromagnetic Pulse for ground-based command and control facilities. However, not all military systems are currently hardened against EMP. In addition, some DOD systems rely on commercial facilities, such as communications satellites and ground-based stations, for support of military operations. Hardening most military systems, and mass-produced commercial equipment including PCs and communications equipment, against HEMP or HPM reportedly would add from 2% to 3% to the total cost, if the hardening is engineered into the original design. To retro-fit existing military electrical equipment with hardening would add about 3%-10% to the total cost. In 2004, the EMP Commission held the collective the opinion that DOD had not engaged in any tabletop exercises and simulations that anticipate and EMP attack. In fact, an EMP commissioner observed that over the past 40 years, DOD has tended to "not introduce EMP attack into exercise scenarios or game scenarios because it tends to end the game, and that is not a good sign." In April, 2005, the Defense Science Board (DSB) Task Force on Nuclear Weapon Effects (NWE) Test, Evaluation and Simulation published a report for DOD describing current and emerging threat environments. This included a comprehensive evaluation of future DOD capabilities for successful operation in nuclear environments. The DSB findings were independent, "but are highly consistent with, the findings and recommendations of the Congressionally mandated Electromagnetic Pulse (EMP) Commission." The DSB findings include the following: Despite the reduction of the threat of strategic nuclear exchange, it is becoming more, not less, likely that U.S. forces will have to operate in a nuclear environment in regional operations. This is driven by the proliferation of nuclear weapon capabilities and the attractiveness of nuclear weapons as an offset to U.S. conventional superiority and as a counter to U.S. preemptive doctrine.... factors that should make decision makers concerned about the survivability of critical warfighting elements in a nuclear environment. These include the shift to commercial-off-the-shelf (COTS) based electronics, aging of key systems, the growing reliance on historically "soft" C4ISR2 assets, the general neglect of nuclear hardening as a requirement, and the general neglect of nuclear environments as a factor in gaming and exercises. The bottom line is that commanders and planners cannot be assured that today's weapons platforms, command and control (C2), intelligence, surveillance and reconnaissance (ISR), and associated support systems will be available should a nuclear detonation occur. Underground testing of nuclear devices done in 1992 at the Nevada Test Site were designed to research protection techniques to harden military systems against HEMP effects resulting from a nuclear exchange. The Limited Test Ban Treaty of 1963 prohibits nuclear explosions in the atmosphere, in space, and under water. Since then, testing to calibrate the effects of large-scale HEMP on the critical infrastructure has been restricted. The design of new simulators to help measure these effects would call for complex computations to represent the large number of possible interactions between components found in the circuit boards, network connections, wireless systems, hardware modules, and operating environments of modern electronic systems that support the critical infrastructure. DOD research on pulsed-power HPM electromagnetic weapons is currently being done at Kirtland Air Force Base, in Albuquerque, New Mexico. Weapons now being developed by the U.S. military for electronic warfare can disrupt the trajectory of missiles while in flight, and can overpower or degrade enemy communications, telemetry, and circuitry. Other HPM weapons being tested by the military are portable and re-usable through battery-power, and many are effective when fired miles away from a target. These weapons can also be focused like a laser beam and tuned to an appropriate frequency in order to penetrate electronics that are heavily shielded against a nuclear attack. The deepest bunkers with the thickest concrete walls reportedly are not safe from such a beam if they have even a single unprotected wire reaching the surface. Because instantaneous HPM energy can reflect off the ground and possibly affect piloted aircraft above, much testing currently involves HPM devices on Unmanned Aerial Vehicles (UAVs), and on the Air Force Conventional Air-Launched Cruise Missile system. By 2010, DOD reportedly will field several air-launched UAVs using disposable and reusable HPM weapons designed to disrupt enemy computers. During the Cold War, the US Military designed an innovative communications system to relay emergency messages between strategic military areas in the continental United States, using signals that travel by means of low frequency ground waves—electromagnetic fields that hug the ground—rather than by radiating into the atmosphere. The Ground Wave Emergency Network, or GWEN system, was intended to allow continuous communications despite EMP disruptions. However, the hardware was reportedly transistor based, leaving the system with some level of vulnerability to EMP. In addition, the fixed locations of GWEN sites were known to adversaries, and thus vulnerable to direct attack. As the Cold War ended, the U.S. military took steps to reduce its nuclear arsenal and associated infrastructure. After 1998, the USAF decommissioned GWEN assets and replaced the entire system with the Single Channel Anti-Jam Man-Portable (SCAMP) Terminal. SCAMP uses extremely high frequency (EHF) technology, is resistant to EMP, and offers more flexibility than GWEN because the equipment is lightweight, transportable, and interoperable with DOD satellite networks. Reportedly, several potential U.S. adversaries, such as Russia or China, are now capable of launching a crippling HEMP strike against the United States with a nuclear-tipped ballistic missile, and other nations, such as North Korea, could possibly have the capability by 2015. Other nations that could possibly develop a capability for HEMP operations over the next few years include United Kingdom, France, India, Israel, and Pakistan. In 2005, Iran reportedly acquired several medium and intermediate-range ballistic missiles from North Korea, with a range of 2,500 miles. In 2006, Iran tested several of their Shahab-3 nuclear-warhead-capable ballistic missiles, which were exploded in mid-flight. While these explosions could have been the result of a missile self-destruct mechanism, Iran has officially described the tests in 2006 as fully successful. It was noted by witnesses at a 2005 hearing of the Senate Committee on the Judiciary, Subcommittee on Terrorism, Technology and Homeland Security, that this event could indicate that Iran may be practicing for the execution of an HEMP attack. In July 2008, Iran test-launched several more long-range ballistic missiles. However, other observers caution that these and similar actions might simply be a scare tactic used by Iran, but without much substance. A discussion of asymmetric warfare and anti-satellite weapons, at a June 25, 2008, hearing by the House Armed Services Committee, included the possible example of the United States being targeted for attack by China using EMP. According to a 1999 DOD report, China has been actively pursuing the development of electromagnetic pulse weapons, and has devoted significant resources to development of other electronic warfare systems and laser weapons. The report also noted that China's leaders view offensive counter space weapons and other space-based defense systems as part of inevitable scenarios for future warfare. The report noted that China could have as many as 60 ICBMs capable of striking the United States by 2010. Also, China may replace 20 of its current ICBMs with a longer-range missile by the end of this decade, or sooner. Vladimir Lukin, the former Soviet Ambassador to the United States, and former Chairman of the International Affairs Committee for the Russian Parliament, reportedly has stated that Russia currently has a capability to create a HEMP effect over the United States. During 1962, the then Soviet Union conducted a series of atmospheric nuclear tests and observed HEMP effects that included surge protector burnouts, power supply breakdowns, and damage to overhead and underground buried cables at distances of 600 kilometers. Since then, Russia has reportedly made extensive preparations to protect their infrastructure against HEMP by hardening both civilian and military electronic equipment, and by providing continuous training for personnel operating these protected systems. Other sources have reportedly stated that Russia may also have some of the leading physicists in the world currently doing research on electronic warfare weapons and electromagnetic pulse effects. What is the United States doing to protect critical infrastructure systems against the threat of electromagnetic pulse? What is the appropriate response from the United States to a nuclear HEMP attack, where there may be widespread damage to electronics, but relatively little, or possibly no loss of life as a direct result? How could the United States determine which nation or group launched a HEMP attack? After experiencing a HEMP effect, the United States may retain its capability to use strategic weapons for nuclear retaliation, but will the U.S. industrial base and critical infrastructure be crippled or incapable of supporting a sustained military campaign? During such time, would the United States be capable of a making an effective response should other nations chose to make military advances in other parts of the world? A large percentage of U.S. military communications during Operation Iraqi Freedom was reportedly carried over commercial satellites, and much military administrative information is currently routed through equipment that comprises the civilian Internet. Many commercial communications satellites, particularly those in low earth orbit, reportedly may degrade or cease to function shortly after a high altitude nuclear explosion. Many commercial satellite control stations on the ground may also degrade after an EMP attack. However, some observers believe that possible HEMP and HPM vulnerabilities of military information systems are outweighed by the benefits gained through access to innovative technology and increased communications flexibility that come from using state-of-the-art electronics and from maintaining connections to the civilian Internet and satellite systems. The effects of large-scale HEMP have been studied over several years by the Defense Atomic Support Agency, the Defense Nuclear Agency, and the Defense Special Weapons Agency, and are currently being studied by the Defense Threat Reduction Agency (DTRA). However, the application of the results of these studies has been uneven across military weapons and communications systems. Some analysts argue that U.S. strategic military systems (intercontinental ballistic missiles and long-range bombers) may have strong protection against HEMP, while many other U.S. weapons systems used for the battlefield have less protection, and that this is undoubtedly known to our potential adversaries. Some analysts reportedly state that limited testing has shown modern commercial equipment may be surprisingly resistant to the effects of electromagnetic pulse, and some military systems using commercial equipment have been retrofitted to increase resistance to EMP. However, there is disagreement among observers about whether the procedures used by the U.S. military to test EMP survivability may have been flawed, leading to erroneous conclusions about the effects of electromagnetic pulse on commercial electronics. As part of its risk analysis mission, the Department of Homeland Security (DHS) has developed a set of 15 National Planning Scenarios, which depict a diverse set of high-consequence threat scenarios of both potential terrorist attacks and natural disasters. These 15 scenarios are designed to focus contingency planning for homeland security preparedness work, at all levels of government, and with the private sector. These scenarios form the basis for coordinated federal planning, training, exercises, and grant investments needed to prepare for emergencies of all types. However, EMP Commission members stated at the 2008 HASC hearing that they have been unable to convince DHS to add EMP attack to its list of National Planning Scenarios. A single nuclear device exploded at an appropriate altitude above the continental United States could possibly affect our industrial capacity, economic stability, and military effectiveness. Does knowledge of this vulnerability, combined with the proliferation of nuclear technology, provide a new incentive for potential adversaries to develop or acquire a nuclear weapons capability? Will countries now view the development and acquisition of nuclear weapons, even a small arsenal, as a strategy for cyber warfare? During the Cold War, a HEMP attack was viewed as the first step of a nuclear exchange involving many warheads, but the threat of mutually assured destruction provided a lasting deterrent. Today, the proliferation of nuclear technology makes the threat of HEMP attack more difficult to assess. Would the leader of a rogue state be motivated to use a small nuclear arsenal to launch a crippling HEMP strike against the United States, with no resulting fatalities, if it believed the U.S. likely would not retaliate with a nuclear salvo, destroying thousands, or millions of innocent people? Would a HEMP strike over a disputed area during a regional conflict be seen as a way to defeat the communications links and network centric capability of the U.S. military, and gain battlefield advantage from an existing supply of smaller nuclear warheads? A smaller-scale HPM weapon requires a relatively simple design, and can be built using electrical materials and chemical explosives that are easy to obtain. It is estimated that a limited-range suitcase-sized HPM weapon could be constructed for much less than $2,000, and is within the capability of almost any nation, and perhaps many terrorist organizations. In 2001, DOD recruited a scientist to create two small HPM weapons for testing using only commercially available electrical components, such as ordinary spark plugs and coils. One device was developed that could be broken down into two parcels so it could be shipped by regular mail, for example, from one terrorist to another. The second HPM device was constructed to fit inside a small vehicle. Currently, HPM devices, including suitcase-sized devices powerful enough to jam or destroy electronic facilities, are reportedly also available through catalog sales from commercial vendors. It is difficult to assess the threat of a terrorist organization possibly using a smaller-scale HPM weapon against the United States critical infrastructure. It could be argued that an HPM bomb by itself, may not be attractive to terrorists, because its smaller explosion would not be violent enough, and the visible effect would not be as dramatic as a larger, conventional bomb. Observers have reported that the leadership of some terrorist organizations may increasingly become aware of the growing advantages from an EMP attack launched against U.S. critical information systems. In addition, the use of a new weapon directed at U.S. information systems would attract widespread media attention, and may motivate other rival groups to follow along a new pathway. HEMP and HPM energy weapons primarily damage electronic systems, with little or no direct effect on humans, however, these effects may be difficult to limit or control. As HEMP or HPM energy fields instantly spread outward, they may also affect nearby hospital equipment or personal medical devices, such as pace-makers, or other parts of the surrounding civilian infrastructure. For this reason, some international human rights organizations may object to the development or testing of HEMP or HPM weapons. P.L. 110-181 , The National Defense Authorization Act for Fiscal Year 2008, requires the Department of Homeland Security to coordinate efforts with the Commission for work related to electromagnetic pulse attack on electricity infrastructure, and protection against such attack. Funding by provided by the Department of Defense to the Commission for preparation and submission of the final report is limited to $5,600,000. The deadline for the submission of the final report of the Commission has been extended to November 30, 2008. CRS Report RL32114, Botnets, Cybercrime, and Cyberterrorism: Vulnerabilities and Policy Issues for Congress . CRS Report RL32411, Network Centric Operations: Background and Oversight Issues for Congress . CRS Report RS21528, Terrorist " Dirty Bombs " : A Brief Primer . CRS Report IB92099. Nuclear Weapons: Comprehensive Test Ban Treaty .
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Electromagnetic Pulse (EMP) is an instantaneous, intense energy field that can overload or disrupt at a distance numerous electrical systems and high technology microcircuits, which are especially sensitive to power surges. A large scale EMP effect can be produced by a single nuclear explosion detonated high in the atmosphere. This method is referred to as High-Altitude EMP (HEMP). A similar, smaller-scale EMP effect can be created using non-nuclear devices with powerful batteries or reactive chemicals. This method is called High Power Microwave (HPM). Several nations, including reported sponsors of terrorism, may currently have a capability to use EMP as a weapon for cyber warfare or cyber terrorism to disrupt communications and other parts of the U.S. critical infrastructure. Also, some equipment and weapons used by the U.S. military may be vulnerable to the effects of EMP. The threat of an EMP attack against the United States is hard to assess, but some observers indicate that it is growing along with worldwide access to newer technologies and the proliferation of nuclear weapons. In the past, the threat of mutually assured destruction provided a lasting deterrent against the exchange of multiple high-yield nuclear warheads. However, now even a single, low-yield nuclear explosion high above the United States, or over a battlefield, can produce a large-scale EMP effect that could result in a widespread loss of electronics, but no direct fatalities, and may not necessarily evoke a large nuclear retaliatory strike by the U.S. military. This, coupled with published articles discussing the vulnerability of U.S. critical infrastructure control systems, and some U.S. military battlefield systems to the effects of EMP, may create a new incentive for other countries to rapidly develop or acquire a nuclear capability. Policy issues raised by this threat include (1) what is the United States doing to protect civilian critical infrastructure systems against the threat of EMP, (2) could the U.S. military be affected if an EMP attack is directed against the U.S. civilian infrastructure, (3) are other nations now encouraged by U.S. vulnerabilities to develop or acquire nuclear weapons, and (4) how likely are terrorist organizations to launch a smaller-scale EMP attack against the United States? This report will be updated as events warrant.
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Combining elements of mathematics, computer science, engineering, and physical sciences, quantum information science (QIS) has the potential to provide capabilities far beyond what is possible with the most advanced technologies available today. Quantum science, generally, is the study of the smallest particles of matter and energy; QIS builds on quantum science principles to obtain and process information in ways that cannot be achieved based on classical physics principles. QIS is based on the premise that information science depends on quantum effects in physics. The advantages to using QIS in certain circumstances can be illustrated by the example of quantum computing. Quantum computing is not just "faster" than classical computing. It is not useful for many types of problems where a classical supercomputer would excel. However, there are certain tasks for which the power of quantum computing is unmatched, such as code breaking. This power is derived from quantum computing's use of "qubits" or "quantum bits." Whereas classical computing uses "bits" for data processing, quantum computing uses qubits. The practical difference between a bit and a qubit is that a bit can only exist in one of two states at a time, usually represented by a 1 and a 0, whereas a qubit can exist in both states at one time. This is a phenomenon called "superposition" and it is what allows the power of a quantum computer to grow exponentially with the addition of each bit. Two bits in a classical computer provides four possible combinations—00, 01, 11, and 10, but only one combination at a time. Two bits in a quantum computer provides for the same four possibilities, but, because of superposition, the qubits can represent all four states at the same time, making the quantum computer four times as powerful as the classical computer. So, adding a bit to a classical computer increases its power linearly, but adding a qubit to a quantum computer increases its power exponentially—doubling power with the addition of each qubit. Quantum computing, for all its promise, is still a developing technology (along with other quantum applications). Assembling a working quantum computer is much more difficult than assembling a classical computer. The difficulty is caused by the narrow set of conditions that must exist for a quantum computer to work. For example, the temperature must be exactly 1/100 th of a degree above absolute zero. Also, the slightest vibration can cause a qubit to lose its superposition. Until systems can be developed to maintain the ideal conditions to maintain a qubit, many quantum systems will remain theoretical in nature. Although much of the press coverage of QIS has been devoted to quantum computing, there is more to QIS. Many experts divide QIS technologies into three application areas: Sensing and metrology, Communications, and Computing and simulation. Quantum sensing and metrology include navigation, atomic clocks, gravimeters and gravitational gradiometers, inertial motion units, atomic magnetometers, electron microscopes, technologies to locate subterranean mineral deposits, and quantum-assisted nuclear spin imaging devices. They currently have the largest range of existing and potential commercial products. There are also several products in this category that have been manufactured for decades, making it the most established category. In its report Assessment of the Future Economic Impact of Quantum Information Science , analysts at the Institute for Defense Analysis (IDA) determined that new technologies in quantum metrology and sensing offer improved accuracy compared to products based on classical physics or existing quantum technologies. New QIS technologies are being used for position, navigation, and timing; medical imaging; and research. Some experts believe that the potential markets for these technologies are small because in some cases, traditional technologies remain more attractive due to the higher costs and technical complexity of QIS alternatives. However, others have stated that they believe continued investment and effective coordination between the research community and industry could bring a broad range of QIS-enhanced sensors to the U.S. marketplace by 2021. Quantum key distribution (QKD) is a method of securing communications that uses quantum physics, rather than mathematical algorithms, to safeguard data sent over unprotected networks. However, signals traveling over fiber-optic cable weaken at about 60 miles and must be retransmitted. Quantum repeaters can extend the distance the signal can be sent, but they significantly increase the complexity of the process. The communications are not only secure, but any eavesdropping attempt will destroy the communication, revealing the eavesdropping attempt. The Chinese government has been spending heavily on QKD, but many analysts in North America and Europe do not believe that the benefits over existing nonquantum technologies outweigh the costs associated with QKD, making commercial demand difficult to ascertain. Quantum computing provides an exponentially larger scale than classical computing, which provides advantages for certain applications. Quantum simulation refers to the use of quantum hardware to determine the properties of a quantum system, for example, determining the properties of materials such as high-temperature superconductors, and modeling nuclear and particle physics. However, the current capabilities of quantum computers limit the size of the problems that they can be used to solve. While significant research has been conducted to date by government laboratories, university departments, and large technology companies, as well as small start-ups, it is unlikely that any commercial quantum computing will be widely available before 2025. The government's interest in QIS dates back at least to the mid-1990s, when the National Institute of Standards and Technology (NIST) and the Department of Defense (DOD) held their first workshops on the topic. QIS is first mentioned in the FY2008 budget of what is now the Networking and Information Technology Research and Development Program and has been a component of the program since then. In September 2018, the Department of Energy (DOE) announced that it had committed $218 million to 85 research projects lasting from two to five years. Also in September 2018, the National Science Foundation (NSF) announced that it had awarded $31 million in grants to 33 projects. Eight projects receiving a total of $6 million are engineering projects aimed at creating working quantum information systems (applied research). The remaining $25 million will be distributed to 25 basic research projects. Government QIS basic research is also conducted by NIST, the DOD services, and the Office of the Secretary of Defense. Additionally, the Defense Advanced Research Projects Agency and the Intelligence Advanced Research Projects Activity have funded a series of targeted programs. QIS is a component of the National Strategic Computing Initiative (Presidential Executive Order 13702), which was established in 2015. The White House has issued two reports on QIS strategy, the first under President Obama and the second under President Trump. In July 2016, the National Science and Technology Council (NSTC), under the purview of the White House Office of Science and Technology Policy (OSTP), issued Advancing Quantum Information Science: National Challenges and Opportunities . This report provided a brief description of the QIS disciplines, summarized developments and potential impacts in various fields of technology and areas of basic research, identified impediments to progress and potential approaches to addressing them, surveyed federal investments, and discussed the federal path forward in the context of international and private-sector activity. The report outlined three principles to guide U.S. government QIS R&D: Maintain stable and sustained core programs that can be enhanced as new opportunities appear and restructured as impediments evolve. Sustained core programs will allow established researchers to continue their work, give students confidence that QIS is a field with a future, and provide a solid base for translating laboratory demonstrations into marketable technology. Invest strategically in targeted, time-limited programs to achieve concrete, measureable objectives. Targeted, time-limited programs are an effective mechanism for achieving well-defined technical advances and allow quick adaptation to a changing technological landscape. Closely monitor the field to evaluate the outcome of federal QIS investments and quickly adapt programs to take advantage of technical breakthroughs as they are made. Continued monitoring is required to ensure that the federal strategy for QIS investment remains effective into the future and to avoid technological surprise. The report concluded by stating that QIS should be considered a priority for federal coordination and investment, with particular attention paid to identifying and implementing methods to address impediments to progress and maintaining a commitment to keep the United States at the leading edge of QIS developments. In September 2018, the NSTC issued The National Strategic Overview for Quantum Information Science . The policy opportunities identified in this strategic overview are summarized in Table 1 . According to the report, "following these recommendations, along with detailed planning and coordination made possible by the SCQIS as well as engagement with stakeholders, is crucial for the United States' future success." On November 19, 2018, the Department of Commerce (DOC) Bureau of Industry and Security (BIS or "bureau") released an Advance Notice of Proposed Rulemaking (ANPRM), "Review of Controls for Certain Emerging Technologies." The bureau controls the export of dual-use and other military items through export regulations. This ANPRM seeks public comment on criteria to identify emerging technologies that may be essential to U.S. national security, for example, because they— have potential as conventional weapons or weapons of mass destruction; could provide new methods for intelligence collection; could be used as the basis for new terrorist applications; or could provide the United States with a qualitative military or intelligence advantage. These criteria may be included in possible future export control regulations. The list of categories includes, among many others, a wide range of QIS applications: positioning, navigation, timing, computing, sensing, and encryption. Comments on the ANPRM are due on December 19, 2018. QIS R&D is being pursued at major research centers worldwide, with China and the European Union (EU) having the largest foreign QIS programs. The UK and Canada have also made high-profile investments in QIS R&D, while Australia and the Netherlands have made smaller investments. Even without explicit QIS initiatives, many other countries, including Russia, Germany, and Austria, are making strides in QIS R&D. A report by the Institute for Defense Analysis, Assessment of the Future Economic Impact of Quantum Information Science, and witness testimony at congressional hearings have provided information on these initiatives. China designated QIS research as one of four "megaprojects" in its 15-year science and technology development plan for 2006-2020. Additionally, it designated quantum communications and computing as one of six major goals for this period. China's annual funding for QIS R&D is estimated at $244 million. In 2017, the country began construction of a national QIS science center. China also actively seeks out QIS experts. Since 2008, China has provided incentives to attract Chinese QIS experts and entrepreneurs, currently living and working overseas, back to China. Between 2016 and 2018, China was the first to achieve three significant QIS milestones: the launch of the world's first quantum satellite, Micius, in August 2016; the launch of a long-distance quantum communication landline, between Beijing and Shanghai, in September 2017; and the first long-distance quantum videoconference, between the Chinese Academy of Sciences in Beijing and the Austrian Academy of Sciences in Vienna, in January 2018. First outlined in the EU's 2016 Quantum Manifesto and updated in The Quantum Technologies Roadmap in August 2018, the EU's Quantum Technologies Flagship program is a $1.1 billion, 10-year initiative to commercialize the EU's investment in basic QIS R&D. The goals of the initiative are to foster a competitive European quantum industry to position Europe as a leader in the future global industrial landscape; expand European scientific leadership and excellence in quantum research; make Europe an attractive region for innovative businesses and investment in quantum technologies; and benefit from advances in quantum technologies to provide better solutions to grand challenges in such fields as energy, health, security, and the environment. In 2013, the UK established a five-year, $440 million National Quantum Technologies Program to translate QIS R&D into commercial technologies. In September 2018, the UK announced that it would invest more than $105 million in four UK-based quantum technology development centers over the next five years. Likely research areas may include internet security, vehicle driving assistance systems, life-saving equipment for search-and-rescue missions, and helping firefighters. Canada's QIS program began in 1999 with private investments that established the Perimeter Institute and University of Waterloo as leaders in QIS R&D. Canada's 2018 budget provided $11.5 million (USD) over three years to the Institute of Quantum Computing at the University of Waterloo. Three QIS-focused bills have been introduced in the 115 th Congress. Additionally, the House has held three QIS hearings. The Senate has introduced two bills and the House has introduced one bill related to QIS. The National Quantum Initiative Act ( S. 3143 , H.R. 6227 ) was introduced in the Senate on June 26, 2018, by Senator John Thune and in the House on June 27, 2018, by Representative Lamar Smith. These bills would establish a federal program to accelerate U.S. QIS R&D. Specifically, the bills would establish a National Quantum Coordination Office within OSTP to— oversee interagency coordination, provide strategic planning support, serve as a central point of contact for stakeholders, conduct outreach, and promote commercialization of federal research by the private sector. The bills are intended to— support basic QIS research and standards development at NIST, support DOE basic research and establish DOE national research centers, and support National Science Foundation basic research and academic multidisciplinary quantum research and education centers; encourage U.S. technology companies to contribute their knowledge and resources to a national effort; and address fundamental research gaps, assist in creating a stronger workforce pipeline, and allow the United States to take the lead in developing quantum standards and measures for global use. H.R. 6227 was reported by the House Committee on Science, Space, and Technology and passed in the House on September 13, 2018 ( H.Rept. 115-950 ) ; it was received by the Senate and referred to the Committee on Commerce, Science, and Transportation on September 17, 2018. S. 3143 was approved and ordered to be reported with an amendment in the nature of a substitute by the Senate Committee on Commerce, Science, and Transportation on August 1, 2018 (see S.Rept. 115-389 , November 27, 2018); it was placed on the Senate Legislative Calendar under General Orders on November 27, 2018. The Quantum Computing Research Act ( S. 2998 ) was introduced by Senator Kamala Harris on June 5, 2018. The bill would require the Secretary of Defense to establish the Defense Quant um Information Consortium. The c onsortium w ould include — one component composed of members selected by the Chief of Naval Research from among institutions of higher learning and industry partners located in the eastern half of the United States which are recognized for achievement in quantum information science; and one component composed of members selected by the Director of the Army Research Laboratory from among institutions of higher learning and industry partners located in the western half of the United States which are recognized for achievement in quantum information science. The bill would also establish a board composed of— the Chief of Naval Research and a designee of the Chief; the Director of the Army Research Laboratory and a designee of the Director; the Assistant Director of Quantum Information Science at the Office of Science and Technology Policy; and members of the National Quantum Initiative (NQI). The board would be responsible for— awarding grants to consortium members; assisting with ongoing research being conducted by consortium members relating to quantum information sciences; and facilitating partnerships between consortium members. The Department of Energy Quantum Information Science Research Act ( S. 3673 ) was introduced by Senator Lisa Murkowski on November 28, 2018. The bill would require the Secretary of Energy to conduct basic quantum information science research, including— formulating goals for quantum information science research to be supported by the Department of Energy; leveraging the collective body of knowledge from existing quantum information science research; providing research experiences and training for additional undergraduate and graduate students in quantum information science; coordinating research efforts funded through existing programs across the Department; and coordinating with other federal agencies, research communities, and potential users of information produced under this section. Three House committees have held hearings on different aspects of QIS. On October 24, 2017, the House Committee on Science, Space, and Technology Subcommittee on Research and Technology and Subcommittee on Energy held a joint hearing on "American Leadership in Quantum Technology." Issues discussed included— a comparison of U.S. and international QIS R&D and how to effectively train a QIS-knowledgeable workforce. On January 9, 2018, the House Armed Services Committee Subcommittee on Emerging Threats and Capabilities held a hearing on "China's Pursuit of Emerging and Exponential Technologies." Issues discussed included— China's investment in leading-edge technologies, including QIS, and concerns that China may be closing the gap with the United States in advanced technology R&D. On May 18, 2018, the House Committee on Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection held a hearing on quantum computing as part of its "Disrupter Series." Issues discussed included — an overview of the uses of quantum computers, the advantages of quantum computers over conventional computers, potential dangers from quantum technologies, barriers to the development of a commercially available quantum computer in the United States, and where the United States stands in relation to other nations in developing a commercially available quantum computer. In its July 2016 report, the NSTC stated that creating a cohesive and effective U.S. QIS R&D policy would require a collaborative effort among government, academia, and the private sector. The report cited five key areas that need to be addressed in crafting an effective policy: institutional boundaries; education and workforce training; technology and knowledge transfer; materials and fabrication; and the level and stability of funding. These topics were reiterated in the DOE report Quantum Sensors at the Intersections of Fundamental Science, Quantum Information Science, and Computing (2016), and during congressional hearings. QIS research is often conducted within institutional boundaries with little coordination. For example, federal departments, and even agencies and offices within a department, have sponsored R&D at a number of universities in different disciplines to address unique federal mission requirements. As a result, coordination and collaboration among these university researchers is difficult. The creation of cross-cutting teams with diverse expertise is seen by many as vital to success. Many observers and researchers contend that partnerships that encourage such collaboration will lead to greater progress than working alone. Scientists and industry representatives contend that current academic education and workforce training programs are insufficient for continued progress in QIS R&D, which requires a diverse, cross-cutting range of skills and expertise that varies from one application to another. For example, while a deep knowledge of quantum mechanics, taught in physics departments, is required for QIS basic research and applications development, disciplines taught in other departments—such as computer science, applied mathematics, electrical engineering, and systems engineering—are needed as well. Multidisciplinary QIS centers at universities and federal labs (e.g., DOE, NIST) are seen as one possible solution to this problem. Some of the potentially serious impediments to creating successful commercial QIS products include issues related to the complicated nature of licensing of intellectual property from universities and obtaining patents, lack of a strong venture capital environment, and difficulty connecting qualified recent graduates and experienced scientists with companies. Industry and government representatives have noted that some federal programs exist to address these issues, but that challenges remain. Advancement of QIS applications depends heavily on the generation of novel quantum materials and on improving the tools needed to fabricate them and package hardware that may currently fill a room into usable forms. These challenges are not yet fully understood, but scientists generally agree that advancement in QIS R&D depends upon solving them. Like other R&D programs, QIS is affected by fluctuations in federal funding. Some assert that such fluctuations have slowed QIS progress, as well as the development of a fully qualified workforce. Some of the funding instability has been attributed to insufficient coordination among federal agencies, which has led to uncertainty in university research programs. This uncertainty may have contributed to promising researchers seeking opportunities outside the United States or being actively recruited by foreign governments or companies.
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Quantum information science (QIS) combines elements of mathematics, computer science, engineering, and physical sciences, and has the potential to provide capabilities far beyond what is possible with the most advanced technologies available today. Although much of the press coverage of QIS has been devoted to quantum computing, there is more to QIS. Many experts divide QIS technologies into three application areas: Sensing and metrology, Communications, and Computing and simulation. The government's interest in QIS dates back at least to the mid-1990s, when the National Institute of Standards and Technology and the Department of Defense (DOD) held their first workshops on the topic. QIS is first mentioned in the FY2008 budget of what is now the Networking and Information Technology Research and Development Program and has been a component of the program since then. Today, QIS is a component of the National Strategic Computing Initiative (Presidential Executive Order 13702), which was established in 2015. Most recently, in September 2018, the National Science and Technology Council issued the National Strategic Overview for Quantum Information Science. The policy opportunities identified in this strategic overview include— choosing a science-first approach to QIS, creating a "quantum-smart" workforce, deepening engagement with the quantum industry, providing critical infrastructure, maintaining national security and economic growth, and advancing international cooperation. The United States is not alone in increasing investment in QIS R&D. This research is also being pursued at major research centers worldwide, with China and the European Union having the largest foreign QIS programs. Further, even without explicit QIS initiatives, many other countries, including Russia, Germany, and Austria, are making strides in QIS research and development (R&D). The Senate has introduced three bills in the 115th Congress (S. 3143, S. 2998, and S. 3673) and the House has introduced one bill in the 115th Congress (H.R. 6227) related to QIS. These bills would establish a federal program to accelerate U.S. QIS R&D, create a National Quantum Coordination Office within OSTP, establish a Defense Quantum Information Consortium, and require the Secretary of Energy to carry out quantum information science research. The House has held three hearings related to QIS. Issues discussed in these hearings included a comparison of U.S. and international QIS R&D, and how to effectively train a QIS-knowledgeable workforce; China's investment in leading-edge technologies, including QIS, and concerns that China may be closing the gap with the United States in advanced technology R&D; and an overview of quantum computers. This report provides an overview of QIS technologies: sensing and metrology, communications, and computing and simulation. It also includes examples of existing and potential future applications; brief summaries of funding and selected R&D initiatives in the United States and elsewhere around the world; a description of U.S. congressional activity; and a discussion of related policy considerations.
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The Quadrennial Defense Review (QDR) is a statutorily mandated strategic review process conducted by the Department of Defense (DOD) every four years. The review process generates an unclassified report, whose contents are also specified in law. The most recent QDR process, conducted in late 2013, is expected to generate a QDR report that will be delivered to Congress at about the same time as the President's Fiscal Year 2015 budget request. The review process took place against the backdrop of ongoing evolution in the broader strategic environment, marked fiscal constraints, and recent adjustments in DOD's strategic direction heralded in its 2012 Defense Strategic Guidance (DSG) and its 2013 Strategic Choices and Management Review (SCMR) process. In theory, a QDR process, its decisions, and its accompanying report might accomplish a number of things: Reassessing and refining DOD's strategic direction, including the ends, ways, and means required to meet DOD's mandate to "protect and defend" the nation; Ensuring, through a highly participatory process, that DOD's strategic vision is shared and uniformly understood across the Department; Building, through broad participation, a shared understanding within DOD of the most appropriate internal division of labor—for example, across Military Services, the Active and Reserve Components, and the Special Operations and conventional communities—for executing defense strategy; Generating sufficient internal guidance to inform force planning, force employment, and resourcing decisions; Synchronizing DOD strategic guidance vertically, with national-level strategic guidance such as the national security strategy, and horizontally with the strategies of other U.S. Government agencies; Facilitating Congressional oversight by clarifying and articulating the strategic thinking that underpins DOD requests for resources and authorities; Informing the American people—the voters and taxpayers who provide the resources—about DOD's strategic vision and intent; Shaping the global security environment—including assuring Allies and partners and encouraging potential adversaries to change their calculus—by communicating DOD's strategic vision and intent; and Generating a sufficiently rigorous discussion, within DOD, within the Administration, and between the Executive and Legislative Branches, of "risk" –potential hazards resulting from deliberate choices not to plan or resource against certain concerns—including the likelihood, imminence, and severity of impact on U.S. national interests of such potential hazards. This report briefly reviews the statutory QDR mandate and characterizes the context for the 2014 QDR. Then it raises a series of issues that Congress may choose to consider in evaluating the QDR mandate, the 2014 QDR, and DOD's strategic direction more broadly. The nature of the conduct of the QDR, the contents of the QDR report, and the terms of reference for the QDR's independent oversight body, the National Defense Panel (NDP), are prescribed by Section 118 of Title 10, U.S. Code. The mandate requires that the review be conducted every four years, during the first year of every presidential administration. The review is required to take a 20-year outlook, and to be fiscally unconstrained by the concurrent President's budget request. The process is required to "delineate a national defense strategy"; to determine the force structure, modernization plans, and infrastructure required to implement that strategy; and to craft an associated budget plan. The mandate further requires that the Secretary of Defense submit a report based on that review to the House and Senate Armed Services Committees in the year following the year in which the QDR is conducted, no later than the date on which the President delivers his budget request to Congress. Legislation does not specify a classification level for the report. The QDR report is required to address 16 specific points, as well as any additional items the Secretary deems appropriate. These are: The results of the review, including a comprehensive discussion of the national defense strategy of the United States, the strategic planning guidance, and the force structure best suited to implement the strategy at a low-to-moderate level of risk; The assumed or defined national security interests of the United States that inform the national defense strategy defined in the review; The threats to the assumed or defined national security interests of the United States that were examined for the purposes of the review and the scenarios developed in the examination of those threats; The assumptions used in the review, including assumptions relating to (A) the status of readiness of United States forces; (B) the cooperation of allies, mission-sharing and additional benefits to and burdens on United States forces resulting from coalition operations; (C) warning times; (D) levels of engagement in operations other than war and smaller-scale contingencies and withdrawal from such operations and contingencies; (E) the intensity, duration, and military and political end-states of conflicts and smaller-scale contingencies; and (F) the roles and responsibilities that would be discharged by contractors; The effect on the force structure and on readiness for high-intensity combat of preparations for and participation in operations other than war and smaller-scale contingencies; The manpower, sustainment, and contractor support policies required under the national defense strategy to support engagement in conflicts lasting longer than 120 days; The anticipated roles and missions of the reserve components in the national defense strategy and the strength, capabilities, and equipment necessary to assure that the reserve components can capably discharge those roles and missions; The appropriate ratio of combat forces to support forces (commonly referred to as the 'tooth-to-tail' ratio) under the national defense strategy, including, in particular, the appropriate number and size of headquarters units and Defense Agencies, and the scope of contractor support, for that purpose; The specific capabilities, including the general number and type of specific military platforms, needed to achieve the strategic and warfighting objectives identified in the review; The strategic and tactical air-lift, sea-lift, and ground transportation capabilities required to support the national defense strategy; The forward presence, pre-positioning, and other anticipatory deployments necessary under the national defense strategy for conflict deterrence and adequate military response to anticipated conflicts; The extent to which resources must be shifted among two or more theaters under the national defense strategy in the event of conflict in such theaters; The advisability of revisions to the Unified Command Plan as a result of the national defense strategy; The effect on force structure of the use by the armed forces of technologies anticipated to be available for the ensuing 20 years; The national defense mission of the Coast Guard; The homeland defense and support to civil authority missions of the active and reserve components, including the organization and capabilities required for the active and reserve components to discharge each such mission; Any other matter the Secretary considers appropriate. The QDR statutory mandate also requires that each QDR process be accompanied by the work of an independent National Defense Panel (NDP), which must be composed of ten recognized national security experts appointed, two each, by the Secretary of Defense, and the Chairmen and Ranking Members of the Senate and House Armed Services Committees. The NDP is tasked to review the terms of reference of the QDR process; to assess the assumptions, strategy, findings, and risks in the QDR report; to conduct an independent assessment of possible force structures; to compare the resource requirements of its own alternative force structures with the QDR's budget plan; and to make recommendations to Congress. The panel is required to submit its report to the House and Senate Armed Services Committees not more than three months after DOD submits to them the QDR report. The 2014 QDR has taken place against the backdrop of an increasingly complex global security environment, tightening fiscal constraints, and a recent history of U.S. policy choices designed to address both of those dynamics. In April 2011, President Obama directed DOD to identify $400 billion in "additional savings" in the defense budget, as part of a broader effort to achieve $4 trillion in deficit reduction over twelve years. The President stressed that the cuts should be strategically-driven, based on "a fundamental review of America's missions, capabilities, and our role in a changing world." In May 2011, then-Secretary of Defense Robert Gates stressed that the review would help "ensure that future spending decisions are focused on priorities, strategy, and risks, and are not simply a math and accounting exercise". In August 2011, then-Secretary of Defense Leon Panetta confirmed that DOD was continuing to implement the President's April guidance by conducting a "fundamental review". It would address core strategic questions such as "What are the essential missions our military must do to protect America and our way of life? What are the risks of the strategic choices we make? What are the financial costs?" In January 2012, DOD released the Defense Strategic Guidance (DSG), which was intended to provide the foundation for DOD's priorities, activities, and budget requests for the following ten years. The DSG took into account the need for cost savings, as directed by the President in April 2011. It also addressed the need to refine DOD's strategic focus in response to changes in the global security environment and the end of the decade of warfare that followed the terrorist attacks of September 11, 2001. Broadly, the DSG called for: a shift in DOD's geographical priorities toward Asia and the Pacific region, while retaining emphasis on the Middle East; a shift in the balance of priority missions toward power projection and away from stabilization operations; a shift toward greater reliance on advanced capabilities including Special Operations Forces (SOF), new technologies such as intelligence, surveillance and reconnaissance (ISR) and unmanned systems, and cyberspace capabilities; and corresponding changes in force structure. But by the time it was issued, the DSG was already behind the fiscal curve. In 2011, Congress had enacted, and the President had signed into law, the Budget Control Act (BCA) of 2011, P.L. 112-25 , a dramatic effort to reduce the national deficit, which required overall reductions in defense spending for ten years and prescribed further mandatory annual cuts, through the mechanism of sequestration, should agreement not be reached regarding reducing the deficit. Most observers agree that the BCA was designed to force further tough decision-making in a more constrained fiscal climate, rather than to establish a sensible plan of action, per se . Yet early efforts to alleviate the pressure of fixed caps and sequestration restrictions, by striking some form of grand bargain, failed to yield results. While the DSG was crafted to facilitate achieving $487 billion in cost savings over ten years, it was not designed to account for the additional annual cuts that might be imposed through sequestration. In March 2013, Secretary of Defense Chuck Hagel launched the Strategic Choices and Management Review (SCMR, commonly pronounced "skimmer"), an internal review process designed to explore the implications for DOD of continued budget reductions. The SCMR considered three fiscal scenarios: the President's FY2014 budget projection; the BCA's topline caps and restrictions; and an "in-between" scenario. The review examined three broad substantive areas—management efficiencies and overhead reductions; compensation reforms; and changes to force structure and modernization plans. In briefing the major lessons from the SCMR, and in other contexts, DOD senior officials argued that the BCA topline caps and sequestration restrictions would "break" the 2012 Defense Strategic Guidance (DSG). They also noted that even the most drastic options under consideration in the SCMR's three substantive categories would help DOD meet the BCA's annual topline caps only toward the end of the BCA's ten-year application. In December 2013, the Bipartisan Budget Act, P.L. 113-67 , amended the BCA to raise the topline budget caps for FY 2014 and FY 2015, offsetting the cost of that change by extending the application of the BCA for two additional years, FY 2022 and FY 2023. The new annual levels for FY 2014 and FY 2015, while above the original BCA caps, are below the President's original FY2014 request. The change offers DOD some stability and relief for the next two fiscal years—together with the opportunity, or temptation, to delay some particularly tough decisions. It would also appear to address, in part, the view expressed by some DOD officials, that having greater flexibility to balance the required cost savings over ten years, instead of being required to absorb the reductions uniformly each year, would give DOD more options and allow it to make more strategically-informed decisions. But the change also preserves the uncertainty associated with the out years, which are currently still subject to the original BCA topline caps and restrictions. Not surprisingly, some DOD officials have wondered for which potential fiscal future it would be most prudent to plan; in practice, DOD has planned for several potential fiscal futures. In conducting oversight activities regarding DOD's 2014 QDR, the QDR statutory mandate, and U.S. defense strategy in general, Congress may choose to consider the following issues. Most U.S. strategic guidance documents underscore the need for U.S. "leadership" on the world stage. But leadership can be used toward a great variety of different ends, and exercised in a great variety of ways—none are givens, and all require choices. Further, in practice, approaches toward exercising leadership are generally predicated, explicitly or otherwise, on some theory of how power operates in the global arena. Yet leading experts disagree vehemently about the respective importance of personalities, perceptions, military capabilities, economic strength, norms, and other factors. Key questions concerning the role of the U.S. on the world stage might include the following: To what extent, in what arenas, and at what cost, should the U.S. aspire to "lead" on the world stage? To what broad ends should such leadership be exercised? Which tools are most germane to the effective exercise of leadership? How important is any such leadership to U.S. national security? How much of a risk to that national security would incorrectly crafting a U.S. leadership role pose? What role, exactly, does the effective exercise of defense strategy play in ensuring that the U.S. Government can play its chosen leadership role? Most U.S. strategic guidance documents begin with a baseline assessment of the current global security environment and expected future trajectories. Most observers today would point to growing uncertainty and an expanding array of potential threats of various kinds—a more complex picture compared not only with the Cold War era but also with the last decade of concerted focus on violent extremism in the broader Middle East. Critical to defense strategy, and to national security strategy in general, is the linkage between the key trajectories in the global security environment and U.S. national interests. Statute requires that the President submit to Congress an annual report on national security strategy (NSS), which must include "the worldwide interests...that are vital to the national security of the United States." Observers suggest the utility of analyzing the specific U.S. interests on which each key dynamic in the global security context might have an impact; the likelihood of any such impact; the imminence of any such impact; and the severity of any such impact, including both its depth and its permanence. Key questions concerning the global security environment might include the following: What is the most helpful way to characterize fundamental U.S. national security interests? Is the shorthand, "people, territory, and way of life" sufficient, or is something more specific required? When might an interest be considered "vital", what distinguishes such interests from those that are merely "important," and how helpful, if at all, is that distinction? What is the most helpful way to frame the broad array of global security threats and concerns the U.S. faces, in order to facilitate decision-making about countering them? How helpful are the concepts of "likelihood," "imminence," and "severity"? How far out into the future is it necessary—and also meaningful—to look, in the arena of national security? How much confidence should one have in a 20-year outlook, such as the QDR is required to adopt? What internal mechanisms can be used to guard against the common tendency to minimize, perhaps subconsciously, the scope of the problem to better accord with the constrained resources available to meet it? Most strategic reviews consider and outline the kinds of missions necessary for DOD to "protect and defend" the nation. The 2012 DSG listed ten "priority missions," though not explicitly in priority order. Many observers suggest that explicit prioritization is necessary in order to help military services and components understand, and execute, based on intent; and that prioritization may also be helpful in order to provide a clear basis for external audiences, including Congress, to understand the rationale for tough decisions. Many observers also suggest that missions do not exist, as a rule, in splendid isolation from one other—for example, forward presence and engagement of all kinds may directly bolster homeland defense, by discouraging or forestalling threats long before they reach U.S. territory. Most observers would add that the responsibilities for each priority mission may not apply equally to all military services—service roles are distinct, and the relative weight of each mission is likely to vary by service. Finally, while all priorities may be portrayed as equal, some are clearly "more equal than others"—in the sense of those priorities that DOD chooses to actually size the force against. The DSG, for example, asserted that DOD would size against four of the ten priority missions—counter-terrorism, deterring and defeating aggression, countering weapons of mass destruction, and homeland defense. Key questions concerning mission priorities might include the following: To what extent, and in what ways, have U.S. interests, or the global strategic environment, changed significantly enough in the last two years to warrant changes in DOD's priority missions? If fiscal constraints are the primary driver for a strategic update, where amidst the ten DSG's priority missions is there room to assume additional risk? At what point of fiscal pressure, if any, should DOD step back and fundamentally reconsider what it means to "protect and defend"? To what extent is mission prioritization clearly and commonly understood throughout DOD? To the extent that overall prioritization may have different implications for each military service and agency, to what extent are those variations clearly and commonly understood? How important, and in what ways, are those "priority" missions that DOD chooses not to size the force against? What signals do DOD's articulated priority missions send to major stakeholders outside DOD—to other U.S. Government agencies, to Allies and partners, and to potential adversaries? For example, how would greater emphasis on homeland defense likely be understood—as another way of emphasizing defense in depth, starting with military engagement around the world, or as a shift toward retrenchment? Many national security strategic guidance documents point to some geographic areas of particular concern or opportunity—but fail to strictly prioritize regions of the world. The 2012 DSG signaled geographic prioritization more emphatically than most guidance documents—with a strong new emphasis on Asia and the Pacific region, some continued attention to the Middle East, and a reasonably explicit intent to decrease the scope and scale of U.S. commitment and engagement everywhere else. DOD officials have suggested that the 2014 QDR debates explored the possibility of assuming greater risk in some regions. Key questions concerning geographic priorities might include the following: Are current priorities about right—Pacific first, Middle East decidedly second, everything else a distant third? Under increased fiscal pressure, what room is there, if any, to further pare back global engagement, in scope or scale, compared to the 2012 DSG? How can unlike geographic priorities best be balanced—in particular the longer-term, potentially profound challenges and opportunities of the Pacific region, and the pressing, near-term tensions and violence in the Middle East? Presence is potentially one of the most powerful sets of tools that DOD can employ in order to shape events on the world stage, and the term appears frequently in strategic guidance documents. But "presence" can refer to a number of different things, and its strategic logic—how it generates effects—is assumed more often than it is spelled out, making it more difficult to make informed policy and resourcing decisions. Moreover, some observers have suggested that BCA topline caps and sequestration restrictions should force an a priori reconsideration of the extent and nature of DOD's global presence. In theory, from a strategist's perspective, a debate about presence should begin, not with an adjudication of the number of forward-stationed troops, but rather with a determination of the strategic rationale for presence—that is, why should DOD engage around the world? Proponents generally propose some combination of these elements: providing closer proximity, and thus shorter timelines, to support possible future contingencies; helping guarantee access to and through other countries as needed; deterring potential aggressors and constructively shaping the choices of state and non-state actors; fostering the capabilities, capacity, and will of Allies and partners; and building relationships as means for exercising influence on the world stage. Defense strategy might balance the relative priority of these various desired effects in any number of ways. In turn, "presence" might plausibly be achieved by any of a number of different approaches: permanent versions of presence in which units are based overseas; continual versions of "rotational presence" in which units rotate in-and-out, back-to-back; limited versions of rotational presence in which units deploy periodically, or partially, or both; and virtual versions of presence ranging from the ability to collaborate remotely through, for example, simulations, to the ability to strike globally. The 2012 DSG introduced some major adjustments to the ways that DOD maintains presence—in particular, through a strong emphasis on "rotational presence" rather than permanent forward presence. Some observers have wondered whether efforts to scale back DOD global force posture and engagement are differentiating sufficiently among the various effects that different forms of presence are best able to generate, and taking sufficient account of the risks associated with scaled-back presence. Key questions concerning presence might include the following: Why if at all is it important for DOD to maintain forward presence around the world? Which of those reasons are most important? Where is it most important to maintain such presence? To what extent if any should various forms of presence be considered fungible with each other? What risks, if any, are associated with substituting less robust for more robust forms of presence and engagement? How valid is the familiar observation that "virtual presence is actual absence"? How unified and coherent is DOD thinking in distinguishing among the various possible forms of presence, their respective appropriateness for generating certain kinds of effects, and the risks associated with any substitutions? Is presence best thought of as a burden on, or a form of support to, a host nation? Is presence a U.S. "ask", or theirs, or both? The 2012 DSG, and other recent U.S. published strategies as well as internal guidance documents, have all stressed the importance of international partnerships—or "building partner capacity" (BPC). Yet this rhetorical enthusiasm has been largely unmatched by conceptual clarity regarding the specific effects that BPC should be designed to achieve, the modalities for assessing those effects, the anticipated timeline and costs for achieving those effects, or the associated risks. Among proponents—practitioners and observers—two lines of thinking, not mutually exclusive, have emerged, concerning the potential value of partnership. One line of thinking stresses effects—BPC's potential to extend U.S. reach in an ever more complex global security environment. The other line of thinking among partnership proponents stresses cost savings—in a word, "they do more, we do less." These themes are not incompatible, but they are often blurred even in internal debates. Meanwhile, skeptics suggest that whatever the value of BPC may be, it is a luxury that DOD, in a tougher budget climate, might no longer be able to afford. Complicating the debate further is the fact that international partnerships can take many different forms, from start-from-scratch generation of host nation security forces and institutions, as in Iraq and Afghanistan; to building capacity and/or fostering specific capabilities in developing partners; to encouraging interoperability, and the political will to match it, in key Allies and close partners. In addition, partnership can be conducted bilaterally, which may have the value of simplicity; or under the rubric of formal alliances such as NATO, which may add the value of tested procedures, standing command and control mechanisms, and interoperable capabilities, as well as collective name recognition that may be helpful in shaping the choices of others. Those two approaches—bilateral and Alliance—may suggest different resourcing decisions in some instances, but in theory, they also have the potential to be mutually reinforcing. Some observers suggest that at a time of undiminished and quite various global security challenges, together with significant fiscal constraints that are likely to persist for some time, it makes sense to aim for "smart partnership." One basic premise, it is proposed, would be that if the U.S., as a rule, does intend to conduct future military operations with international partners, it would be sensible to invest ahead of time in combined effectiveness. And another basic premise might be that, given resource constraints, the U.S. should make careful, explicit choices about its partnership investments—a tailored rather than an omnivorous approach—based on prioritized desired effects, and associated costs, timelines and risks. Key questions concerning partnership might include the following: How exactly might building the capacity and capabilities of U.S. partners lead, through their actions, toward outcomes that help protect U.S. national security interests? How important is partnership to the implementation of defense strategy? Should the importance of BPC increase or diminish under increased fiscal pressure? How should the opportunity costs associated with scaling back partnership activities—for example, potential loss of access, or loss of influence—best be gauged? Should the goal of partnership be to save money? To extend U.S. reach and meet a greater array of global security challenges? To influence regional and global rules and norms? Or some combination? Would it be helpful, for decision-making, analysis, and oversight, to more clearly differentiate, in the vocabulary commonly used, among different major categories of partnership activities? Illustratively, might these include activities aimed at comprehensively building host nation forces as part of major contingency operations; or fostering interoperability and shared will with particularly close counterparts with whom the U.S. envisages conducting combined operations; or cultivating specific capabilities in partners who may apply them unilaterally, or under the rubric of regional organizations? How exactly should DOD's vision for partnership be reflected in resourcing decisions? To what extent might partnership activities help prevent conflicts, or mitigate their impact? What is the best way to assess any of these outcomes? How important is the political will of U.S. Allies and partners—in addition to their capacity and capabilities—in determining whether they will choose to act in ways that protect U.S. interests? How, if at all, can the U.S. most effectively shape and influence that will? What is the most appropriate way to understand, and evaluate, the risks associated with U.S. partnership investments? Given that Allies and partners are highly unlikely to do exactly as the U.S. wishes, in every circumstance, how much "divergence" might be considered acceptable? In particular, how important is it to invest in the NATO Alliance—and in what ways—versus investing specifically in the most capable states with whom the U.S. is most likely to conduct future coalition operations? To what extent might those two sets of investments be mutually reinforcing? What might genuinely "smart partnership" look like? Most strategic guidance documents highlight a critical role for "deterrence"—after all, it is far less costly in every sense to prevent wars than to prosecute them. The concept of deterrence concerns ensuring that potential adversaries do not take certain steps, which they might otherwise be inclined to take, and typically relies on assumptions about cost/benefit analyses by those potential adversaries. The concept may apply to both nuclear and non-nuclear arenas. In the academic community, leading experts have long disagreed, sometimes vehemently, about when and how deterrence works. But strategic guidance often takes for granted the existence of a simple, shared understanding of the logic of deterrence. One common point of reference is the U.S. approach to nuclear deterrence during the Cold War—a simpler global strategic context with only one peer-competitor adversary, the Soviet Union. The U.S. approach to strategic deterrence generally relied on maintaining a nuclear arsenal sufficient to ensure a second-strike capability, on the premise that the anticipated costs, up to and including mutual assured destruction, would affect the calculus of those who might otherwise be inclined to attack the United States with nuclear weapons. The United States relied not only on platforms but also on communicated policy, and on Soviet perceptions of capability and intent. Further complicating the picture, during the Cold War, the U.S. Government sought to use its nuclear arsenal to "extend" deterrence abroad, using a credible threat of retaliation, by all means necessary, including the use of nuclear weapons, to forestall attacks against U.S. Allies. In the post-Cold War world, U.S. policy continues to support "extended deterrence," now generally understood to refer to U.S. reliance on a mix of nuclear and conventional capabilities to assure a wider array of Allies and partners, and to deter nuclear and conventional attacks against them. Observers agree that the global context has changed significantly since the Cold War, and that Cold War mental models—which persist, if subconsciously, in some quarters—require refinement. Today's nuclear arena alone includes a far broader array of actors, including some nuclear states and other state and non-state entities with nuclear aspirations, who may have widely varying notions of "unacceptable costs." In non-nuclear arenas, there may be even less of a consensus regarding the combination of capabilities and demonstrated will that would be most likely to change a given potential adversary's calculus, in a given set of circumstances. At the very least, it seems unlikely that simple math—for example, counting warheads or delivery systems—is a sufficiently robust tool for calculating deterrence requirements. The 2012 DSG, while underscoring the importance of deterrence, begged more questions than it resolved. It suggested tantalizingly that "it is possible that our deterrence goals can be achieved with a smaller nuclear force," without articulating the rationale behind that possibility. And it argued more broadly that "credible deterrence results from both the capabilities to deny an aggressor the prospect of achieving his objectives and from the complementary capability to impose unacceptable costs on the aggressor," without tackling key questions including what mix of nuclear and conventional capabilities might prove sufficient, and what would, in each circumstance that might arise, constitute "unacceptable costs." Key questions concerning deterrence might include the following: To what extent are current U.S. approaches to nuclear deterrence undergirded by a clear theory of deterrence? Can a single strategic logic apply to deterring use by current nuclear powers, and to deterring acquisition by aspirant states and non-state actors? How might nuclear deterrence theory best grapple with the problems posed by the existence of more than one nuclear near-peer competitor? Or with the differences in respective U.S., Chinese, and Russian "escalation ladders"? How effective can conventional weapons be in deterring potential nuclear attacks? To what extent, if any, has the likelihood of nuclear use, and/or the severity of impact from any such use, diminished? Would any such changes justify assuming greater risk in this arena? How can a potential adversary's mind be changed? What combination of military capabilities, nuclear and conventional; economic strength; political will; international partnerships; and other qualities would be required? Is U.S. understanding of the perceptions of potential adversaries sufficient to meaningfully make this calculus? To what extent if any can a broad formula of non-nuclear deterrence be applied to all potential adversaries and sets of circumstances? How germane if at all is the idea of a potential adversary's calculated costs? How can the U.S. best test its assumptions about deterrence, given that only "failure" can provide unassailably clear test results? As a rule, QDRs revisit and update DOD's force planning construct (FPC)—a shorthand statement of the number and type of missions the force is expected to be able to accomplish simultaneously, which is used to shape and size the force. Many observers would agree that the greater the clarity of an FPC, the greater its utility. The well-known "1-4-2-1" construct, introduced by the 2001 QDR, had the great value of parsimony. The FPCs put forward in the 2006 and 2010 QDRs were more complex, allowing for multiple possible combinations of simultaneous contingencies in addition to steady-state activities. Both preserved DOD's ability to do more than one big thing at a time but argued that both sustainable durations and associated risks would depend on the particular combination of contingencies. The FPC in the 2012 DSG called for a future force shaped and sized to conduct simultaneously one effort to defeat an adversary—a combined arms campaign across all domains, including a large-scale ground operation—and a second effort, to deny an aggressor's objective or impose unacceptable costs, as well as smaller additional missions, with "acceptable" risk. Some outside observers raised concerns that the DSG had abandoned the requirement to do two big things at a time. Internally, some DOD officials expressed concern that the second effort was quite poorly, or at any rate not uniformly, understood throughout DOD; and that the FPC would be difficult to execute, even without the additional annual topline caps that might be imposed through sequestration, without significant risk to the force and risk to mission. Key questions concerning any force planning construct might include the following: How clearly and universally understood, within DOD, is the FPC? How genuinely "simultaneously" can the major components of the FPC be executed? How, and how well, does the FPC account for steady-state activities such as presence, partnership, and deterrence? To what extent does it assume that those activities would become "force providers" in the event of major contingencies? What risks to the force, and risks to mission, does the FPC accept? Observers and practitioners generally agree that the tighter the fiscal constraints, the more imperative it becomes for DOD to strike an appropriate balance of roles and responsibilities across the Total Force, in order to eliminate harmful gaps and unnecessary redundancies, and to forge efficiencies through stronger integration of effort. While responsibilities for some activities are obvious, statutorily mandated, or both, many other arenas require choice, because responsibilities could theoretically be distributed in number of different ways, among various actors, to achieve the desired effects. While QDRs and other strategic reviews sometimes link activities with actors, they are typically less robust in correspondingly "de-linking" actors from activities as needed, and may raise as many questions as they resolve. The 2012 DSG encouraged greater reliance on special operations forces (SOF), compared with conventional forces. Some proponents of that shift pointed to strategic imperatives, arguing that SOF's abilities to strike, and to partner with other security forces around the world, are particularly appropriate for meeting emerging global security challenges. Other proponents stressed fiscal imperatives, arguing that reductions in overall endstrength place a higher premium on cultivating the most capable U.S. forces. Skeptics have stressed, variously, the long lead times required to grow effective SOF; the stress on the SOF force that generating greater capacity might impose; and the array of critical, complementary roles, not least the command and control of complex operations and the provision of enablers, that conventional forces typically play in contingencies. The DSG largely left it to each service to determine the implications for conventional forces of greater reliance on SOF, and to craft an appropriate future SOF/conventional balance. Subsequently, many DOD officials have noted much greater emphasis on "interdependence," but some have suggested that there is still work to be done in clarifying the SOF/conventional division of labor—for example, in arenas such as command and control, and security force assistance. The DSG also called broadly for increasing DOD's reliance on the Reserve Component (RC), including further institutionalizing its use as an operational reserve. But the DSG largely left it to each military service to determine the implications for the Active Component (AC), given greater reliance on the RC, and to craft an appropriate future AC/RC balance. While many facets of AC/RC roles and missions are specified in statute, fundamental choices remain, for example regarding force structure. Key questions concerning roles and missions might include the following: Ideally, given changes in the global security landscape and fiscal realities, how would integration of effort, and the balance of roles and responsibilities, between SOF and conventional forces further evolve? To what extent, if any, should greater reliance on SOF be viewed as a tool for mitigating risk amidst greater fiscal constraints? How should SOF reliance on conventional force support best be characterized, in scope and scale, and what do those characterizations imply for resourcing both forces? How should the overall requirement for DOD's global engagement best be characterized, and how might the efforts of various SOF and conventional forces—for example, SOF regional engagement, naval presence, and the Army's regionally aligned forces—best complement each other under that rubric? What lessons has the last decade or so of sustained warfighting taught about SOF/ conventional integration? To what extent have all relevant communities learned the same lessons? Ideally, given changes in the global security landscape and fiscal realities, how would integration of effort, and the balance of roles and responsibilities, between the active and reserve components further evolve? What are the most important criteria to consider in refining the AC/RC total force mix, in order to ensure that the active and reserve components best complement each other in support of defense strategy? How should respective costs be calculated, given varying terms of service, and varying responsibilities for overhead? How should respective effectiveness in various mission areas best be evaluated? To what extent if any should greater reliance on the RC be viewed as a tool for mitigating risk amidst greater fiscal constraints? What risks if any does increased reliance on mobilization, as a critical element of any protracted contingency operation, help mitigate? What risks if any does it introduce? What lessons have been learned, from the last decade or so of sustained warfighting abroad and some major contingencies at home, about AC/RC integration and division of labor? To what extent have all relevant communities learned the same lessons? How important is it to resolve, in the near term, any lingering uncertainties regarding SOF/conventional and/or AC/RC integration and division of labor? To what extent, if any, do lingering uncertainties, and sometimes tensions, introduce risk to mission or to the force? Who is best placed to play an "honest broker" role, facilitating the search for an optimal systemic-level balance for the Total Force? How actively if at all should Congress participate in these debates? As a rule, QDR processes to date have sought, in one way or another, to introduce a competition of ideas into the process, through the efforts of some form of independent panel. One role that such a panel can play is internal—"grading the homework" of the formal process as it goes. That might include challenging assumptions, identifying gaps, and helping refine the practical modalities of the process. Playing such a role most effectively would require, as a rule, unfettered access to the mechanics as well as the ideas of the formal process. The main goal of an internal competition is strengthening the formal process and improving its output. The "red team" created to support the 2006 QDR—without a statutory mandate—roughly followed this internal model, by closely tracking the formal QDR process and directly engaging, and pushing on, its big, emerging ideas. The other basic role that such a panel can play is external. In its most ambitious form, this might mean crafting a complete alternative approach—from strategic vision, to objectives and assumptions, detailed force structure, and resourcing plans, together with associated risks—and making those results available to Congress and other external audiences. Playing such a role effectively would require substantial time, relevant expertise, and sufficient staffing. The main goal of such an external competition is to establish a coherent, provocative counterpoint to the formal process, in order to spur debate and encourage better follow-on decision-making. To date, external panels have typically found that crafting a comprehensive alternative—including strategic assessment, force structure, and cost—is beyond the scope of the time and resources available. Yet even an alternative set of big ideas may serve as a useful catalyst to the debates. Key questions concerning a competition of ideas might include the following: How important is a competition of ideas for any QDR process? To what extent does DOD need an external catalyst to spur its own strategic thinking? To what extent should the goal of a competition of ideas be to "grade the homework" of the formal process and thereby to improve its outcome? What support mechanisms—such as access—would be necessary to help ensure that an outside panel could play such a role? To what extent should the goal of a competition of ideas be to offer a provocative, alternative approach to help spur more effective oversight and better future decision-making? To what extent might this goal be supported by soliciting input from an independent panel early in, or prior to, the formal review process, to help frame the broader debates? How helpful, if at all, would it be to constitute a standing independent panel to support DOD's QDR processes? What value-added, if any, might a permanent institutional home, greater continuity of membership, and a longer time horizon provide to such a panel's efforts? To what extent, on the other hand, does the idea of a standing panel conflate the need to catalyze the QDR process, with the need for powerful, ongoing strategic "engines" within DOD itself? For Congress—the collective authors of the statutory mandate for the QDR—one of the most fundamental oversight issues concerns compliance with that mandate. The conduct of the five QDR processes to date, and the contents of the QDR reports they have generated, have been prescribed by law. While DOD has broadly complied with the mandate, including the timelines for delivering the QDR report to Congress, its track record regarding more detailed compliance is mixed, particularly concerning responding to each of the items that DOD is required to address in the QDR report. Still more fundamental may be the issue of whether the QDR mandate itself is "correct." Some observers raise questions about the QDR's 20-year outlook. Practitioners and observers generally agree that fidelity is significantly greater in the near term, and weaker further out. They suggest that while it may be valuable to consider several different timelines, each time horizon would need its own set of caveats. Some observers and practitioners point to the barnacle-like accretion over time of legacy legislative language and suggest that the list of specified items to be addressed in the QDR report is outdated. The legislative history shows that as new strategic concerns have arisen, some new items have been added, but older terminology and concepts no longer in general usage have far less frequently been removed. Other observers raise questions about the QDR's fixed four-year cycle. That timeline is relatively rigid. The review is required to take place regardless of whether changes in the global or domestic contexts suggest the need for an update. At the same time, "quadrennial" may not be frequent enough to adjust DOD's focus and priorities as circumstances change. Some note that the statutory mandate for national military strategy (NMS), codified in §153(b), Title 10, U.S. Code, might usefully point the way to greater flexibility. Based on recent amendments, the Chairman of the Joint Chiefs of Staff is required to submit an NMS every two years when he deems it necessary, and a simpler update when he does not. Still other observers wonder what separate and distinct value the QDR—and the national defense strategy (NDS) that it is required to delineate—provide, in addition to national security strategy, the NMS, and the array of internal, classified guidance documents that DOD uses to shape and direct the enterprise and the force. Key questions concerning the QDR mandate might include: How well has DOD complied over time with the QDR statutory mandate? In what significant ways, if any, has compliance been insufficient? How helpful is a 20-year time horizon for the QDR? How might variation over that timeline be more clearly differentiated, to facilitate better oversight and debate? What would be the impact on internal DOD decision-making, Congressional oversight, and national defense if the QDR requirement were eliminated altogether? How important is the QDR for synchronizing strategy vertically, with the White House, and horizontally, with other U.S. Government agencies? What specific contribution do the QDR and its associated national defense strategy make, in relationship to the national security strategy, the national military strategy, and internal classified guidance? How important is the QDR as a strategic communications tool, for signalling intent to friends and potential foes around the world? How helpful is the QDR as a tool for oversight? To what extent might updating, revising, or streamlining the statutory mandate improve the QDR's utility for oversight purposes? Strategic review processes and strategy-making in general may make useful contributions in a number of ways, for example by fostering internal consensus, or by producing materials to be used in external communications. But perhaps the most fundamental contribution any review may make—and perhaps one of the most difficult things to do—is generating smart, rigorous strategic thinking. Some observers point to an enduring requirement for DOD to have an appropriate internal "strategic engine" to generate ideas, and to help ensure the strategic rigor of formal review processes such as the QDR as well as other internal strategy debates. Key questions concerning DOD and strategy might include: To what internal entities, if any, has DOD given the mandate, time, and ability to focus on longer-term and bigger-picture strategic thinking? How effectively do such entities contribute to strategy debates and decision-making? To what internal entities, if any, has DOD given the mandate to help ensure the strategic rigor of formal review processes such as the QDR, and other internal strategy development processes, as they unfold? How essential is it that any such entities enjoy full, unfettered access to the debates, with no parochial equities of their own? How effectively do any such entities play the role of identifying gaps in the debates, pushing back on assumptions, and "helping DOD see itself"? To what internal entities, if any, has DOD given the mandate to trace the various ways that defense strategy, once issued, is actually understood throughout the Department at all levels, and to help evaluate whether those variations in understanding are acceptable, as myriad constituent parts of DOD implement the strategy? Former House Armed Services Committee Chairman Ike Skelton used to ask, "Where are today's Marshalls?," suggesting the need for at least a few strategic thinkers in the mold of General of the Army, Secretary of State, and Secretary of Defense George C. Marshall, Jr. How should DOD identify potential strategists, develop them, craft appropriate career paths for them, and ensure that their insights and abilities infuse DOD's decision-making processes?
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By statute, the Department of Defense (DOD) is required, by Section 118, Title 10, U.S. Code, to submit to Congress a report based on its most recent Quadrennial Defense Review (QDR) process, no later than the President submits his budget request for Fiscal Year 2015. The "2014 QDR" review process took place against the backdrop of key changes in the global strategic context, recent evolutions in U.S. strategic priorities, and a tighter fiscal context. The 2014 process also drew on a series of recent reviews and guidance documents—a 2011 DOD "comprehensive review" initially launched by Secretary of Defense Gates and continued by Secretary of Defense Panetta; the January 2012 Defense Strategic Guidance document (DSG), and the 2013 review process known as the Strategic Choices and Management Review (SCMR). Statute prescribes that DOD, in each QDR process, "delineate a national defense strategy;" determine the force structure, modernization plans, and infrastructure required to implement that strategy; and craft an associated budget plan. Statute also spells out 16 items—as well as any other matter the Secretary considers appropriate—that the QDR report must address. More broadly, a QDR process, and its associated report, may play any number of helpful roles: refining and updating defense strategic thinking; forging a shared vision within DOD of both priorities, and roles and missions; helping ensure a common view across the Executive Branch, of the role of DOD, in cooperation with other Departments and agencies, in support of broader national security strategy; facilitating Congressional oversight; communicating a sense of defense strategy to the American people, the taxpayers; and signaling intent abroad, to reassure Allies and partners and deter or dissuade potential foes. In evaluating the 2014 QDR report and current defense strategy more broadly, Congress may choose to consider a number of issues: the role of the United States on the world stage; changes and trajectories in the global security environment; DOD's mission and geographic priorities; the extent and nature for U.S. global military presence; the extent and nature of U.S. international military partnerships; the strategic rationale for deterrence; the force planning construct (FPC), a shorthand statement of the number and type of missions the force is expected to be able to accomplish simultaneously, which is used to shape and size the force; the division of labor among Military Services and components in executing the strategy; and the nature and extent of the risks that defense strategy assumes. Congress may also wish to consider the extent of DOD's compliance with the statutory mandate for the QDR, the appropriateness of the mandate itself; and DOD's tools and approaches for crafting strategy in general.
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On April 12, 2006, U.S. Trade Representative Rob Portman and Peruvian Minister of Foreign Trade and Tourism Alfredo Ferrero Diez Canseco signed the proposed U.S.-Peru Trade Promotion Agreement (PTPA). The labor chapter of the PTPA includes enforceable International Labor Organization (ILO) core labor standards in addition to specific obligations on domestic labor law enforcement and a labor cooperation and capacity building mechanism. Despite the June 30, 2007 expiration of presidential "fast track" or "trade promotion authority" (provided by the Trade Act of 2002 , P.L. 107 - 210 ) to negotiate agreements that Congress then considers on an expedited basis—without amendment and under limited debate—Congress passed PTPA implementing legislation, the President signed it, and it became law as P.L. 110 - 138 on December 14, 2007. It went into effect February 1, 2009. On May 10, 2007, after much negotiation, Congress and the Administration announced a "New Trade Policy for America." Pending U.S. trade agreements would be amended to incorporate "key Democratic priorities" relating to such issues as labor, the environment, access to medicine, port security, and government procurement that would "spread the benefits of globalization here and abroad by raising standards." The release also announced that "this policy clears the way for broad, bipartisan congressional support" for pending FTAs . Key concepts in the new trade-labor policy include, for FTAs, fully enforceable provisions: (1) incorporating ILO core labor standards as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work (henceforth referred to as the ILO Declaration ); and (2) prohibiting FTA countries from weakening laws relating to ILO core labor standards in order to attract trade or investment. They also include (3) new limitations on "prosecutorial" and "enforcement" discretion, so that FTA countries cannot defend failure to enforce laws related to the ILO core labor standards on the basis of resource limitations or decisions to prioritize other enforcement issues; and (4) the same mechanisms/penalties for settling labor, environment, and all other FTA obligations. The Administration released the "final text" of the Peru FTA incorporating these concepts on June 25, 2007. On June 27, 2007, Peru's congress approved the FTA-related amendments. Other FTA language previously agreed to by both countries also includes procedural guarantees to help ensure that workers and employers would have fair, equitable, and transparent access to labor tribunals. Both parties would ensure that (1) workers have appropriate access to tribunals for the enforcement of each party's labor laws; (2) the proceedings before such tribunals are fair, equitable, and transparent; (3) the tribunals' final decisions are in writing and made publicly available; (4) parties to the proceedings have the right to seek review and possible correction of final decisions; (5) tribunals conducting or reviewing the proceedings are impartial and independent; (6) parties to the proceedings could seek remedies such as penalties or temporary workplace closures to ensure the enforcement of their rights under labor laws; and (7) public awareness of domestic labor laws is promoted through public availability of information and encouraging public education regarding labor laws. In addition, the agreement would require that the United States and Peru establish a Labor Affairs Council (Labor Council) comprised of cabinet-level or equivalent representatives to oversee implementation of the labor obligations, including the activities of the Labor Cooperation and Capacity Building Mechanism. The Labor Council would meet within the first year after the date of entry into force of the agreement and as often as necessary thereafter. Government representatives of the two countries would work together to establish priorities in specific cooperative and capacity-building activities. The Labor Council would establish guidelines, prepare reports, provide public communication, and be responsible for cooperating with the parties' points of contact. Finally, the two parties agreed that cooperation on labor issues plays an important role in advancing labor commitments, including those embodied in the 1998 ILO Declaration and a 1999 ILO convention on the worst forms of child labor (including child trafficking, or the use of children in armed conflict, drug trafficking, or pornography). They would establish a Labor Cooperation and Capacity Building Mechanism to develop and pursue bilateral or regional cooperation activities on labor-related issues. Such initiatives would be aimed at establishing and strengthening alternative dispute resolution mechanisms for labor disputes. Peruvian President Alan Garcia took office for a five-year term at the end of July 2006, replacing outgoing president, Alejandro Toledo. President Toledo presided over a period in which Peru was one of the fastest growing economies in Latin America, largely due to growth in the mining and export sectors. In spite of the recent economic growth, over half of Peruvians live in poverty and a large portion of the population is underemployed. Unemployment and underemployment levels total 64.5% nationwide. Peru's labor market is relatively small compared with that of the United States. In 2005, the labor force of Peru comprised nine million workers, compared to 151 million workers in the United States. Recorded unemployment in Peru was 7.2% and labor cost per hour was $1.48 in 2005. In comparison, the United States had a recorded unemployment rate of 4.7% and an hourly labor cost of $24.42. The economic sector in Peru with the highest employment is wholesale/retail trade and repair services, followed by manufacturing. During the regime of former President Alberto Fujimori (1990 to 2000), the government implemented a radical economic reform program to control hyperinflation and bring economic stability to the country. Part of the program included a wide-ranging privatization plan and a relaxation of foreign investment restrictions to help increase foreign investment. Existing labor laws were relaxed significantly during this time. In recent years, however, Peru has made much progress in strengthening labor protections by implementing labor law reform and protecting workers' rights. In 2002, Peru ratified the two ILO conventions on the abolition of child labor. In 2003, the government reduced the number of workers needed to establish a union, eliminated prohibitions on workers that kept them from joining unions during their probationary period, and limited the power of the labor authority to cancel a union's registration. In July 2004, the government published regulations to strengthen labor inspections and broaden labor inspectors' powers to allow easier access to firms, improved inspectors' ability to impose sanctions, and increase the levels of fines. Peru has ratified 71 ILO conventions, including all eight core conventions on workers' rights. The ILO has stated that Peru has satisfactorily amended its laws to improve labor standards in certain areas related to freedom of association and protection of the right to organize. However, some critics argue that Peru has had some problems in the observance of the ILO core labor standards and that improvements must be made in Peru's legislation on collective bargaining. The proposed PTPA was negotiated under the trade promotion authority in the Trade Act of 2002 ( P.L. 107 - 210 ) as were seven other trade agreements approved by Congress: the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), plus agreements with Chile, Singapore, Australia, Morocco, Bahrain, and Oman; and several agreements that are still pending (Colombia, Panama, and South Korea.) While many provisions of the free trade agreements (FTAs) are similar, the Peru TPA was the first to incorporate provisions reflecting the new congressional-administration trade policy. In addition, each of the eight agreements has some unique provisions. For the PTPA, unique labor provisions include some new reporting requirements and cooperative and trade-capacity building activities. Proponents and opponents typically cite the following strengths and weaknesses of the labor provisions of the PTPA. Supporters argue that the PTPA reinforces Peru's labor reforms in 2003, 2004, and 2005. In addition, enforceable ILO core labor standards in the body of the agreement overlay and reinforce Peru's long-term ratification of 71 ILO labor conventions including all eight ILO core labor standards—two in each of the following categories: (1) the right to organize and bargain collectively (ILO Convention (C) 87 in 1960 and C98 in 1964); (2) freedom from forced or compulsory labor (C29 and C105, both in 1960); (3) prohibitions against child labor (C138 and C182, both in 2002); and (4) prohibitions against employment discrimination (C100 in 1960 and C111 in 1970). Proponents point out that "key Democratic priorities" include fully enforceable ILO core labor standards and the same dispute resolution procedures that were available for commercial disputes. The PTPA would go beyond protections afforded Peru under the Andean Trade Preference Drug Enforcement Act (ATPDEA, P.L. 107 - 210 ) and the Generalized System of Preferences (GSP, P.L. 98 - 573 , as amended), which set, for benefits eligibility, the lower standard of " providing or taking steps to provide " workers "internationally recognized worker rights." Critics argue that, with enforceable ILO core labor standards in the language of the agreement, the main issues at this point are Peru's adoption of new labor laws and enforceability. They argue that recent Peruvian labor reforms have not reversed the weakening of labor laws during the Fujimori administration, and that both ILO reports and the 2005 State Department's Country Reports on Human Rights Practices document the failure of Peru's compliance with U.S. internationally recognized worker rights and ILO core labor standards. Such "failures" include (1) the lack of basic protection of the right to organize for (a) large numbers of workers "casually" employed as temporary or contract workers (and therefore not permitted to join labor unions of permanent workers) and (b) the 60% of all Peruvian workers in the largely unregulated informal sector; (2) reports of forced or compulsory labor practices, particularly involving indigenous families in remote areas, in violation of Peru's laws; (3) violations of child labor laws—an estimated one-fourth of all children between 6 and 17 years of age are employed, mostly in the informal sector including some in prostitution and narcotics production; and (4) non-compliance with minimum wage guideline s, in that roughly half the workforce earned the minimum wage or below, many of them in the informal sector. Before the new PTPA language was released, some observers noted that the United States has ratified only two ILO conventions, while Peru has ratified all eight. In addition, the United States has some laws that may not totally conform with language of ILO conventions. A possible example is some state laws that permit employment-without-pay for prisoners. Consequently, they express concern that including enforceable ILO core labor standards into trade agreements could subject the entire U.S. labor code to challenges by trading partners. This issue is addressed by language in the PTPA that (a) restricts the application of the PTPA provisions to trade-related matters and (b) incorporates only the principles of the four basic ILO rights listed in the ILO Declaration and quoted on p. 4, footnote 2, rather than the detailed language of the specific eight conventions. The proposed PTPA is unlikely to impact the aggregate employment level in the United States: U.S.-Peru trade accounts for only 0.3% of total U.S. merchandise trade (2005). However, it could impact jobs in specific industries. According to a report by the U.S. International Trade Commission (USITC), the largest U.S. employment gain (1%) is projected in wheat production. Declines are projected in metals (gold, copper, and aluminum), rice production, and miscellaneous crops (cut flowers, live plants, and seeds) which could "lose" up to 0.2% of their employment, displaced by imports. For Peru, various estimates of job "gains" range from less than 20,000 to 700,000. On the other hand, some labor groups argue that U.S. exports of basic grains could adversely affect the livelihoods of subsistence farmers in Peru, where agriculture is the main source of jobs. The Peruvian Congress voted 79-14 to approve the PTPA in June 2006 and it approved a set of amendments tied to the FTA on June 27, 2007. Gaining passage of a PTPA was a high priority for the government of Peru. Peruvian President Alan García Perez met with President Bush on October 10, 2006, and again on April 23, 2007, to discuss the free trade agreement. After the April 2007 meeting, President García said about the agreement, "It is vital for our country. It is fundamental to continue this path of growth and social redistribution that we have started in my country." House Democratic leaders had indicated they would not take up implementing legislation until after Peru changed its laws to comply with new labor (and other) provisions added to the PTPA. Peru is implementing its new labor obligations under the agreement through a series of "supreme decrees" issued by President Garcia. Peru had agreed to issue supreme decrees covering five areas: time-limited contracts, subcontracting, the right to strike, anti-union discrimination, and safeguarding the right to strike. The House passed the Peru TPA implementing legislation, H.R. 3688 , on November 8, 2007, by a vote of 285 to 132; the Senate passed it on December 4 by a vote of 77 to 18; and President Bush signed it into law as P.L. 110 - 138 on December 14, 2007. Issues included how a PTPA might affect workers in both countries, and Peru's commitments to reforms, alleviating poverty, and enforcement. Some Peruvian policymakers believe that maintaining confidence in the bilateral trade environment with the United States is the key to the long-term stability of the region. While the Chamber of Commerce and the Business Roundtable strongly supported the Peru TPA, the AFL-CIO neither supported nor opposed it because the AFL-CIO has labor unions on both sides of the issue. Change To Win labor coalition, comprised of labor unions that formerly belonged to the AFL, urged Congress to oppose the PTPA.
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On April 12, 2006, the United States and Peru signed the proposed U.S.-Peru Trade Promotion Agreement (PTPA). On June 25, 2007, the Administration released a revised text with new labor, environment, and other provisions. This "final text" language reflected a Congress-Administration "New Trade Policy for America" announced on May 10 that incorporated key Democratic priorities. Supporters of the agreement argue that Peru has ratified all eight International Labor Organization (ILO) core labor standards and that the PTPA would reinforce Peru's labor reform measures of recent years. Critics are concerned about the potential for enforcement of the standards. Peru PTA implementing legislation (H.R. 3688) passed the House on November 8, 2007, by a vote of 285 to 132; passed the Senate on December 4 by a vote of 77 to 18; and was signed by President Bush on December 14 (P.L. 110-138). It went into effect on February 1, 2009. See also CRS Report RL34108, U.S.-Peru Economic Relations and the U.S.-Peru Trade Promotion Agreement, by [author name scrubbed], and CRS Report RL33864, Trade Promotion Authority (TPA) Renewal: Core Labor Standards Issues, by [author name scrubbed].
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The Homeland Security Act of 2002 and other Administration documents have assigned the Department of Homeland Security specific duties associated with coordinating the nation's efforts to protect its critical infrastructure. Many of these duties were delegated to the Information Analysis and Infrastructure Protection Directorate. In particular, the Directorate was charged with integrating threat assessments with vulnerability assessments in an effort to identify and manage the risk associated with possible terrorist attacks on the nation's critical infrastructure. By doing so, the Directorate is to help the nation set priorities and take cost-effective protective measures. This report is meant to support congressional oversight by discussing, in more detail, what this task entails and issues that need to be addressed. In particular, the report defines terms (e.g., threat, vulnerability, and risk), discusses how they fit together in a systematic analysis, describes processes and techniques that have been used to assess them, and discusses how the results of that analysis can inform resource allocation and policy. While the Directorate was given this task as one of its primary missions, similar activities are being undertaken by other agencies under other authorities and by the private sector and states and local governments. Therefore, this report also discusses to some extent the Directorate's role in coordinating and/or integrating these activities. The National Strategy for Homeland Security, anticipating the establishment of the Department of Homeland Security, stated: "... the Department would build and maintain a complete, current, and accurate assessment of vulnerabilities and preparedness of critical targets across critical infrastructure sectors...[This assessment will] guide the rational long-term investment of effort and resources." "... we must carefully weigh the benefit of each homeland security endeavor and only allocate resources where the benefit of reducing risk is worth the amount of additional cost." Among the specific tasks delegated to the Directorate's Undersecretary by Section 201(d) of the Homeland Security Act of 2002 ( P.L. 107-296 , enacted November 25, 2002) were: "... identify and assess the nature and scope of terrorist threats to the homeland;" "... understand such threats in light of actual and potential vulnerabilities of the homeland;" "... carry out comprehensive assessments of the vulnerabilities of the key resources and critical infrastructures of the United States, including the performance of risk assessments to determine the risk posed by particular types of terrorist attacks within the United States ...." "... integrate relevant information, analyses, and vulnerability assessments ... in order to identify priorities for protective and support measures ...." "... develop a comprehensive national plan for securing the key resources and critical infrastructure of the United States ...." "... recommend measures necessary to protect the key resources and critical infrastructure of the United States ...." The National Strategy for the Physical Protection of Critical Infrastructure and Key Assets stated: "DHS, in collaboration with other key stakeholders, will develop a uniform methodology for identifying facilities, systems, and functions with national-level criticality to help establish federal, state, and local government, and the private-sector protection priorities. Using this methodology, DHS will build a comprehensive database to catalog these critical facility, systems, and functions." Homeland Security Presidential Directive Number 7 (HSPD-7) stated that the Secretary of Homeland Security was responsible for coordinating the overall national effort to identify, prioritize, and protect critical infrastructure and key resources. The Directive assigned Sector Specific Agencies the responsibility of conducting or facilitating vulnerability assessments of their sector, and encouraging the use of risk management strategies to protect against or mitigate the effects of attacks against critical infrastructures or key resources. It also required the Secretary to produce a comprehensive, integrated National Plan for Critical Infrastructure and Key Resources Protection. That National Plan was to include a strategy and a summary of activities to be undertaken to: define and prioritize, reduce the vulnerability of, and coordinate the protection of critical infrastructure and key resources. The terms "vulnerabilities," "threats," "risk," "integrated," and "prioritize" are used repeatedly in the documents cited above. However, none of the documents defined these terms or discussed how they were to be integrated and used. Also, in hearings, articles in the press, and other public discourse these terms are used loosely, clouding the intent of what is being proposed or discussed. What might seem trivial differences in definitions can make a big difference in policy and implementation. The following section provides definitions and a generic model for integrating them in a systematic way. Many models/methodologies have been developed by which threats, vulnerabilities, and consequences are assessed and then used to inform the cost-effective allocation of resources to reduce risks. For this report, CRS reviewed vulnerability and risk assessment models or methodologies, including some developed and used, to varying degrees, in certain selected sectors (electric power, ports, oil and gas). These are listed in the " References " section of this report. In addition, this report draws upon information contained in a book by Carl Roper entitled Risk Management for Security Professionals . Essential elements of these models/methods have been distilled and are presented below. They may provide some guidance in overseeing DHS's methodology as it is developed and employed. For the most part, each of the methodologies reviewed consist of certain elements. These elements can be divided into: assessments per se; and, the use of the assessments to make decisions. The elements are performed, more or less, in the following sequence: Assessments identify assets and identify which are most critical identify, characterize, and assess threats assess the vulnerability of critical assets to specific threats determine the risk (i.e., the expected consequences of specific types of attacks on specific assets) Using Assessments to Identify and Prioritize Risk Reduction Activities identify and characterize ways to reduce those risks prioritize risk reduction activities based on a risk reduction strategy The infrastructure of a facility, a company, or an economic sector, consists of an array of assets which are necessary for the production and/or delivery of a good or service. Similarly, the infrastructure of a city, state, or nation consists of an array of assets necessary for the economic and social activity of the city and region, and the public health and welfare of its citizens. The first step in the process is to determine which infrastructure assets to include in the study. The American Chemistry Council, the Chlorine Institute, and the Synthetic Organic Chemical Manufacturers Association, in their Site Security Guidelines for the U.S. Chemistry Industry , broadly define assets as people, property, and information. Roper's Risk Management for Security Professionals (and DOE's Energy Infrastructure Risk Management Checklists for Small and Medium Sized Energy Facilities ) broadly define assets as people, activities and operations, information, facilities (installations), and equipment and materials. The methodologies reviewed do not provide a definitive list of such assets but suggest which ones might be considered. For example, people assets may include employees, customers, and/or the surrounding community. Property usually includes a long list of physical assets like buildings, vehicles, production equipment, storage tanks, control equipment, raw materials, power, water, communication systems, information systems, office equipment, supplies, etc. Information could include product designs, formulae, process data, operational data, business strategies, financial data, employee data, etc. Roper's examples of activities and operations assets include such things as intelligence gathering and special training programs. Many methodologies suggest considering, initially, as broad a set of assets as is reasonable. However, not every asset is as important as another. In order to focus assessment resources, all of the methodologies reviewed suggest that the assessment should focus on those assets judged to be most critical. Criticality is typically defined as a measure of the consequences associated with the loss or degradation of a particular asset. The more the loss of an asset threatens the survival or viability of its owners, of those located nearby, or of others who depend on it (including the nation as a whole), the more critical it becomes. Consequences can be categorized in a number of ways: economic; financial; environmental; health and safety; technological; operational; and, time. For example, a process control center may be essential for the safe production of a particular product. Its loss, or inability to function properly, could result not only in a disruption of production (with its concomitant loss of revenue and additional costs associated with replacing the lost capability), but it might also result in the loss of life, property damage, or environmental damage, if the process being controlled involves hazardous materials. The loss of an asset might also reduce a firm's competitive advantage, not only because of the financial costs associated with its loss, but also because of the loss of technological advantage or loss of unique knowledge or information that would be difficult to replace or reproduce. Individual firms, too, have to worry about loss of reputation. The American Petroleum Institute and the National Petrochemical and Refiners Association (API/NPRA) in their Security Vulnerability Assessment Methodology for the Petroleum and Petrochemical Industries also suggested considering the possibility of "excessive media exposure and resulting public hysteria that may affect people that may be far removed from the actual event location." While the immediate impact is important, so, too, is the amount of time and resources required to replace the lost capability. If losing the asset results in a large immediate disruption, but the asset can be replaced quickly and cheaply, or there are cost-effective substitutes, the total consequence may not be so great. Alternatively, the loss of an asset resulting in a small immediate consequence, but which continues for a long period of time because of the difficulty in reconstituting the lost capability, may result in a much greater total loss. Another issue which decision makers may consider is if the loss of a particular asset could lead to cascading effects, not only within the facility or the company, but also cascading effects that might affect other infrastructures. For example, the loss of electric power can lead to problems in the supply of safe drinking water. The loss of a key communications node can impair the function of ATM machines. The initial set of assets are categorized by their degree of criticality. Typically the degree of criticality is assessed qualitatively as high, medium, or low, or some variation of this type of measure. However, even if assessed qualitatively, a number of methodologies suggest being specific about what kind of consequence qualifies an asset to be placed in each category. For example, the electric utility sector methodology suggests that a highly critical asset might be one whose loss would require an immediate response by a company's board of directors, or whose loss carries with it the possibility of off-site fatalities, property damage in excess of a specified amount of dollars, or the interruption of operations for more than a specified amount of time. Alternatively, an asset whose loss results in no injuries, or shuts down operations for only a few days, may be designated as having low criticality. For those sectors not vertically integrated, ownership of infrastructure assets may span a number of firms, or industries. Whoever is doing the analysis may feel constrained to consider only those assets owned and operated by the analyst or analyst's client. For example, transmission assets (whether pipeline, electric, or communication) may not be owned or operated by the same firms that produce the commodity being transmitted. Both the production assets and the transmission assets, however, are key elements of the overall infrastructure. Also, a firm may rely on the output from a specific asset owned and operated by someone else. The user may consider that asset critical, but the owner and operator may not. Some of the methodologies reviewed encourage the analyst to also consider (or at least account for) the vulnerability of those assets owned or operated by someone else that provide critical input into the system being analyzed. These "interdependency" problems are often characterized in terms of inter-sector dependencies (e.g., the reliance of water systems on electric power), but they may also exist intra-sector. The interdependency issue is both a technical one (i.e., identifying them) and a political/legal one (i.e., how can entity A induce entity B to protect an asset). Roper and the API/NPRA define threat as "any indication, circumstance or event with the potential to cause loss or damage to an asset." Roper includes an additional definition: "The intention and capability of an adversary to undertake actions that would be detrimental to U.S. interests." To be helpful in assessing vulnerability and risk, threats need to be characterized in some detail. Important characteristics include type (e.g., insider, terrorist, military, or environmental (e.g., hurricane, tornado)); intent or motivation; triggers (i.e., events that might initiate an attack); capability (e.g., skills, specific knowledge, access to materials or equipment); methods (e.g., use of individual suicide bombers, truck bombs, assault, cyber); and trends (what techniques have groups used in the past or have experimented with, etc.). Information useful to characterizing the threat can come from the intelligence community, law enforcement, specialists, news reports, analysis and investigations of past incidents, received threats, or "red teams" whose purpose is to "think" like a terrorist. Threat assessment typically also involves assumptions and speculation since information on specific threats may be scant, incomplete, or vague. Once potential threats have been identified (both generically (e.g., terrorists), and specifically (e.g., Al Qaeda), and characterized, a threat assessment estimates the "likelihood of adversary activity against a given asset or group of assets." The likelihood of an attack is a function of at least two parameters: (a) whether or not the asset represents a tempting target based on the goals and motivation of the adversary (i.e., would a successful attack on that asset further the goals and objectives of the attacker); and (b) whether the adversary has the capability to attack the asset by various methods. Other parameters to consider include past history of such attacks against such targets by the same adversary or by others, the availability of the asset as a target (e.g., is the location of the target fixed or does it change and how would the adversary know of the target's existence or movement, etc.). The asset's vulnerability to various methods of attack (determined in the next step) may also affect the attractiveness of the asset as a target. As an example of a threat assessment technique, the U.S. Coast Guard, using an expert panel made up of Coast Guard subject matter and risk experts, evaluated the likelihood of 12 different attack modes against 50 different potential targets (i.e., 600 scenarios). Attack modes included "... boat loaded with explosives exploding along side a docked tank vessel," or "... tank vessel being commandeered and intentionally damaged." The Coast Guard also considered scenarios where port assets could be stolen or commandeered and used as a weapon or used to transport terrorists or terrorism materials. Potential targets included various types of vessels (including ferries), container facilities, water intakes, utility pipelines, hazardous materials barges, etc. The panel of experts judged the credibility of each scenario. For example, using a military vessel for transporting terrorists or terrorism materials was judged not to be credible given the inherent security measures in place, but an external attack on a military target was considered credible. Each credible scenario was assigned one of 5 threat levels representing the perceived probability (likelihood) of it occurring, after considering the hostile group's intent, its capabilities, prior incidents, and any existing intelligence. The Electricity Sector's methodology used a checklist which asks for the specific attack mode (such as the use of explosives, truck bomb, or cyber attack) and whether it is likely that such an attack would be carried out by: (a) an individual; or (b) by an assault team of up to five members. In this case, the analyst is to identify likely targets for each type of attack scenario and the objective that the adversary would achieve by such an attack. Likelihood can be measured quantitatively, by assigning it a probability (e.g., an 85% chance of occurring), or qualitatively, such as "Very High Threat Level," which might mean there is a credible threat, with a demonstrated capability, and it has happened before. As with criticality, a number of methodologies suggested specific criteria be used to define what would constitute varying threat levels. A threat assessment need not be static in time. Threats (i.e., the likelihood that an adversary may attack) may rise and fall over time, depending on events, anniversary dates, an increase in capability, or the need for the adversary to reassert itself. Intelligence may detect activity that indicates pre-attack activity or a lull in such activity, or an explicit threat may be made. Roper defines vulnerability as a "weakness that can be exploited to gain access to a given asset." The API/NPRA expands this definition to include "... and subsequent destruction or theft of [the] ... asset." The Coast Guard defines vulnerability as "the conditional probability of success given that a threat scenario occurs. " Weaknesses, like criticality, can be categorized in a number of ways: physical (accessibility, relative locations, visibility, toughness, strength, etc.), technical (susceptible to cyber attack, energy surges, contamination, eavesdropping, etc.), operational (policies, procedures, personal habits), organizational (e.g., would taking out headquarters severely disrupt operations), etc. Existing countermeasures may already exist to address these weaknesses. A vulnerability assessment must evaluate the reliability and effectiveness of those existing countermeasures in detail. For example, security guards may provide a certain degree of deterrence against unauthorized access to a certain asset. However, to assess their effectiveness, a number of additional questions may need to be asked. For example, how many security guards are on duty? Do they patrol or monitor surveillance equipment? How equipped or well trained are they to delay or repulse an attempt to gain access? Have they successfully repulsed any attempt to gain unauthorized access? Vulnerabilities are assessed by the analyst against specific attacks. API/NPRA identifies three steps to assessing vulnerabilities: (1) determine how an adversary could carry out a specific kind of attack against a specific asset (or group of assets); (2) evaluate existing countermeasures for their reliability and their effectiveness to deter, detect, or delay the specific attack; and (3) estimate current state of vulnerability and assign it a value. Specific types of attacks can be informed by the preceding threat assessment. The Coast Guard measured vulnerability of potential targets for each attack scenario in four areas: (1) is the target available (i.e., is it present and/or predictable as it relates to the adversary's ability to plan and operate); (2) is it accessible (i.e., how easily can the adversary get to or near the target); (3) what are the "organic" countermeasures in place (i.e., what is the existing security plan, communication capabilities, intrusion detection systems, guard force, etc.); and, (4) is the target hard (i.e., based on the target's design complexity and material construction characteristics, how effectively can it withstand the attack). Each of these four vectors were evaluated on a level of 1 to 5, with each level corresponding to a assigned probability of a successful attack. By comparison, the electricity sector process measured vulnerability as a probability that existing countermeasures can mitigate specific attack scenarios (e.g., probability of surviving attack = 80%). Alternatively, the analyst can value vulnerability qualitatively. For example, a "highly vulnerable" asset might be one that is highly attractive as a target, for which no countermeasures currently exist against a highly credible threat. An asset with low vulnerability might be one that has multiple effective countermeasures. Risk implies uncertain consequences. Roper defines risk as the "... probability of loss or damage, and its impact..." The Coast Guard refers to a risk assessment as "essentially an estimate of the expected losses should a specific target/attack scenario occur." "Expected" loss is determined by multiplying the estimated adverse impact caused by a successful threat/attack scenario by the probabilities associated with threat and vulnerability. API/NPRA defines risk as "a function of: consequences of a successful attack against an asset; and, likelihood of a successful attack against an asset." "Likelihood" is defined as "a function of: the attractiveness of the target to the adversary [based on the adversary's intent and the target's perceived value to the adversary], degree of threat [based on adversary's capabilities], and degree of vulnerability of the asset." An important point is that risk, as defined here, is a discounted measure of consequence; i.e., discounted by the uncertainty of what might happen (see the example given below). As noted in the first step, impact can be categorized in a number of ways. Impact or consequences may be measured more precisely at this point in the process, however, to better inform the prioritization of risk reduction steps that follows. The Coast Guard considered six categories of impact: death/injury; economic; environmental; national defense; symbolic effect; and secondary national security issues. Each target/attack scenario measured the potential impact in each of these categories on a severity scale from 1 to 5 (from low to catastrophic). The assigned scale value was based on benchmarks. The API/NPRA, which used a similar construct, suggested the following benchmarks for its severity scale. The severity of death and injury varied from high to low depending on whether they occurred off-site or on-site, and whether they were certain or possible. The severity of environmental damage again varied from high to low depending on whether it was large scale (spreading off-site) or small scale (staying on-site). The severity of financial losses or economic disruptions were valued on threshold dollar amounts and time-frames. The analyst can also try to measure risk quantitatively. For example, for a specific target/attack scenario, the analysis may determine that there is a 50/50 chance (i.e., we don't know) that the adversary will try to attack a particular government building. But, if they did, there is a 75% chance that they would use a truck bomb (i.e. we are pretty sure that if they attack they would try to use a truck bomb). If they try use a truck bomb, the vulnerability assessment determined that they would have a 30% chance of succeeding (i.e., if they try, there is a good chance that the current protective measures will prevent them from getting close enough to the building to bring it down). The consequences of a successful attack (bringing the building down) could be 500 people killed and $300 million in property damage. The risk associated with this scenario would be: expected loss = (consequence) x ( probability that an attack will occur) x (conditional probability that the attacker uses a truck bomb) x (the conditional probability that they would be successful), or (500 people killed + $300 million in damage) x (.5) x (.75) x (.3), or risk = 56 expected deaths and $33.8 million in expected damages. Risk is often measured qualitatively (e.g., high, medium, low). Since consequences may be measured along a number of different vectors, and threat and vulnerability have been measured separately, a qualitative measure of risk must have some criteria for integrating the number of different qualitative measures. For example, how should the assessment decide what risk rating to give a medium threat against a highly vulnerable target that would have a low death/injury impact, a medium environmental impact, but a high short-term financial impact? Does this scenario equal a high, medium, or low level of risk? Risks can be reduced in a number of ways: by reducing threats (e.g., through eliminating or intercepting the adversary before he strikes); by reducing vulnerabilities (e.g., harden or toughen the asset to withstand the attack); or, by reducing the impact or consequences (e.g., build back-ups systems or isolate facilities from major populations). For each potential countermeasure, the benefit in risk reduction should also be determined. More than one countermeasure may exist for a particular asset, or one countermeasure may reduce the risk for a number of assets. Multiple countermeasures should be assessed together to determine their net effects. The analyst should also assess the feasibility of the countermeasure. The cost of each countermeasure must also be determined. Costs, too, are multidimensional. There may be up-front financial costs with associated materials, equipment, installation, and training. There are also longer term operational costs of the new protective measures, including maintenance and repair. There may also be operational costs associated with changes to overall operations. Costs also include time and impact on staff, customers, and vendors, etc. Expenditures on the protection of assets also results in opportunity costs (i.e., costs associated with not being able to invest those resources in something else). Once a set of countermeasures have been assessed and characterized by their impact on risk, feasibility, and cost, priorities may be set. Decision makers would have to come to a consensus on which risk reduction strategy to use to set priorities. Most of the methods reviewed suggest a cost-effective selection process (i.e., implementation of the risk-reduction method(s) should not cost more than the benefit derived by the reduced risk). Cost-effectiveness could also imply that the country invest in risk reduction to the point where the marginal cost to society equals the marginal benefit. Alternatively, given a fixed budget, cost-effectiveness might imply investing in protections that maximize the benefits for that investment. Countermeasures that lower risk to a number of assets may prove to be most cost-effective. Also, focusing attention on those assets associated with the highest risks may yield the greatest risk reduction and be one way to implement a cost-effective approach. While cost-effectiveness is usually the recommended measure for setting priorities, decision makers may use others. For example, decision makers may be risk averse. In other words, even if the chance of an attack is small, or the potential target is not particularly vulnerable, the consequences may be too adverse to contemplate. In this case, decision makers may wish to bear the costs of additional protection that exceed the "expected" reduction in risk. Roper notes, however, that, in general, protection costs should not exceed a reasonable percentage of the total value of the asset. Another measure by which to select protective actions might be to favor maximizing the number or geographical distribution of assets for which risks are reduced. Alternatively, decision makers might want to focus efforts on reducing a specific threat scenario (e.g., dirty bombs) or protecting specific targets (e.g., events where large numbers of people attend). The electric utility checklist states that the ultimate goal of risk management is to select and implement security improvements to achieve an "acceptable level of risk" at an acceptable cost. The concept of acceptable risk is mentioned in a number of methodologies, and it needs to be determined by decision makers. After selecting which protective measures to pursue, programs, responsibilities, and mechanisms for implementing them must be established. Many of the reviewed methodologies conclude with the recommendation to revisit the analysis on a regular basis. Following September 11, 2001, owners/operators of critical infrastructure assets, to varying degrees, began identifying critical assets, assessing their vulnerabilities to attack, and developing security plans or increased protections. For example, the Federal Transit Authority assessed the vulnerabilities of the nation's largest mass transit systems. The freight rail companies developed additional security measures to coincide with the level of threat identified by DHS's color-coded National Alert System. The Public Health Security and Bioterrorism Preparedness Act ( P.L. 107-188 ) required drinking water authorities to conduct vulnerability assessments and to develop security plans based on those assessments. The Maritime Transportation Security Act ( P.L. 107-295 ) required port facilities and maritime vessels to do the same. The American Petroleum Institute, the North American Electric Reliability Council, and other industry associations offered guidance to their respective members on how to conduct vulnerability assessments and how to manage their risk from possible attack. DHS's ability to coordinate this activity developed more slowly. It only recently released its National Infrastructure Protection Plan in June 2006, which details a uniform risk management methodology that could allow DHS to generate a set of national priorities across all sectors (see below). While it has been developing the NIPP, the Directorate has been engaged in its own risk management activities. Shortly before the beginning of Operation Iraqi Freedom in 2003, as part of Operation Liberty Shield, the Directorate identified a list of 160 assets or sites, including chemical and hazardous materials sites, nuclear power plants, energy facilities, business and finance centers, and more, that it considered critical to the nation based on their vulnerability to attack and potential consequences. Over time this list grew. In testimony before the House Appropriations Committee on April 1, 2004, then-Undersecretary for Information Analysis and Infrastructure Protection, Frank Libutti, stated that DHS had identified 1700 sites as being high priority sites. According to the testimony, DHS intended to visit each of these sites. These Site Assistance Visits (SAVs) are conducted with owners and operators, on a voluntary basis, to discuss vulnerabilities and protective measures that can be taken "inside the fence." In addition, DHS meets with law enforcement officials of jurisdiction to assist them in developing Buffer Zone Protection Plans (BZPPs). BZPPs focus on protections that can be taken "outside the fence," including how to identify threatening surveillance, patrolling techniques, and how to assert command and control if an incident should occur. DHS has provided training and technical assistance to help state and local law enforcement entities develop their own BZPPs. It is not clear how many sites DHS officials have visited, how many vulnerability assessments have been conducted, how many security plans have been developed, and how many have been implemented. Nor has the Directorate been transparent about the processes or methodology that it uses to identify and prioritize these high-priority sites or for selecting the recommended protective measures. It is not clear, even, how many assets or sites DHS still considers to be high-priority. The original list of 1700 or more sites received some criticism for including sites that were no longer in use or whose criticality was questioned. According to the Department's Inspector General, DHS itself found its original list unreliable. The Assistant Secretary for Infrastructure Protection, Robert Stephan, in July 2006, wrote that DHS had a list of more than 600 high-priority sites that it uses to focus its efforts. What, if any, relationship this list of 600 has to the original list of 1700 was not explained. In a more recent statement relating to the process used to allocate federal grants in the Urban Area Security Initiative Program (see below), Secretary Chertoff said that DHS has a list of approximately 2000 sites or assets that it considered to be of national or regional importance. How these sites relate to the 600 mentioned by the Assistant Secretary, or to the original 1700 sites was not mentioned. In addition to the activity discussed above, DHS also has been supporting state and local efforts to protect assets critical to them and the nation. DHS grants support a wide range of counter-terrorism activities. These include funds for law enforcement, fire fighters, emergency response and management, medical providers, citizen corps, etc. Some also include funding for critical infrastructure protection. For example, the State Homeland Security Grant Program and the Urban Areas Security Initiative grants, while primarily focused on the needs of first responders, also allow funding for critical infrastructure protection, such as the purchase of surveillance equipment, detectors, fences, cybersecurity hardware and software, etc. DHS also funds grants more specific to critical infrastructure protection. These include port, rail, mass transit, trucking, and inter-city bus security grants. Allocation of funds through the State Homeland Security Grant program is based partially on a formula determined by Congress. Initial allocation of funds for the Urban Areas Security Initiative grants (and the more specific port and transportation-related grants mentioned above) are based on a risk assessments performed by what is now called Grants and Training within DHS (formerly called the Office of Domestic Preparedness) and states must justify their proposals, based in part, on a risk management process they perform. The guidelines for the FY2006 Urban Areas Security Initiative grant program provides a glimpse into the risk assessment process used by Grants and Training, which has evolved over the last few years. DHS considered all cities with a population greater than 100,000 and any city with reported threat data during the past fiscal year. Cities on this list with shared boundaries were combined into a single candidate urban area. A 10-mile buffer was then drawn around the candidate area or city to define a geographic area in which data was evaluated. This could transcend state boundaries, leading to a regional approach. All candidate areas with a combined population greater than 200,000 were then considered for the final analysis. The FY2006 guidance made a distinction between asset-based risk and geographically-based risk, both of which were considered when making the final selection of those urban areas eligible for the FY2006 grants. Asset-based risk as described in the guidance basically follows the processes discussed in this report. It considered specific types of attacks against potential targets within the urban area, combining the risks for an overall risk estimate. Consequences included human health, economic, strategic mission, and psychological impact, but focused on human and economic impact. Threat was defined as the likelihood that an attack might be attempted and included specific types of attacks as well as strategic intent, "chatter," attractiveness of the targets within the urban area, and capabilities. Vulnerability was defined as the likelihood that an attack might succeed (although "succeed" was not defined nor were the parameters that were considered). Geographically-based risk expanded upon this by considering certain prevailing attributes intrinsic to the area that may further contribute to the level of risk; for example, proximity to national boundaries, population density and the number of visitors and commuters that pass through the urban area. Threat calculations included such things as total number of FBI investigations in the area, number of suspicious incidents that have occurred within the area, and the total number of visitors that come from countries of special interest. Grants and Training considered the process described above as more rigorous than previous analyses. The increased rigor is due, in part, to the more quantitative nature of the data being used and its specificity in terms of specific assets, specific attack scenarios, etc. The analysis included over 120,000 specific assets in 38 different asset types. Following this new methodology, not all of the urban areas that received funding in previous years were considered eligible for FY2006 funds. To receive a grant, urban areas also must have developed an urban area security strategy, a needs assessment tied to that strategy, and an investment plan that addresses those needs. The needs assessment considers a set of capabilities that DHS has determined are necessary to prevent, protect, and respond to various types of events. Urban areas assessed their current capabilities against these to determine where they fell short. This defined their needs. Grants were made to fund programs that DHS determined would yield the highest rate of return in meeting those needs. In the past, urban areas were allocated, a priori, a certain amount of funding for which it could apply. In FY2006, allocations were made competitively based on the investment programs submitted. A number of urban areas saw their FY2006 grant awards decline from the previous year's, while other saw theirs increase. Those whose allocations declined (including New York City and Washington, DC) adamantly voiced their concern that DHS's methodology, or its data, were flawed. DHS, at the time, defended its allocations saying they were based not just on risk, but on need, and the alignment of the investment strategies with identified needs. Since then, Secretary Chertoff has stated that the FY2007 process has introduced some "common sense" into the process. For the first time, urban areas have been divided into two tiers. Six urban areas categorized as tier 1 (i.e., areas associated with the highest risks) will receive 55% of the Urban Areas Security Initiative funds, the remaining 39 urban areas will receive the balance. Also, the number and types of infrastructure assets that figure into the analysis has been reduced (from over 120,000 to approximately 2,000). Only those assets, whose loss would have a national or regional economic impact (or impact military readiness) are being considered. Assets such as office buildings, monuments, (and presumably stadiums, casinos, theme parks, etc.), which were considered specifically in FY2006, will not be considered specifically in FY2007. The rationale for not including these assets is that concerns about them in the past were primarily casualty related, which will be captured instead by criteria related to population: total population, population density, and numbers of commuters and tourists. Even with these changes, however, the allocation of funds within each tier will still be competitive; based, again, on the ability of urban areas to align their proposals with identified needs and return on investment. The National Infrastructure Protection Plan (NIPP) is meant to provide a unifying structure for integrating critical infrastructure protection efforts, including those already underway, and to guide protection investments both within each sector and among sectors. The NIPP plans to use sector-level plans, to be developed cooperatively by Sector Specific Agencies and representatives of their sector, as its foundation. The NIPP outlines what would become a common framework by which each sector could identify critical assets, conduct risk assessments (by integrating threat, vulnerability and consequences), and, then, use the results to help direct resources toward those activities that can most reduce the risks for a given investment. The risk management process described in the National Infrastructure Protection Plan (NIPP) contains all of the elements described above. It calls for the setting of specific goals in terms of the security and recovery posture that the sectors wish to attain. It calls for the identification of assets that constitute each infrastructure and to screen these for criticality based on potential consequences. Factors to consider include the assets function, proximity to significant populations or other critical assets, and relative importance to the national economy. The NIPP defines risk as a being a function of consequences, vulnerability, and threat. It defines consequences as the negative effects on public health and safety, the economy, public confidence, and the functioning of government, that can be expected if an asset is damaged, destroyed, or disrupted by a terrorist attack or natural disaster. Consequences include impacts on human life and physical well-being, both direct and indirect economic impact (e.g., the cost to respond, cost to rebuild, downstream costs resulting from disruption of product or service, and long term environmental costs), impact on public confidence, and impact on governments' ability to maintain order and provide minimum essential services. It states that consequences should consider the worst-reasonable-case scenario. Vulnerability is defined as the likelihood that a characteristic of, or flaw in, an asset's design, location, security posture, process or operation renders it susceptible to destruction, incapacitation, or exploitation. Vulnerability assessments are to be scenario based, including specific attack tactics and weapons. Vulnerability assessments should consider operational, people, cyber, as well as physical issues. The NIPP defines threat as the likelihood that a particular asset will suffer an attack or incident, based on the intent and capability of an adversary or the probability of a natural event. Threat should consider methods and tactics, including physical and cyber, and should also consider insider threats as well as external threats. The NIPP calls for the assessment of these elements to be measured quantitatively if possible, or on a numeric scale if necessary, and combined mathematically to calculate a numerical risk score. Consideration of risk reduction measures is to follow a two-step process. The first step is to focus on those assets which have the highest risk scores. The second step is to identify protective measures expected to result in the greatest reduction of risk for any given investment in these high priority assets. Protective measures should include actions that can prevent, deter, or mitigate a threat, reduce a vulnerability, minimize the consequences, or enable timely and efficient response and recovery. According to the NIPP, some issues to consider when estimating cost-effectiveness are: lowering of coordination costs; long lead-time investments; appropriate roles for stakeholders; existing market incentives; and, public interests. Finally, metrics should be developed that can track the performance of the protective measures being implemented and which can be used to provide feedback to the risk management process. While the statements and documents referenced above allude to many of the steps outlined in the first part of this report, many questions still remain regarding process, methodology, criteria, etc. According the DHS Inspector General, the list of high-priority sites begun by DHS as part of Operation Liberty Shield eventually morphed into a much larger and broader list of infrastructure assets now called the National Asset Database. According to the Inspector General, as of January 2006, the Database included over 77,000 entries, covering all the critical infrastructure sectors. DHS continues to refine and populate the Database. The Database has generated considerable debate. A primary concern is that it includes thousands of entries that many consider not to be of national significance. Also, the Inspector General opined that it also did not include assets that many might consider to be of national significance. Other concerns include the accuracy and quality of the data included on each entry and an inconsistency of data from state to state, locality to locality (for example some regional mass transit system assets were characterized en masse, while others were characterized station-by-station). While ceding that quality and consistency of data were a problem early in the development of the Database, DHS has taken a number of steps to correct these problems. However, in response to concerns about the Database including assets that are hard to imagine being nationally significant, DHS asserts that the Database is an inventory of assets and not a list of critical assets. In other words, it represents a list of assets, supplied by states and localities, commercial and private databases and other sources, from which critical assets can be identified. This would appear to correspond with the initial step of a risk management process: identifying assets. Even so, critics feel that the Database should be purged of those assets that are found not to be of national significance. DHS has rejected this idea. On what basis did (or does) the Directorate select the 1,700 (or 600 or approximately 2000) high priority assets? According to the Undersecretary, in his testimony referenced above, the 1,700 assets were ones with a credible potential for loss of life and loss of citizen confidence and that these impacts would be felt nationally. He described these assets as "ones we cannot afford to lose." Roper, and other methodologies reviewed for this report, recommended the criteria for assessing the level of criticality be specific. For example, at what point is the impact of an attack felt nationally versus one felt primarily locally or regionally? How many casualties rise to the level of having a national impact? What level of economic impact or what measure of reduced confidence would rank an asset as nationally critical? Again, the answers to these questions would probably require a consensus among decision makers. An example of an analysis that provides more detail as to what might be considered nationally critical can be found in a white paper entitled Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System . The authors of the white paper, the Federal Reserve Board, U.S. Security Exchange Commission, and Office of the Comptroller of the Currency, determined that a disruption in the services of certain "core clearing and settlement" organizations could, by virtue of their market share, present a systemic risk to the smooth operations of the financial markets they service. The paper defined "systemic risk" as the risk that failure of one participant to meet its required obligations will cause other participants to be unable to meet their obligations when due, causing significant liquidity or credit problems and threatening the stability of financial markets. The white paper identified a threshold market share, above which a firm's plans associated with back-up capacity, geographic location, and recovery would be subject to review by the appropriate agency. According to the DHS Inspector General, in a second more detailed request to states for data to populate the National Asset Database, DHS offered more specific guidance for identifying "national level" critical infrastructure. For example: producers with herd of more than 20,000 bovine, 30,000 swine, 500,000 poultry or distribution to more than 10 states or production of 50,001-250,000 bushels of crops; chemical sites that could cause death or serious injury in the event of a chemical release and have greater than 300,000 persons within a 25-mile radius of the facility; major power generation facilities that exceed 2000MW and if successfully attacked would disrupt the regional electric grid; refineries with refining capacity in excess of 225,000 barrels per day; cruise ports/terminals located within urban centers with a population of greater than 500,000 or servicing greater than 10,000 passengers daily; seaports and facilities that service the Strategic Petroleum Reserve. These criteria are similar (but not necessarily the same) as those offered in the guidelines for the State Homeland Security Grants and the Urban Areas Security Initiative Grants. It is not known if the Directorate's internal activity uses these criteria. The Homeland Security Act assigned to the Directorate the responsibility of integrating all-source information in order to identify and assess the nature and scope of terrorist threats against the homeland and to detect and identify threats of terrorism against the United States. However, shortly after the act was passed, the Bush Administration, in January 2003, established the Terrorist Threat Integration Center (TTIC) and placed it within the Central Intelligence Agency. Many observers felt that the TTIC assumed many of the same responsibilities of the Information Analysis (IA) function of the Directorate. The Homeland Security Act designated DHS a member of the intelligence community and, and as such, was given a seat at the TTIC. Issues and concerns associated with the division of labor between TTIC and the Directorate, expressed at the time, are beyond the scope of this report. Passage of the Intelligence Reform and Terrorism Prevention Act ( P.L. 108-458 ), which created the position of Director of National Intelligence and created a National Counterterrorism Center within his office has raised additional questions. The 2005 reorganization of DHS moved the IA function out of the new Preparedness Directorate and put it directly under the Secretary. Regardless of the organizational changes that have occurred, there are two key questions that are relevant to this report. Is there a consistent characterization of the threat used throughout the intelligence community and made available to the Directorate and beyond to other stakeholders? Is that characterization used consistently to inform the teams sent out to do vulnerability assessments or those agencies and other stakeholders tasked with assessing the vulnerabilities of the sectors for which they are responsible? According to the National Infrastructure Protection Plan (NIPP), the Homeland Infrastructure Threat and Risk Analysis Center (HITRAC) will develop three types of threat analysis that can be used by each sector in their risk assessments. These products are: Common Threat Scenarios, General Threat Environment, and Specific Threat Information. The Common Threat Scenarios are descriptions ("detailed vignettes') of potential terrorist attack methods, based on known or desired capabilities of specific terrorist groups. The General Threat Environment analysis will be more sector- and sub-sector specific. According to the NIPP, each potential attack method will be cross-referenced with each potential set of targets across all sectors, based on the whether that attack scenario could achieve the goals and objectives of the attack. The resulting Terrorist Strategic Target Selection Matrix will help sectors narrow the range of threats they need to consider in their subsequent vulnerability, consequence, and risk assessments. In other words, a blank cell in the matrix indicates that the intelligence analysts do not think that particular attack scenario would likely be used or be successful against a particular target set. The Specific Threat Information is based on real-time intelligence information of explicit threats that could cause the nation's (or a sector's) alert level to rise. The General Threat Environment will be updated as needed based on Specific Threat Information. It is unlikely that earlier risk management activities benefitted from this analysis. Another issue is whether the Directorate values all threats equally. For example, Al Qaeda has demonstrated capabilities in a number of attack modes (e.g., bombs, hijacking and piloting planes). But, their capability in other attack modes are not necessarily as well developed. How does the Directorate consider this in their threat assessments? According to Government Accountability Office (GAO), the Directorate has developed what are called "benchmark scenarios," but was not yet able to assess the relative likelihood of one over the other. The Matrix referred to in the NIPP, to the extent it exists, could suggest that this may no longer be an issue. The testimony and statements of the Directorate officials cited above implied that the Directorate will either perform or lead vulnerability assessments in the field. However, many of the early efforts were performed by contractors or details from other agencies until the Directorate was more fully staffed. Also, it is not clear if the Directorate used the vulnerability assessments performed by other agencies or stakeholders in lieu of doing their own. A key question is whether or not contractors, details, or other agencies and stakeholders follow a similar protocol in doing their vulnerability assessments? The NIPP is suppose to supply that standardization. DHS will accept vulnerability assessments made with alternative methodologies, if they meet certain baseline criteria identified in the NIPP (see Appendix 3A ). For example, as a minimum, a sector's vulnerability assessment should consider not only physical security, but also personnel, cyber, and operational security. Dependencies and interdependencies are supposed to be considered. Also, current abilities to deter, detect, and delay attacks are to be considered. However, Congress might want to ensure that certain general considerations are included. What consequences does the Directorate consider when assessing risk? The testimony of the then Undersecretary mentioned that the criticality of an asset was measured in part by loss of life and loss of citizen confidence, and the Directorate's budget justification alludes to forecasting national security, economic, and public safety implications. HSPD-7 lists the types of attacks that animate national critical infrastructure policy. These are attacks that could: cause catastrophic health effects or mass casualties; impair federal agencies' ability to perform essential missions; undermine the ability of state and local governments' to maintain order and provide essential services; damage the orderly function of the economy; or undermine the public's morale or confidence. One could assume that the Directorate has considered these factors in the internal assessments of risk. The NIPP states that, at a minimum, assessments should focus on the two most fundamental impacts: the human and the most relevant direct economic impacts (e.g., cost to rebuild, cost to respond and recover, clearly identified costs resulting from the unavailability of product or service; long term environmental costs). But, are they all considered together? How are different consequences integrated into an overall risk rating for a given scenario? Does the Directorate weigh each category of consequence equally? HSPD-7 stated that the Secretary of Homeland Security, when identifying, prioritizing, and coordinating the protection of critical infrastructures, should emphasis those infrastructures that could be exploited to cause catastrophic health effects or mass casualties comparable to those from the use of a weapon of mass destruction. In this case, might preventing an attack on the Super Bowl take precedent over an attack on one of those financial "core clearing and settlement facilities" mentioned above, the destruction of which might significantly disrupt national financial markets, but not necessarily lead to loss of life? To what extent, if any, is the Directorate risk averse? Another question is how are these consequences measured? Are potential deaths based on experiential data or models or best estimates? How is confidence or morale, and the impact on morale measured? Are economic models used to determine economic impact? How are cascading effects due to interdependencies determined? How far down the chain of reactions does the Directorate consider? Recognizing the complexity of estimating some of these consequences, the NIPP states that assessment methodologies are required and that some standards for estimating consequences need to be developed. However, aside from referencing the modeling capabilities developed at the National Infrastructure Simulation and Analysis Center, the NIPP offers little in way of setting standards for what measures to use, and the assumptions that need to be made. The risk associated with a specific attack on an asset can be reduced by reducing the level of threat to it, by reducing its vulnerability to that threat, or by reducing the consequences or impact of an attack should it happen. This parallels the Bush Administration's overall strategy for homeland security: (1) prevent terrorist attacks, (2) reduce America's vulnerability to terrorism, and (3) minimize the damage and recover from attacks that do occur. The Department of Defense, the Central Intelligence Agency, the Federal Bureau of Investigations, elements of DHS's Border and Transportation Directorate, and other law enforcement and intelligence agencies have the primary role of reducing threat, by disrupting, finding, detaining, or eliminating individuals that threaten the United States. DHS's emergency preparedness and response activities address mitigating the consequences of an attack, through rapid response and quick recovery. The Directorate's critical infrastructure protection activities primarily address reducing an asset's vulnerability. As discussed above, it is doing so mainly by hardening the asset against attack, by improving the ability of those protecting the asset to deny access to the asset and to improve their ability to repulse an attack. This raises the question, however, of whether or not, and by what mechanism, are the various efforts to reduce threat (prevent), vulnerability (protect), and consequences (prepare) coordinated both within DHS and between DHS and other agencies and to what extent, and by what mechanism, are the allocation of federal resources to these three areas influenced at all by comparing the risk reduction achieved by each? For example, effective screening of people entering the country likely contributes greatly to reducing the risks associated with an attack on critical infrastructure. To what extent is the marginal risk reduction associated with an additional investment in the Department's border screening effort balanced against the marginal risk reduction associated with an additional investment in hardening assets. This would likely require a level of risk management currently beyond the Directorate's mandate. According to the NIPP, prioritizing protection activities should be a two step process. First, those critical assets that pose the greatest risks are addressed first. Protective measures for these assets are identified and their potential for reducing risk determined. Second, the amount of resources available is divided among these measures in a way that maximizes the reduction in risk. Presumably, according to the NIPP, DHS will use a similar approach in recommending budget levels for these and other federal programs that address infrastructure security needs as part of a National Critical Infrastructure and Key Resources Protection Annual Report to the Office of Management and Budget. In allocating funds in its Homeland Security Grants, its Urban Areas Security Initiative, and some of its more infrastructure-specific grants, DHS has resorted to ranking assets or geographic areas into tiers, based on the level or risk (or at least potential consequences) associated with them. Funds are then allocated to each tier and entities within each tier compete for those funds. DHS then ranks proposals based on a variety of factors including the proposal's contribution to risk reduction or the degree to which identified needs or vulnerabilities are addressed. While allocating resources primarily on risk-oriented cost-effectiveness seems relatively straightforward, it may not be easy to implement, or may it lead to a distribution of resources that is politically unpalatable. For example, depending on the budget and the protective measures proposed and their expected degree of effectiveness in lowering risk, it is conceivable that most of a given budget could go to a few areas or assets or that some areas or assets do not receive any funding. Alternatively, if proposals are only partially funded, it may be difficult to prorate the associated risk reduction. As Secretary Chertoff suggested, such a strategy may have to be modified by "common sense," something less than objective, and probably in need of explanation, if not consensus. DHS and the Directorate have been tasked with a very complex problem. Security oriented risk management is typically done at the site or facility level or at the corporate level. The Directorate is being asked to do this at the national level, assessing and comparing perhaps thousands of disparate sites and facilities it has judged as being nationally important. The Directorate is to consider not only economic impacts and loss of life, but also the possible impact on national morale and the ability of state and local governments to maintain order and deliver essential services. None of these are easy to measure and all are difficult to trade off one against the other, should the analysis come down to that. To determine the economic impact of the loss of an asset is more difficult than determining the effect on a company's bottom line. The Directorate has been instructed to determine economic impacts two to three levels through the supply chain. It is not clear how the Directorate can or intends to measure the impact on national morale associated with the loss of an asset, especially a cultural icon. Comparing the potential loss of life in one scenario with the potential loss of life in another scenario, while sensitive, presents a direct comparison. However, comparing the importance of an asset whose loss may result in a relatively small loss of life with another asset the loss of which might result in a large economic impact is much harder. The exercise will be less than perfect and probably less than objective. The Bush Administration and Congress are allocating resources in any event, so these choices are getting made implicitly. If such processes were more transparent, Congress could better oversee them and offer guidance if necessary. The 9/11 Commission, in discussing a need for a layered security system for public transportation systems, stated that the Transportation Security Administration should be able to identify for Congress the array of potential terrorist attacks, the layers of security in place, and the reliability provided by each layer. Expanding on this, the Directorate should be able to tell Congress what criteria it has used to select assets of national importance, the basic strategy it uses to determine which assets warrant additional protective measures, by how much these measures could reduce the risk to the nation, and how much these additional measures might cost. It is not clear that the Directorate has had a consistent systematic approach for identifying nationally critical assets, assessing the risks they pose, and using that information to inform cost-effective allocation of resources to protective action, especially in its early efforts. The NIPP appears to provide a framework for a written protocol that outlines specifically the steps taken in the risk assessment and risk management process and the assumptions, criteria, and tradeoffs that are made. While the NIPP lays out a clear process, it is not clear how transparent the implementation of the plan will be. DHS has stated that Section Specific Plans and their integration into a set of national priorities could be classified. Finally, Congress may choose to offer its guidance to the Directorate on some of these criteria or tradeoffs. To do so with the same systematic approach that the Directorate has been asked to do, the different committees with jurisdiction over different infrastructures may want to consider coordinating their advice. Carl Roper, Risk Management for Security Professionals, Butterworth-Heinemann, 1999. U.S. Coast Guard, Implementation of National Maritime Security Initiatives , Federal Register, Vol. 68, No. 126, July 1, 2003, pp 39240-39250. American Petroleum Institute and the National Petrochemical & Refiners Association, Security Vulnerability Assessment Methodology for the Petroleum and Petrochemical Industries , May 2003. U.S. Department of Energy, Office of Energy Assurance, Vulnerability Assessment Methodology, Electric Power Infrastructure (Draft) , September 30, 2002. National Communications Systems, Office of the Manager, Public Switched Network Security Assessment Guidelines , September 2000. Association of Metropolitan Sewerage Agencies, Protecting Wastewater Infrastructure Assets: Asset Based Vulnerability Checklist for Wastewater Utilities , 2002. Government Accountability Office, Homeland Security: Key Elements of a Risk Management Approach , GAO-02-150T, October 12, 2001. American Chemistry Council, the Chlorine Institute, and the Synthetic Organic Chemical Manufacturers Association, in their Site Security Guidelines for the U.S. Chemistry Industry . Argonne National Laboratory, et al., prepared for the Office of Energy Assurance, U.S. Department of Energy, Energy Infrastructure Vulnerability Survey Checklists , February 22, 2002. Department of Homeland Security. National Infrastructure Protection Plan . June 2006.
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The Homeland Security Act of 2002 (P.L. 107-296) and other Administration documents have assigned the Department of Homeland Security specific duties associated with coordinating the nation's efforts to protect its critical infrastructure, including using a risk management approach to set priorities. Many of these duties have been delegated to what is now called the National Protection and Programs Directorate. Risk assessment involves the integration of threat, vulnerability, and consequence information. Risk management involves deciding which risk reduction measures to take based on an agreed upon risk reduction strategy. Many models/methodologies have been developed by which threats, vulnerabilities, and consequences are integrated to determine risks and then used to inform the allocation of resources to reduce those risks. For the most part, these methodologies consist of the following elements, performed, more or less, in the following order. identify assets and identify which are most critical identify, characterize, and assess threats assess the vulnerability of critical assets to specific threats determine the risk (i.e., the expected consequences of specific types of attacks on specific assets) identify ways to reduce those risks prioritize risk reduction measures based on a strategy Beginning in 2003, the Department of Homeland Security has been accumulating a list of infrastructure assets (specific sites and facilities). From this list the Department selects high-priority assets that it judges to be critical from a national point of view, based on the potential consequences associated with their loss. The Department intends to assess the vulnerability of all the high-priority assets it has identified. Department officials have described, in very general terms, that these vulnerability and consequence assessments are used to determine the risk each asset poses to the nation. This risk assessment is then used to prioritize subsequent additional protection activities. While these statements allude to some of the steps mentioned above, they do so only in a most general way. With its release of the National Infrastructure Protection Plan in June 2006, the Department has laid out a much more detailed discussion of the risk management methodology it intends to use (or is using). The Department's efforts, to date, still raise several questions, ranging from the process and criteria used to populate its lists of assets, its prioritization strategy, and the extent to which the Department is coordinating its efforts with the intelligence community and other agencies both internal and external to the Department. This report will be updated as needed.
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Coal-fired power plants currently account for about 80% of CO 2 emissions from the U.S. electric power industry and about 33% of all U.S. CO 2 emissions. Accordingly, reducing CO 2 emissions from coal plants is a focus of many proposals for cutting greenhouse gas emissions. Options include capturing and sequestering the CO 2 emitted by coal plants, and/or replacing coal-fired generation with low- and zero-carbon sources of electric power, such as wind or nuclear power. Another option is to replace coal power with increased use of natural gas generation. Natural gas is not a zero-carbon fuel, but gas-fired power using modern generating technology releases less than half of the CO 2 per megawatt-hour (MWh) as a coal plant. Recent large increases in estimates of natural gas reserves and resources, especially from shale formations, have further fed interest in natural gas as a relatively low carbon energy option. One proposal is that the nation can and should achieve near-term reductions in carbon emissions by making more use of existing natural gas plants. This argument was made at an October 2009 Senate Energy and Natural Resources Committee hearing on The Role of Natural Gas in Mitigating Climate Change . An executive for a large natural gas pipeline company stated that "Just as natural gas plays a key role in meeting U.S. energy demands, it can also play a key role in providing meaningful, immediate , and verifiable [CO 2 ] emission reductions." [emphasis added] The witness for Calpine, a large operator of gas-fired power plants, stated that: I am here today to tell you that we could, today, simply through the increased use of existing natural-gas fired power plants, meaningfully reduce the CO 2 emissions of the power sector, immediately and for the foreseeable future. In other words, a near- and medium-term solution to our climate change challenge is at hand . No guesswork. No huge spending programs needed. That power would be reliable—available all day, every day. And if we embrace this solution with the right incentives, American business would continue to invest its own capital in existing proven technologies to build even more natural gas fired plants to dramatically further reduce emissions for the longer term. [emphasis added] Both of these statements emphasize the claimed immediate carbon reductions that can result from increased use of natural gas. This would be accomplished by squeezing more electricity from existing gas-fired power plants, so that coal-fired plants can be operated less and CO 2 emissions quickly and substantially reduced. This report provides an overview of the issues involved in displacing coal-fired generation with electricity from existing natural gas plants. This is a complex subject and the report does not seek to provide definitive answers. The report aims to highlight the key issues that Congress may consider in deciding whether to rely on, and encourage, displacement of coal-fired electricity with power from existing natural gas plants. The balance of the report is organized as follows: Background on gas-fired generation and capacity. Coal displacement feasibility issues. Policy considerations. The report also includes two appendices. Appendix A , Background on the Electric Power System, may be of particular value to readers relatively new to the subject. Appendix B provides information on the gas-burning combined cycle generating technology discussed in the report. Several topics are beyond the scope of this report: What would be the cost of a policy of displacing coal with natural gas ? The cost would depend on a host of uncertain variables, such as future natural gas and coal prices, any need to build additional pipeline and transmission line facilities, and the cost of carbon (if any). Could natural gas be burned on a large scale in existing coal plants? Assessing this option would require engineering analysis of the plants and determining how many coal plants have access to high capacity natural gas pipelines. How will circumstances change over time? For example, while existing natural gas plants may have enough excess capacity today to displace a material amount of coal generation, this could change in the future as load grows. What kind of existing natural gas plants could be used to displace coal? This report focuses on the potential for displacing coal generation with increased use of underutilized "combined cycle" generating plants, the most modern and efficient type of natural gas-fired power plants. Two other types of gas-fired plants have low utilization rates: peaking plants (stand-alone combustion turbines and diesel generators) and old steam-electric natural gas plants. These are not reviewed in the report because they are relatively inefficient and may not be designed or permitted for baseload operation. Addressing these issues would require computer modeling and engineering analysis beyond the scope of this report. As noted in the concluding section of the report, these issues, if of interest to Congress, could be part of a more comprehensive review of the potential for displacing coal with natural gas. The argument for displacing coal with natural gas rests on the fact that the United States has a large base of advanced technology, underutilized, gas-burning power plants. This section of the report describes how this reservoir of underutilized natural gas combined cycle (NGCC) plants came about, and why it may represent an option for reducing the use of coal plants. From the 1990s into this century, gas-fired power plants have constituted the vast majority of new generating capacity built in the United States. This development is illustrated by Figure 1 for the period 1990 to 2007. Minimal new coal capacity was constructed and the growth in nuclear capacity was limited to uprates to existing plants. Only wind capacity has challenged the pre-eminence of natural gas as the source of new generating capacity, and then only in the latter part of the 2000s when total capacity additions declined sharply. As shown in Figure 2 , this building boom doubled the natural gas share of total generating capacity between 1989 and 2007. Natural gas-fired capacity is now the largest component of the national generating fleet. Although natural gas is the largest source of generating capacity, it trails far behind coal as a source of actual electricity generation. In 2008, coal accounted for 49% of all electricity produced, compared to 21% for natural gas, 20% for nuclear power, and 6% for hydroelectric generation. The remainder of this section will explain why so much new gas-fired generation was built and why it is underutilized. Natural gas was the major source of new capacity in the 1990s and early 2000s in part by default. Nuclear and coal power have been burdened with cost, environmental, and (in the case of nuclear power) safety concerns. Oil-fired generation was essentially ruled out by the costs and supply risks of petroleum supplies. This left natural gas as the energy source for new non-renewable power plants. But in addition to the negatives that surrounded alternatives, gas fired capacity also grew because of favorable technological, cost, environmental, and power market characteristics. The new gas-fired plants constructed in the 1990s and subsequently were built around the latest design of combustion turbines—a specialized form of the same kind of technology used in a jet engine, but mounted on the ground and used to rotate a generator. Stand-alone combustion turbines were built to serve as peaking units that would operate only a few hundred hours a year. However, the most important technological development was the application of combustion turbines in modern natural gas combined cycle power plants. (For additional information see Appendix B .) These plants were often intended to serve as baseload generators which would operate 70% or more of the time. The NGCC has three important characteristics: The technology is very efficient , because it makes maximum use of the energy in the fuel through a two-step generating process that captures waste heat that would otherwise be lost. NGCC plants can be built r elatively quickly and cheaply . An NGCC plant costs roughly $1,200 per kilowatt of capacity, about half as much as for a coal-fired plant, and can be built in about two to three years from ground-breaking to operation. This compares to about to five to six years to build a coal plant. Coal plants also tend to have longer pre-construction planning and permitting phases. Combined cycle technology is suitable for relatively small scale and modular construction . NGCC plants can be economically built at unit sizes of about 100 MW, and larger projects can be constructed by adding units in a building block fashion over time. Coal plants in contrast are generally economical only at a unit size of several hundred megawatts. For the reasons discussed below, these characteristics made the NGCC an attractive technology option for the independent power producers that dominated the construction of new power plants in the 1990s and after. The construction of new gas-fired capacity was also encouraged by relatively low natural gas prices in the 1990s. As illustrated by Figure 3 , the spot price for natural gas hovered around $2.00 to $3.00 per MMBtu (nominal dollars) through the decade, and a widely held expectation was that gas prices would remain low into the future. The operation of NGCC plants, and natural gas plants generally, produce fewer harmful environmental impacts than coal-fired plants, and have been much easier to site and permit than coal plants. NGCC technology has fewer air emissions than coal plants in part because of the nature of the fuel, and in part because of the greater efficiency of the technology. For example, natural gas when burned inherently emits about half as much carbon dioxide as coal. However, because combined cycle plants are more efficient than typical existing coal plants in converting fuel into electricity, the difference in emissions is greater when measured in terms of CO 2 released per megawatt-hour of electricity produced. By this measure a modern combined cycle emits only about 40% of the CO 2 per MWh as a typical existing coal plant. Restructuring of the electric power industry (beginning in the late 1970s and accelerating in the 1990s) included federal and state policies that encouraged the separation of power generation and power plant construction from other utility functions. In the 1990s, new independent power producers (IPPs) bought power plants from utilities and constructed most of the new generating capacity. Because these companies sold power into competitive markets and did not have the security of regulated rates and guaranteed markets, they generally sought to minimize risks by constructing relatively low cost, quick-to-build, power plants. For these reasons, independent power producers built many NGCC plants, largely to meet baseload demand. As shown in Table 1 , between 1990 and 2007 over 168,000 MW of NGCC capacity was built at 345 plant sites. This was an enormous building program, equivalent to adding 23% to the entire national generating fleet that existed in 1990. However, the growth in generating capacity did not stop with new combined cycle plants. As also shown in Table 1 , another 89,843 MW of less efficient stand-alone peaking turbines were constructed, plus another 56,939 MW of other generating technologies. When all of this capacity is added together, generating capacity grew by 43% between 1990 and 2007. By the mid-2000s it was apparent that the combined cycle building boom had resulted in excess and underutilized generating capacity. Too many plants were built, in part because of questionable investment decisions by independent developers operating in an immature restructured power market. The capacity glut was compounded by a dramatic increase in gas prices after 2000. (See Figure 3 .) Even the high efficiency of the combined cycle plants could not compensate for gas prices that at times peaked above $10.00 per MMBtu, compared to $2.00 to $3.00 per MMBtu prices (nominal dollars) in the 1990s. The consequence of the combined cycle building boom and bust is that the fleet of NGCC plants has a large amount of unused generating capacity, as illustrated in Table 2 for a "study group" of large combined cycle plants defined for this report. Baseload operation can be reasonably defined as operation at an annual capacity factor of 70% or greater. As shown in Table 2 , only 13% of combined cycle capacity in the study group operated in this range in 2007. A third of the combined cycle capacity had a utilization rate of less than 30%; that is, the plants were the equivalent of idle more than 70% of the time. In 2007 the study group of NGCC plants had an average capacity factor of 42%. In contrast, the study group of coal plants had an average capacity factor of 75%. It is this mismatch between combined cycle and coal plant operating patterns—the former, low carbon emitting but underutilized; the latter, high carbon emitting and highly utilized—that creates the interest and perceived opportunity for displacing coal power with gas generation from existing plants. The maximum coal-fired generation and emissions that may be displaceable by existing NGCC plants is estimated in Table 3 and Table 4 . As noted above, the plants in the NGCC study group had an average capacity factor of 42% in 2007. As shown in the tables, if the utilization of this capacity could be essentially doubled to 85%, it would generate additional power equivalent to 32% of all coal-fired generation in 2007, and could displace about 19% of the CO 2 emissions associated with coal-fired generation of electricity. Although these calculations suggest that at most about a third of current (2007) coal-fired generation could be displaced by existing NGCC plants, it is unlikely that this maximum could actually be achieved. This section of the report will discuss issues that relate to the feasibility of actually displacing coal with gas from existing power plants. The issues are: Transmission system factors; System dispatch factors; Natural gas supply and price; and Natural gas transportation and storage. If an NGCC generating unit is located at the same plant site as a coal-fired generating unit, it is probably fair to assume that the NGCC unit can use the same transmission lines as the coal unit and can transmit its power to any load the coal unit is used to meet. However, in most cases coal units and NGCC units are built at separate locations and rely on different transmission paths to move their power. This means that there is no guarantee that the NGCC plant can send its power to the same loads as the coal plant and by doing so displace coal-fired generation. Even on a regional level, coal and NGCC plants are not necessarily located in the same areas. The maps in Figure 4 and Figure 5 show, respectively, the location of large coal and NGCC plants in the conterminous states. The maps show that in some cases coal and NGCC plants are in the same regions, such as east Texas. On the other hand, California has many NGCC plants and no coal plants, while the Ohio River valley has a dense concentration of coal plants and only a handful of NGCC plants. This section of the report will discuss three types of transmission system constraints that can prevent one power plant from meeting the load currently served by another plant. These limits on the "transmission interchangeability" of coal and NGCC plants are: Isolation of the Interconnections; Limited long-distance transmission capacity; and Transmission system congestion. The concluding part of this section presents an analysis of potential coal displacement by gas using the proximity of coal and existing NGCC plants as a proxy for transmission interchangeability. The electric power grid covering the conterminous states is divided into three "interconnections," Eastern, Western, and the ERCOT Interconnection that covers most of Texas ( Figure 6 ). These three interconnections operate in most respects as independent systems. There are only a handful of limited, low capacity links between the interconnections. Consequently, surplus capacity in one interconnection cannot be used to meet load in another interconnection. To illustrate with a hypothetical example, assume 1,000 MW of surplus NGCC capacity in the northern part of the ERCOT Interconnection, and a desired use for that capacity to displace coal in Oklahoma, which is in the Eastern Interconnection. Although the regions are adjacent, from the standpoint of the power grid they are electrically isolated from each other because, with very limited exceptions, the ERCOT and Eastern Interconnections are not linked. Therefore the displacement cannot take place. Within each interconnection the network of power lines, generating plants, and electricity consumers are linked together. The grid operates in some respects like a single giant machine in which, for example, a disturbance in the operation of the transmission system in Maine is detectible by system monitors in Florida. Although all generators and loads within an interconnection are linked by the grid, the power grid is not designed to move large amounts of power long distances. The grid was not built in accordance with a "master plan," analogous to the Interstate Highway System. Transmission lines were first built in the early 20 th century by single utilities to move electricity to population centers from nearby power plants. As generation and transmission technology advanced, the distances between power plants and loads increased, but the model of a single entity building lines within its service territory to supply its own load still predominated. Over time the local grids began to interconnect, due to utilities building jointly owned power plants and because power companies began to grasp the economic and reliability benefits of being able to exchange power. Nonetheless, this pattern of development did not emphasize the construction of very long-distance inter-regional lines. Consequently, the capacity to move power long distances within interconnections is limited. For example, while a generator in Maine and a load in Florida are connected by the grid, it is not feasible to send power from Maine to Florida because the transmission lines do not have enough capacity to move the electricity. Additionally, over distances of hundreds of miles, losses occur with transmission of electricity, making the transfer uneconomic. Power can be moved long distances most efficiently by the highest voltage transmission lines, but only a small portion of the national grid consists of these types of lines. Much of the debate over the proposed increased use of renewable power involves how to build and pay for the new transmission lines that would be needed to move wind and solar power from remote locations to population centers, in part to displace fossil-fueled power plants. Coal displacement by existing gas-fired generators is a similar type of problem. If the existing transmission network does not have sufficient capacity in the right places, then it may not be practical to move gas-powered electricity to loads currently served by coal plants without investing in upgraded or new power lines. Even across relatively short distances, options for moving power can be restricted by transmission line congestion. Transmission congestion occurs when use of a power line is limited to prevent overloading that can lead to failure of the line. Congestion can occur throughout a power system: Regional congestion: for example, power flows are limited between the eastern and western parts of the PJM power pool (covering much of the Midwest and middle Atlantic regions) by congestion. In the western states, examples of congested links include power flows between Montana and the Pacific Northwest, and between Utah and Nevada. State-level congestion: for example, congestion restricts power flows into and out of southwestern Connecticut. Local congestion: These are "load pockets" with limited ability to import power. New York City is an example of a load pocket. Transmission congestion can increase costs to consumers by forcing utilities to depend on nearby inefficient power plants to meet load instead of importing power from more distant but less costly units. Studies suggest that the annual costs of transmission congestion range from the hundreds of millions to billions of dollars. However, for the purposes of this report the key aspect of transmission system congestion is not the cost impact, but the restrictions it imposes on power flows. Because of congestion, it may not be possible to ship power from an underutilized NGCC plant to a load served by coal power, because the transmission path available to the combined cycle is too congested to carry the electricity. The solution for congestion is not necessarily massive transmission construction. For example, DOE found that in the Eastern Interconnection "a relatively small portion of constrained transmission capacity causes the bulk of the congestion cost that is passed through to consumers. This means that a relatively small number of selective additions to transmission capacity could lead to major economic benefits for many consumers." However, in the absence of this construction, congestion remains a constraint on the choice of power plants available to meet a load. Transmission system limitations on coal displacement can be rigorously analyzed using sophisticated computer models. Such an analysis is beyond the scope of this report. However, a first approach to the significance of transmission factors can be made by examining how close coal plants are to existing NGCC plants. The assumption behind such a "proximity analysis" is that the closer an NGCC plant is to a coal plant, the more likely that the NGCC plant will connect to the same transmission lines as the coal plant. If the NGCC plant has this comparable transmission access—that is, the combined cycle is "transmission interchangeable" with the coal plant—it potentially could serve the same load as the coal plant and supplant the coal generation. CRS performed a proximity analysis for the coal plants and NGCC plants in the study groups defined for this report. The analysis was conducted as follows, in all cases using 2007 data (the most recent pre-recession year for which complete data were available): (1) Study groups of large coal plants and NGCC plants were defined. The plants in these groups accounted for the great majority of power plant coal generation and NGCC generation in 2007. (2) The latitude and longitude of each plant (provided by EIA) was entered into a geographical information system (GIS). (3) The GIS was used to identify all coal plants with one or more existing NGCC plants within a ten mile radius. The hypothetical surplus generation for each NGCC plant within the ten-mile radius was calculated and assumed to displace generation from the coal plant. If one NGCC plant was within ten miles of two or more coal plants, it was allocated first to the coal plant with the largest estimated CO 2 emissions in 2007. (4) A second version of Step 3 was performed which included all NGCC plants within 25 miles of a coal plant. The maps in Figure 7 and Figure 8 show the locations of the coal plants assumed to have generation displaced by existing NGCC plants. This analysis is not a forecast. It is a first approach to estimating coal displacement potential based on one factor, the proximity of coal and existing NGCC plants. Many other factors, including, for example, how utility systems are dispatched, the configuration and capacity of the electric power transmission system, fuel cost and availability, natural gas transportation capacity, and power system reliability requirements, would influence actual coal displacement potential. These other factors could increase or decrease the potential displacement. Table 5 , which gives the results of the proximity analysis, shows in column 4 that existing NGCC plants located near coal plants might be able to achieve 15% to 28% of the potential maximum coal generation and CO 2 emissions displacement. However, the displaceable coal generation and emissions (see Table 3 and Table 4 ) are only a fraction of total U.S. coal generation and CO 2 . As shown in Table 5 , column 5, the hypothetical displaced coal generation and emissions are equivalent to 5% to 9% of total U.S. coal generation, and 3% to 5% of the associated CO 2 emissions. Given its limitations, the analysis suggests that existing NGCC plants near coal plants may be able to account for something on the order of 30% or less of the displaceable coal-fired generation and CO 2 emissions. Greater displacement of coal by existing NGCC plants would depend on more distant NGCC plants which would be less clearly "transmission interchangeable" with coal plants. This emphasizes the importance that the configuration and capacity of the transmission system will likely play in determining the actual potential for displacing coal with power from existing NGCC plants. System dispatch refers to the pattern in which power plants are turned on and off, and their power output ramped up and down, to meet changing load patterns. (For additional discussion, see Appendix A .) The concept of displacing coal generation with power from existing NGCC plants assumes that the NGCC plants are underutilized or idle when coal plants are operating. However, this is not necessarily the case. This can be illustrated by examining the monthly utilization of the coal and gas-fired plants in the study groups ( Figure 9 ). As shown in the figure, the utilization of coal and combined cycle plants follows a similar pattern: utilization is highest in the summer and, to a lesser degree, in the winter, and lowest in the "shoulder" months of the spring and fall. The figure illustrates that when coal plant operation is at its highest and the most coal power can be displaced, NGCC plant operation is also at its highest and surplus gas-fired generation is therefore at its lowest. Figure 9 is a national, monthly picture of power plant dispatch. System dispatch actually takes place moment-to-moment, and at this level of detail the complexities in displacing coal with gas become further evident. Figure 10 graphically illustrates hourly dispatch at Plant Barry, a power plant in Alabama that has both coal and NGCC units at the same site. The data is for November 2007, the month in which the NGCC units at Plant Barry had their lowest generation for the year and therefore, in principle, the most excess capacity available to displace coal. However, the graphic illustrates that even during this low utilization month for the NGCC units, there are still periods when the units were running near maximum output (e.g., November 6 to 9, and 27 to 30). While there were periods when coal plant output was high and the NGCC units were shut down (e.g., November 4), creating the maximum opportunity to displace coal with gas, there were also periods when the NGCC units were available but potential coal displacement was reduced by limited operation of the coal units (e.g., November 18). These examples illustrate the level of detailed analysis required to realistically estimate the potential for changing plant dispatch to displace coal with natural gas. Large scale displacement of coal-fired generation by existing NGCC plants could result in a significant increase in U.S. gas demand. Table 6 compares the actual demand for natural gas for all purposes in 2007 with an illustrative estimate of the additional gas supplies needed if all of the displaceable coal-fired generation (see Table 3 ) were actually replaced by existing NGCC plants. As discussed above, this maximum displacement of coal by existing NGCC plants may be unachievable, so results are also shown for a half and a quarter of the maximum. Total U.S. natural gas demand in 2007 was the third highest on record. The illustrative estimates of increased gas demand for coal displacement would increase the already high level of demand in 2007 by another 5% to 20% ( Table 6 , line 3). This increased demand might be met with a combination of increased domestic production, pipeline imports from Canada, Alaskan supplies if the trans-Alaskan gas pipeline is built, and imports of liquefied natural gas by tanker from overseas. For example, one reason for the interest in coal displacement by gas is the recent increase in natural gas available from shale formations and other "unconventional" sources of gas. The combination of higher production (up a projected 3.7% for 2009) and reduced demand due to the 2008-2009 recession has contributed to a sharp decline in gas prices from the peaks experienced earlier in the 2000s (see Figure 3 ). For the longer term, there is widespread optimism concerning the gas supply and price outlook. An example is a late 2009 assessment by the Federal Energy Regulatory Commission (FERC): The long-term [gas production] story is one of abundance. In June, the Potential Gas Committee, an independent group that develops biennial assessments of gas resources, raised its estimate to over 2 quadrillion cubic feet, one-third more than its previous level and almost 100 years of gas production at current consumption levels. The large increase is almost entirely due to improvements in our ability to harvest gas from shale and get it to markets at a reasonable cost…. As we have indicated before, gas production is becoming more like mining and manufacturing with high probability of production from each well drilled. This environment should have profound effects on the traditional boom and bust cycle of gas production. EIA's most recent long-term forecasts of natural gas wellhead prices for 2020 and 2030 have dropped, respectively, 13% and 11% from its prior forecast, "due to a more rapid ramping up of shale gas production, particularly after 2015. [The forecast] assumes a larger resource base for natural gas, based on a reevaluation of shale gas and other resources…." Even with the current optimism concerning natural gas supplies and prices, it is important to note that natural gas markets have historically been exceptionally difficult to forecast. According to an EIA self-assessment of its long-term projections, "The fuel with the largest difference between the projections and actual data has generally been natural gas." In the 1990s gas prices were expected to be low; by 2004 prices were much higher than expected and major gas buyers were reported to be "increasingly critical of the nation's system for forecasting natural gas supply and demand." Subsequently, as shown in Figure 3 , prices plummeted. In the October 2009 Senate hearing on natural gas, a cautionary note was sounded by the witness for Dow Chemical Company: Although increased supply from shale gas appears to have changed the production profile, we have seen similar scenarios occur after past spikes. In 1998, significant new imports from Canada came on line; in 2002-2003, there were new supplies from the Gulf of Mexico and in 2005, new discoveries in the Rockies were brought into play. In each case, the initial hopes were too high and production increases were not as large as initially expected. In 2009, as in 2002, 2004 and 2006, drilling has declined dramatically as price has fallen. After each trough, natural gas demand and price rise once the economy turns, signaling the production community to increase drilling. During the lag between the pricing signals and new production, only one mechanism exists to rebalance supply and demand: demand destruction brought about by price spikes. Demand destruction is an antiseptic economic term for job destruction. Although multiple options may exist to meet the additional natural gas demand created by a coal displacement policy, the significance of the potential increase in demand should not be underestimated. The lowest level of increased gas demand shown in Table 6 , 1,194 trillion Btus (TBtus), would raise total demand to 24,886 TBtus. In its most recent Reference Case forecast, the U.S. Energy Information Administration (EIA) does not envision this demand level being reached until after 2028. The middle estimate of increased gas demand shown in Table 6 would raise total gas demand to 26,080 TBtus, which is larger than EIA's forecast for 2035. A policy of rapid change from coal to gas could therefore involve a significant acceleration of gas demand growth compared to EIA's current estimates. Gas-fired power plants and other gas consumers receive fuel through a vast national pipeline network. At the end of 2008 the network consisted of 293,000 miles of interstate and intrastate pipelines with the capacity to move up to 215 billion cubic feet (BCF) of gas daily. The capacity of this system is sized to meet peak loads, such as during the winter residential heating season. Peak demands are also supported by a system of natural gas storage facilities connected to the pipeline network. These storage facilities hold gas which is produced during lower demand periods until it is needed to meet peak demand. It seems unlikely that on a national, aggregate scale, pipeline capacity would be a constraint on coal displacement by existing NGCC plants. The natural gas consumption required for the maximum potential coal displacement by existing NGCC plants (see Table 3 ) equate to about 15 BCF per day of natural gas, or about 7% of existing pipeline capacity. A 7% increase in peak demand would appear manageable given the planned expansions to the pipeline system (see below). But irrespective of national system-wide capacity, a different question is whether increased use of gas-fired plants could overstress the specific pipelines and storage facilities that serve those plants. This may be an important issue because the increase in gas demand from existing NGCC plants for coal displacement could be large relative to the amount of gas currently used for power generation. As shown in Table 7 , illustrative estimates of this increase range from 16% to 66%, which means that the facilities serving those plants could have to handle a material increase in gas demand. A balancing factor is that the natural gas industry has been effective at adding large amounts of capacity to the pipeline system. Capacity additions in 2007 and 2008 were, respectively, 14.9 and 44.6 BCF per day, and as of mid-2009, 31.9 BCF per day was under construction or approved for construction and completion in 2009. Another 62.1 BCF per day of capacity additions are planned for 2010 and 2011, which is equivalent to almost 30% of current capacity. It appears that, given sufficient lead time, the natural gas industry has the ability to install large amounts of additional transportation capacity to meet increased demand. As discussed in this report, the potential for displacing coal consumption in the power sector by making greater use of existing NGCC power plants depends on numerous factors. These include: The amount of excess NGCC generating capacity available; The current operating patterns of coal and NGCC plants, and the amount of flexibility power system operators have for changing those patterns; Whether or not the transmission grid can deliver power from existing NGCC plants to loads currently served by coal plants; and Whether there is sufficient natural gas supply, and pipeline and gas storage capacity, to deliver large amounts of additional fuel to gas-fired power plants; and consideration of the environmental impacts of increasing gas production. All of these factors have a time dimension. For example, while existing NGCC plants may have sufficient excess capacity today to displace a material amount of coal generation, this could change in the future as load grows. Therefore a full analysis of the potential for gas displacement of coal must take into account future conditions, not just a snapshot of the current situation. There is also the question of cost which, as discussed in the introduction, is beyond the scope of this report. Clearly, the cost of a coal displacement by gas policy is highly uncertain, and depends on such factors as future natural gas and coal prices, any need to build additional pipeline and transmission line facilities, and the cost of carbon (if any). The economic impacts of a coal displacement by gas policy could also spill over to other parts of the economy. For example, increased power sector demand could drive up the price of natural gas, to the detriment of other residential, commercial, and industrial users. Decreased production of coal and increased production of natural gas would pose varying costs and benefits for states and regions. As a step toward addressing these questions, Congress may consider chartering a rigorous study of the potential for displacing coal with power from existing gas-fired power plants. Such a study would require sophisticated computer modeling to simulate the operation of the power system, to determine whether there is sufficient excess gas fired capacity and the supporting transmission and other infrastructure to displace a significant volume of coal over the near term. This kind of study might also estimate the direct costs of a gas for coal policy, such as the impact on electric rates. Because of the large number of uncertainties, such as the future price of natural gas, the study would have to consider several scenarios. Such a study could help Congress judge whether there is sufficient potential to further explore a policy of replacing coal generation with increased output from existing gas-fired plants. Congress may also consider chartering an analysis of the potential for directly using gas in existing coal-fired plants, either as a supplemental or primary fuel. As noted in the introduction, large scale use of gas in coal plants raises engineering issues and the question of how many coal plants have adequate pipeline connections. However, burning gas in coal plants would make it possible to displace coal while still using existing transmission lines to meet load, which could be a significant advantage. Appendix A. Background on the Electric Power System This appendix provides background on the components and operation of the electric power system. Readers familiar with these topics may wish to skim or skip this appendix. Power Plants and Power Lines Power plants, transmission systems, and distribution systems constitute the major components of the existing electric power system, as briefly described and illustrated below ( Figure A -1 ): Generating plants produce electricity, using either combustible fuels such as coal, natural gas, and biomass; or non-combustible energy sources such as wind, solar energy, or nuclear fuel. Transmission lines carry electricity from power plants to demand centers. The higher the voltage of a transmission line the more power it can carry and the fewer the line losses during transmission. Current policy discussions focus on the high voltage network (230 kilovolts (kV) rating and greater) used to move large amounts of power long distances. Near customers a step-down transformer reduces voltage so the power can be carried by low voltage distribution lines for final delivery. Capacity and Energy Capacity is the potential instantaneous output of a generating or storage unit, measured in watts. Energy is the actual amount of electricity generated by a power plant or released by a storage device during a time period, measured in watt-hours. The units are usually expressed in thousands (kilowatts and kilowatt-hours) or millions (megawatts and megawatt-hours). For example, the maximum amount of power a 1,000 megawatt (MW) power plant can generate in a year is 8.76 million megawatt-hours (MWh), calculated as: 1,000 MW x 8,760 hours in a year = 8.76 million MWh. Capacity Factor Capacity factor is a standard measure of how intensively a power plant is utilized. It is the ratio of how much electricity a power plant produced over a period of time, typically a year, compared to how much electricity the plant could have produced if it operated continuously at full output. For example, as shown in the prior paragraph, the maximum possible output of a 1,000 MW power plant in one year is 8.76 million MWh. Assume that during a year the plant actually produced only 7.0 million MWh. In this case the plant's capacity factor would be 7.0 million MWh ÷ 8.76 million MWh = 81%. Generation and Load The demand for electricity ("load") faced by an electric power system varies moment to moment with changes in business and residential activity and the weather. Load begins growing in the morning as people waken, peaks in the early afternoon, and bottoms-out in the late evening and early morning. Figure A -2 shows an illustrative daily load curve. The daily load shape dictates how electric power systems are operated. As shown in Figure A -2 , there is a minimum demand for electricity that occurs throughout the day. This base level of demand is met with "baseload" generating units which have low variable operating costs. Baseload units can also meet some of the demand above the base, and can reduce output when demand is unusually low. The units do this by "ramping" generation up and down to meet fluctuations in demand. The greater part of the daily up and down swings in demand is met with "intermediate" units (also referred to as load-following or cycling units). These units can quickly change their output to match the change in demand (that is, they have a fast "ramp rate"). Load-following plants can also serve as "spinning reserve" units that are running but not putting power on the grid, and are immediately available to meet unanticipated increases in load or to back up other units that go off-line due to breakdowns. The highest daily loads are met with peaking units. These units are typically the most expensive to operate, but can quickly start up and shut down to meet brief peaks in demand. Peaking units also serve as spinning reserve and as "quick start" units able to go from shutdown to full load in minutes. A peaking unit typically operates for only a few hundred hours a year. Economic Dispatch and Heat Rate The generating units available to meet system load are "dispatched" (put on-line) in order of lowest variable cost. This is referred to as the "economic dispatch" of a power system's plants. For a plant that uses combustible fuels (such as coal or natural gas) a key driver of variable costs is the efficiency with which the plant converts fuel to electricity, as measured by the plant's "heat rate." This is the fuel input in British Thermal Units (btus) needed to produce one kilowatt-hour of electricity output. A lower heat rate equates with greater efficiency and lower variable costs. Other things (most importantly, fuel and environmental compliance costs) being equal, the lower a plant's heat rate, the higher it will stand in the economic dispatch priority order. Heat rates are inapplicable to plants that do not use combustible fuels, such as nuclear and non-biomass renewable plants. As an illustration of economic dispatch, consider a utility system with coal, nuclear, geothermal, natural gas combined cycle, and natural gas peaking units in its system: (1) Nuclear, coal, and geothermal baseload units, which are expensive to build but have low fuel costs and therefore low variable costs, will be the first units to be put on-line. Other than for planned and forced maintenance, these baseload generators will run throughout the year. (2) Combined cycle units, which are very efficient but use more expensive natural gas as a fuel, will meet intermediate load. These cycling plants will ramp up and down during the day, and will be turned on and off dozens of times a year. (3) Peaking plants, using combustion turbines, are relatively inefficient and burn natural gas. They run only as needed to meet the highest loads. An exception to this straightforward economic dispatch are "variable renewable" power plants—wind and solar—that do not fall neatly into the categories of baseload, intermediate, and peaking plants. Variable renewable generation is used as available to meet demand. Because these resources have very low variable costs they are ideally used to displace generation from gas-fired combined cycle plants and peaking units with higher variable costs. However, if wind or solar generation is available when demand is low (such as a weekend or, in the case of wind, in the evening), the renewable output could displace coal generation. Power systems must meet all firm loads at all times, but variable renewable plants do not have firm levels of output because they depend on the weather. They are not firm resources because there is no guarantee that the plant can generate at a specific load level at a given point in time. Variable renewable generation can be made firm by linking wind and solar plants to electricity storage, but with current technology, storage options are limited and expensive. Appendix B. Combined Cycle Technology The combined cycle achieves a high level of efficiency by capturing waste heat that would otherwise be lost in the generating process. As shown in Figure B -1 for a combined cycle unit fueled by natural gas, the gas is fed into a combustion turbine which burns the fuel to power a generator. The exhaust from the combustion turbine is then directed to a specialized type of boiler (the heat recovery steam generator or HRSG) where the heat in the exhaust gases is used to produce steam, which in turn drives a second generator. In combined heat and power (CHP) applications, part of the steam is used to support an industrial process or to provide space heating, further increasing the total energy efficiency of the system. Combined cycles are built in different configurations, depending in part on the amount of capacity needed. Figure B -1 illustrates a configuration in which one combustion turbine feeds one HRSG; this is referred to as "1x1" design. In higher capacity 2x1 or 3x1 designs, multiple combustion turbines feed a single HRSG. These options illustrate the modular (or "building block") nature of combined cycles, which facilitates rapid and flexible construction of new generating units to match changes in demand. In the United States the predominant fuel used in combined cycle plants is natural gas. Combined cycles can also be designed to use fuel oil as a primary or backup fuel. Gasified coal can also be used as the fuel in an integrated gasification combined cycle (IGCC) plant. There are currently two prototype IGCC plant operating in the United States and a commercial-scale unit is under construction in Indiana.
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Reducing carbon dioxide emissions from coal plants is a focus of many proposals for cutting greenhouse gas emissions. One option is to replace some coal power with natural gas generation, a relatively low carbon source of electricity, by increasing the power output from currently underutilized natural gas plants. This report provides an overview of the issues involved in displacing coal-fired generation with electricity from existing natural gas plants. This is a complex subject and the report does not seek to provide definitive answers. The report aims to highlight the key issues that Congress may want to consider in deciding whether to rely on, and encourage, displacement of coal-fired electricity with power from existing natural gas plants. The report finds that the potential for displacing coal by making greater use of existing gas-fired power plants depends on numerous factors. These include: The amount of excess natural gas-fired generating capacity available. The current operating patterns of coal and gas plants, and the amount of flexibility power system operators have for changing those patterns. Whether or not the transmission grid can deliver power from existing gas power plants to loads currently served by coal plants. Whether there is sufficient natural gas supply, and pipeline and gas storage capacity, to deliver large amounts of additional fuel to gas-fired power plants. There is also the question of the cost of a coal displacement by gas policy, and the impacts of such a policy on the economy, regions, and states. All of these factors have a time dimension. For example, while existing natural gas power plants may have sufficient excess capacity today to displace a material amount of coal generation, this could change in the future as load grows. Therefore a full analysis of the potential for gas displacement of coal must take into account future conditions, not just a snapshot of the current situation. As a step toward addressing these questions, Congress may consider chartering a rigorous study of the potential for displacing coal with power from existing gas-fired power plants. Such a study would require sophisticated computer modeling to simulate the operation of the power system to determine whether there is sufficient excess gas fired capacity, and the supporting transmission and other infrastructure, to displace a material volume of coal over the near term. Such a study could help Congress judge whether there is sufficient potential to further explore a policy of replacing coal generation with increased output from existing gas-fired plants.
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The Pacific Alliance is a regional integration initiative comprised of Chile, Colombia, Mexico, and Peru. Costa Rica and Panama are candidates for becoming full members. The Alliance was created on April 28, 2011, in Lima, Peru, when the heads of state of Chile, Colombia, Mexico, and Peru signed a Presidential Declaration for the Pacific Alliance , now known as the Lima Declaration, to facilitate the free flow of goods, services, capital, and people. The United States officially joined the Alliance as an observer on July 18, 2013. The project was an initiative of then-Peruvian President Alan Garcia, who extended the invitation to his counterparts in Chile, Colombia, and Mexico, with the purpose of deepening the integration of these economies. The initiative was developed as a way to supplement existing trade agreements among the four countries. The goal is for the four countries to act as a unified economic bloc to negotiate and trade with other countries. The Alliance is making efforts to liberalize trade in goods and services, open foreign investment, integrate securities markets, and allow the free movement of people among member countries. It has shared values in regard to the respect for rule of law, democracy, and protection of human rights, though the current focus is on liberalizing and increasing trade and investment. Member governments have committed to open markets, free trade policies, fiscal stability, openness to foreign investment, and strengthening trade relations with the Asia-Pacific region. Pacific Alliance members are aiming to form deeper integration that boosts economic growth, development, and competitiveness of their economies by progressively seeking free movement of goods, services, capital, and people. Another key goal is for the Alliance to become a platform for economic and trade integration with a clear focus on the Asia-Pacific region. The stated objectives of the Pacific Alliance consist of the following: Build, in a participatory and consensual manner, an area of deep economic integration and to move gradually toward the free circulation of goods, services, capital, and people. Promote the growth, development and competitiveness of the Parties' economies, aiming at achieving greater welfare, overcoming socioeconomic inequalities, and achieving greater social inclusion of their residents. Become a platform for political articulation, and economic and trade integration, while projecting these strengths to the rest of the world, particularly the Asia-Pacific region. The Alliance was formally established in a Framework Agreement on June 6, 2012, during a presidential summit in Antofagasta, Chile. This agreement is the legal instrument that creates the institutional basis of the regional integration initiative. It also defines the objectives of the alliance and establishes the requirements for the future participation of other countries. The four members already have in place bilateral free trade agreements amongst each other and have agreed to coordinate efforts regarding development agencies, electronic trade, services, and tourism. The Pacific Alliance is the first major trade integration effort in the region since the creation of the Southern Common Market (Mercosur) over 20 years ago. The framework agreement contains the parameters, institutional architecture, and rules that govern the Alliance. It establishes certain requirements for a country to be a member of the Alliance. These requirements state that Alliance members must be democracies; practice the separation of the powers of state; and protect, promote, and guarantee human rights and fundamental liberties. A key requirement is that member countries must have existing bilateral trade agreements with all other member countries. As shown in Figure 1 , current members of the Pacific Alliance are Chile, Colombia, Mexico, and Peru. The economies of the four countries are among the most liberalized in the world. Chile has 22 free trade agreements linking it to 60 countries, including the European Union (EU), the United States, China, Japan, and South Korea. Colombia has 12 free trade agreements (FTAs) involving 30 countries, while Mexico has 12 FTAs with 44 countries, including the United States, China, and the EU. Peru has 15 FTAs with 50 countries. Pacific Alliance countries have a total of 15 FTAs with countries in the Asia-Pacific region. In comparison, Mercosur has four FTAs. Both Mexico and Chile are also members of the Organization for Economic Cooperation and Development (OECD), and Colombia has applied for membership. The coming together of these four countries indicates that they have similar political and economic objectives, recognize their commitment to free trade, and are interested in increasing trade ties with the Asia-Pacific region. Costa Rica is a candidate to become the Alliance's first new member. In February 2014, Costa Rica signed a Declaration on the Intent to the Framework Agreement, which establishes the roadmap for Costa Rica to become a full member of the Alliance. It must comply with the requirement to have FTAs with each of the member countries. Costa Rican President Solís has said he supports enrollment, but has asked several agencies for input in evaluating the possible effects of becoming a full member country. Costa Rica currently has trade agreements in force with Chile, Mexico, and Peru, and has signed an FTA with Colombia that is awaiting approval. Panama is also a candidate for joining once it complies with all the requirements. It has free trade agreements in force with Chile and Peru, and has an agreement with Colombia that was signed in September 2013 and is awaiting approval. Panama has also initiated FTA negotiations with Mexico. Panama and Costa Rica have an FTA that entered into force on November 23, 2008. The Pacific Alliance has 42 observer countries: the United States, Australia, Austria, Belgium, Canada, China, Costa Rica, Denmark, Dominican Republic, Ecuador, El Salvador, Finland, France, Georgia, Germany, Greece, Guatemala, Haiti, Honduras, Hungary, India, Indonesia, Israel, Italy, Japan, Morocco, Netherlands, New Zealand, Panama, Paraguay, Poland, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, Trinidad and Tobago, Turkey, United Kingdom, and Uruguay. Under Article 10 of the Framework Agreement, countries that have FTAs with at least half of the member countries may apply for observer status to the Pacific Alliance. Their status as observer countries will be approved only upon unanimous consent of the Council of Ministers. The Council of Ministers is responsible for defining the conditions under which a country may participate as an observer. While their role is limited, observer countries are able to build relationships with Alliance members and other observer countries through ongoing activities and programs related to trade, market access to Asian and other global markets, small and medium enterprises, science and technology, education and other trade promotional opportunities. Some analysts state that observers to the Alliance may benefit from gaining increased access to Asia Pacific trade links. Observer status may help countries better understand the issues being negotiated in the Alliance and could help a country ultimately decide if wants to join as a member. One of the goals in the case of Australia, for example, would be to diversify trade by going beyond supplying the energy and minerals that have dominated its trade with Asia. While that particular trade pattern has led to a substantial increase in Australia's gross domestic product, it has not resulted in higher productivity, which would be necessary to raise living standards. In the case of Spain, Spanish Prime Minister Mariano Rajoy stated that the alliance could be a gateway to the booming Asia-Pacific region. Other European leaders have made similar statements. The Presidents of the four countries make up the final decision-making body of the Alliance. They meet at formal presidential summits in different locations. In addition, there are several organizational institutions that are responsible for overseeing the objectives and technical aspects of the Alliance. The Council of Ministers is comprised of the foreign affairs and economic ministers of member countries. The council is responsible for making major decisions related to the objectives of the alliance; evaluating progress and results; approving programs and activities; defining the political guidelines related to the integration process; and other related activities. The High Level Group consists of member countries' vice-ministers of foreign affairs, commerce, and trade. It is charged with assessing the progress made by the technical working groups; identifying new areas in which the Alliance can further its objectives; and preparing proposals for interacting or cooperating with other entities or regional groups. The Pacific Alliance countries established numerous working groups to address specific aspects of the negotiations and internal matters. Some of these issues, such as government procurement and regulatory cooperation, are related to provisions that are covered in existing FTAs and to ongoing discussions in the TPP negotiations. Working groups include the following: Institutional Affairs. This working group was created to focus on commitments made by the High Level Group with regard to issues such as institutions, conflict resolution, rules and guidelines, and legal affairs. The group is also charged with writing pertinent procedural guidelines for the Alliance's internal organizations and groups. Regulatory Coherence. This group aims to establish tools for the implementation of policies for greater transparency, public consultation, regulatory impact, and simplification of government regulations. Trade and Integration Group. This group focuses on the trade integration of Pacific Alliance members. The goal is to move progressively closer to the free movement of goods and services and generate a greater dynamism in the flow of trade between countries. The group is active in negotiating provisions on tariff elimination, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, trade facilitation, and customs cooperation. Business Council Committee of Experts. This group was created to represent business interests and to analyze topics recommended by member country business sectors. The business committee serves as a coordinating body and liaison between private sector interests and proposals and the Pacific Alliance. Public Purchasing /Government Procurement. This group focuses on establishing commitments on government procurement opportunities for Pacific Alliance countries. Technical Cooperation. This group helps to promote broad cooperation among member countries with a special focus on the environment and climate change, innovation, science and technology, social development, academic and student exchange, and tourism. Communication strategy. This working group designs and implements communication strategies to help the Pacific Alliance achieve worldwide recognition as a model for integration, economic and commercial development, competitiveness, and effective cooperation among its members in the global economy. Movement of Business People and Facilitation of Migration. One of the priorities of the Pacific Alliance is the free movement of business people and the facilitation of migration transit, including cooperation with immigration officials and the consular police. This group focuses on migratory movement and the free flow of business people, consular cooperation and work-study programs for students, as well as cooperation and information exchange on migration flows. Intellectual Property. This working group focuses on exploring methods for closer cooperation among member countries in order to strengthen intellectual property rights protection in the region. Small and Medium-Sized Enterprises (SMEs). This technical group was designed to deepen the coordination of best public policy practices that support, strengthen, and modernize small and medium-sized enterprises. Services and Capital. This group focuses on services trade, including e-commerce, investment negotiations, cross-border trade in services, financial services, telecommunications, air and maritime transport, and professional engineering services. This group also works on the integrated stock exchanges among member countries. External Relations Group. The purpose of this group is to design a strategy for external relations with observer countries and third parties to help promote the objectives of the Alliance. Fiscal Transparency. The governments of Pacific Alliance countries are committed to fiscal transparency and the fight against tax evasion. They agreed to incorporate high standard tax information exchange policies. This technical group is working on concluding a Pacific Alliance tax information exchange agreement. Leaders of the member countries of the Pacific Alliance have held numerous presidential summits. These include the following: 1. Lima, Peru, April 28, 2011. The Heads of State of Chile, Colombia, Mexico, and Peru agreed on the Declaration of Lima establishing the Pacific Alliance with the goal of advancing towards the free flow of goods, service, capital, and people. Panama was invited to participate in the process as an observer. 2. Merida, Mexico, December 4, 2011. The Presidents of the four Pacific Alliance countries agreed to sign a Pacific Alliance Treaty within six months. 3. Cartagena, Colombia , March 15, 2012 (vía teleconference). During this conference, Costa Rica was included as an observer. 4. Antofagasta, Chile, June 6, 2012 . The four countries formally entered into a Framework Agreement establishing the Pacific Alliance. The Framework Agreement is a legal instrument creating the institutional basis of the initiative, defining its objectives, and establishing the requirements for future negotiations and participation of other countries in the region. 5. Cádiz, Spain, November 17, 2012 . Mexico announced the exemption of visa requirements for Colombians and Peruvians for up to 180 days. Australia, Canada, Spain, New Zealand and Uruguay were welcomed as observers. 6. Santiago, Chile, January 26, 2013. The four Heads of State agreed that the negotiations that were underway at the time would be concluded by June 30, 2013. 7. Cali, Colombia , May 23, 2013. The four countries invited Costa Rica to become the Alliance's first new member. The Alliance also announced an agreement to remove tariffs on 90% of the goods traded within the bloc and completed negotiations on trade facilitation and customs cooperation provisions. Over 450 business representatives from 14 countries attended the summit. 8. Cartagena, Colombia, February 10, 2014 . Presidents of Pacific Alliance countries signed the Additional Protocol of the Framework Agreement for the Pacific Alliance. The Additional Protocol immediately eliminated 92% of tariffs between members, and gradually will phase out the remaining 8% of tariffs over a seven-year period. 9. Punta Mita, Mexico, June 19 -20, 2014 . The four presidents signed the Declaration of Punta Mita, by which they seek to strengthen the objectives and guidelines of the Alliance, including the free movement of goods and services, capital and people. They announced the approval to incorporate the Mexican Stock Exchange into the common stock exchange, the Latin American Integrated Market, or the Mercado Integrado Latinoamericano (MILA), which is expected in the fourth quarter of 2014. Other highlights of the summit included the signing of an Inter-institutional Agreement for a Work and Holiday Program, the launch of a scholarship program, and the announcement of a plan for promoting small businesses through financing, investment, and support networks. Two new countries were admitted as observers: Belgium and Trinidad and Tobago. 10. Paracas, Peru , July 1-3, 2015 . Mexico handed over the pro tempore presidency of the Pacific Alliance to Peru. The four presidents reaffirmed their commitment to the principles included in the Framework Agreement and to continuing their cooperative efforts to achieve higher economic growth, promote economic development, increase competitiveness, and diversify trade flows to the Asia-Pacific region. They also expressed their willingness to continue strengthening cooperation with observer states. During this Summit 10 new countries were admitted as observers: Austria, Denmark, Georgia, Greece, Haiti, Hungary, Indonesia, Poland, Sweden and Thailand. The four countries have taken numerous steps to accomplish their objectives. In addition to eliminating tariffs between member countries, they are organizing trade promotion activities; facilitating the movement of tourists and business people among member countries; liberalizing services trade; integrating their stock markets; and opening joint embassies in various countries. Alliance members have embraced open trade since the 1980s and 1990s, either through unilateral trade liberalization or through FTAs. They signed an agreement in 2013 to eliminate tariffs on 92% of merchandise trade, with the remainder to be freed by 2020. The parliaments of all four countries have approved the agreement and it is expected to take effect in the first half of 2016. Members have actively participated in bilateral and multilateral trade liberalization and have aligned with countries that are also seeking to accomplish, bilaterally and regionally, what has not been possible to accomplish through the World Trade Organization (WTO). They have entered into FTAs with all other Alliance countries and also with the United States, Canada, and the EU. They all have trade linkages with Asian countries through regional trade agreements or by other means. China, Japan, South Korea, and Singapore, and India have all concluded agreements with at least two Pacific Alliance members. While these agreements may have significantly liberalized trade, some are more comprehensive than others and not all have brought tariff levels down to zero. The trade promotion agencies of Chile, Colombia, Mexico, and Peru (ProChile, Proexport Colombia, ProMexico, and PromPeru) are combining their efforts to promote exports, attract foreign direct investment, and promote tourism in the Alliance countries. They have worked together to program activities in 18 countries, including Australia, Canada, China, Colombia, France, Germany, India, Japan, Mexico, the Netherlands, Peru, Russia, South Korea, Spain, Switzerland, Taiwan, Turkey, and the United Arab Emirates. These activities include major business forums for entrepreneurship and innovation, meetings of tourism operators for the design of products and packages, educational seminars, trade fairs with emphasis on agribusiness, and other trade promotion activities, many of which involve small and medium-sized businesses. The Declaration of Lima established that the Alliance would prioritize the movement of business people and the facilitation of migration transit. This provision is intended to facilitate not only the movement of business people, but also tourists and those in transit between the member countries. Alliance members view the free movement of people as a tool for achieving deeper integration, growth, and competitiveness. In November 2012, Mexico announced the elimination of visas for nationals from Colombia and Peru for stays of up to 180 days. Chilean nationals were already able to travel to Mexico without visas. Mexico's removal of visa requirements includes any activities for which travelers have received no income, such as tourism, transit, or business travel. In May 2013, Peru announced the elimination of visas for business people from Chile, Colombia, and Mexico for up to 183 days, provided that they carry out an unpaid activity in the country. Member countries also adopted measures for greater mobility of people from member countries for periods up to six months, provided that the activities they carry out are unpaid. Alliance members are currently working on expanded facilitation measures for migration transit, agreements for the greater mobility of young people to travel and work, and mechanisms for consular cooperation. The Alliance seeks to achieve the free movement of services and capital between its members, basing its work on two major goals: 1) to position itself as an attractive destination for investment and trade in services, and 2) to increase investment flows and trade in services among its members and with the rest of the world. It established a joint committee to improve the investment climate and boost services trade. The Pacific Alliance's Group of Services and Capital is working to establish conditions that will facilitate and promote trade in services and intra-regional investment. It completed negotiations on chapters on services trade, investment, electronic commerce, maritime services, and telecommunications. In 2011, Chile, Colombia, and Peru integrated their stock exchanges through the formation of the Latin American Integrated Market, or the MILA. On July 24, 2014, S&P Dow Jones Indices, a provider of financial market indices, announced the launch of the S&P MILA Pacific Alliance Indices. Mexico's stock exchange carried out its first operation as a member of the MILA on December 2, 2014. Member countries have signed various agreements to share use of their facilities or embassies and consulates to further advance the objectives of the integration process. As part of these agreements, joint embassies are now in operation in Ghana (Chile, Colombia, Mexico, and Peru), Vietnam (Colombia and Peru), Morocco (Chile and Colombia), Algeria (Chile and Colombia), Azerbaijan (Chile and Colombia), and a diplomatic mission to the Organization for Cooperation and Economic Development (Chile and Colombia). In addition, Mexico and Colombia are to open an embassy in Singapore. The Alliance expects that by having joint embassies, they can strengthen their presence around the world and reduce the operation costs of these missions. Up until 2013, Pacific Alliance members had some of the fastest-growing economies in the region. In 2013, Peru had the highest percentage change in real GDP at 5.7%, compared to 2.9% for the entire Latin American region. In 2015, GDP growth was 0.0% for all of Latin America and less than 3% for each of the Pacific Alliance countries (see Table 1 ). The four Latin American countries account for 37% of Latin America's population, 35% of Latin America's nominal GDP, 46% of exports and 50% of total imports. Mexico, however, accounts for much of the economic strength of the group. It represents 57% of the Alliance's population, 61% of the GDP, and 70% of exports as shown in Table 1 . In 2014, foreign direct investment (FDI) flows into Latin America and the Caribbean (LAC) fell by about 16% to $158.8 billion. Inflows to Pacific Alliance countries also decreased, by 23% to $68.5 billion (see Table 2 ). In 2013, inflows reached a record high of $190.0 billion. This was 4% above the 2012 level and continued an upward trend beginning in 2009. The recent decline in FDI inflows and outflows were likely driven by the decline of prices in export commodities and the economic slowdown in the region. FDI remains important for the four economies. Pacific Alliance countries have accounted for over 40% of FDI flows to LAC countries since 2009 as shown in Table 2 . As shown in Figure 2 , the United States is a significant trading partner for all four countries. It is by far Mexico's most important trading partner, accounting for 49.1% of Mexico's imports and 78.8% of Mexico's exports in 2013. The United States is the leading supplier of goods imported by all four members. In exports, the United States ranks among the top two destinations for exports from these countries. China also is a significant trading partner for member countries and, in the case of Chile, ranks first among its export markets. U.S. merchandise imports from Pacific Alliance countries totaled $320.7 billion in 2013, a 1% increase over the 2012 amount of $318.0 billion. U.S. imports from all four countries increased 113% between 2003 and 2013. Mexico supplies 87% of U.S. imports from the Pacific Alliance as shown in Figure 3 . Exports to Pacific Alliance countries totaled $272.1 billion in 2013, a 5% increase over the 2012 amount of $260.4 billion. U.S. exports to these countries increased nearly 160% between 2003 and 2013. Mexico accounts for over 80% of U.S. exports to the four countries as shown in Figure 3 . Vehicles and vehicle parts rank first among U.S. imports from the four countries, accounting for 19% of the total; followed by electrical machinery, televisions, parts, and accessories (18%); mineral fuels (16%); nuclear reactors and mechanical appliances (13%); and natural or cultured pearls and imitation jewelry (4%). Leading U.S. export items to all Pacific Alliance countries include nuclear reactors, machinery, and mechanical appliances (17% of total); electrical machinery, televisions, parts, and accessories (15% of total); mineral fuels (14% of total); vehicles (9% of total); and plastics (6% of total). A key difference between the Pacific Alliance and other Latin American regional integration initiatives is its overt, outward-oriented focus, whereas historically, Latin American trade pacts have been more inward-oriented, such as the South American trading bloc Mercosur. Some analysts see the Pacific Alliance as a potential rival to Mercosur, the Common Market of the South, which has not yet achieved its goal of a common market. If the Alliance proves successful, it could put pressure on Brazil and other Mercosur countries to adopt more outward-looking and open trade policies. Some observers view the Pacific Alliance as a "convergence experiment" within a complex web of free trade agreements in Latin America. It is different from other initiatives because it represents a more pragmatic approach to build upon existing FTAs for further economic integration and to serve as an export platform to the Asia-Pacific region. Major strengths of the Alliance are the shared values among member countries, the high level of expertise among the negotiators, and the experience of all four countries in negotiating free trade agreements. All four countries have experienced negotiators who worked on past agreements and are part of the institutions that have been created thus far as part of the Alliance. Businesses are expressing much interest in the Alliance. They are actively participating in the numerous trade events organized by the Alliance and look upon its numerous accomplishments that have been achieved in such a short period of time as positive signals for trade and investment opportunities. The U.S. Chamber of Commerce supports the establishment of trade ties with Pacific Alliance countries. On October 10, 2013, it hosted a forum with Pacific Alliance finance ministers in Washington, DC. Many U.S. businesses have participated in the two matchmaking forums organized by the Alliance. As the four countries deepen their efforts and add new members to the group, they may face challenges in sustaining the current dynamism and focus. One of the major challenges is that trade among the partner countries is low and the countries are a long way from exporting goods entirely made within the region. Member countries may have to make considerable efforts and heavily involve the private sector to create supply chains. They may have to focus on developing the appropriate policies to create conditions within the region that would allow for the development of supply chains. There also may be challenges in increasing trade linkages with Asian countries. Attempts to expand trade liberalization measures with other countries may prove difficult because of the potential complexities in coordinating and managing these efforts. Although the Alliance has drawn much international attention, the future of the regional trade initiative is uncertain. According to one Latin America policy expert, there may be a "disconnect to some extent between some of the great projections and expectations and the real continuing deficiencies in key areas like infrastructure." One of the major strengths of the initiative is that member countries share similar economic goals. These similarities can provide the pragmatic flexibility to move forward together on their objectives. As long as member countries focus on trade and investment, and not politics, the likelihood for deeper integration may be greater. Some observers believe that the Pacific Alliance can serve as a "hub for knitting together FTAs with Latin American partners and linking up to the proposed Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership." Other observers contend that the Alliance may fall victim to past patterns of regional initiatives and lose its momentum. The government of Chilean President Michelle Bachelet expressed concerns about moving ahead with the Pacific Alliance if it meant leaving other countries in the region behind. In June 2014, Chile's former President Ricardo Lagos and Brazil's former President Luiz Inacio Lula da Silva expressed their view that the Alliance would be more effective in achieving its goals by first deepening the trade relationship with Argentina and Brazil. These views may have prompted the Alliance to reach out to representatives from South America's big trade bloc Mercosur. Three of the four Pacific Alliance members (Chile, Mexico, and Peru) are parties to the Trans-Pacific Partnership agreement, a proposed FTA among 12 countries, including the United States, which aims to liberalize trade in goods and services, remove barriers to foreign investment, and enhance trade rules and disciplines on a range of issues. While the Pacific Alliance has a larger scope than the proposed TPP since it involves the free movement of business people for certain time periods and an integration of the stock markets of member countries, numerous observers have noted that the two could be complementary agreements.
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The Pacific Alliance is a regional integration initiative formed by Chile, Colombia, Mexico, and Peru on April 28, 2011. Its main purpose is for members to form a regional trading bloc and forge stronger economic ties with the Asia-Pacific region. Costa Rica and Panama are candidates to become full members once they meet certain requirements. The United States joined the Alliance as an observer on July 18, 2013. The United States has free trade agreements with all four countries and has significant trade and foreign policy ties with the region. The Pacific Alliance is of interest to Congress because of the role of the United States as an observer country and also because of the strong linkages between the United States and the member countries. It may also be of interest to Congress in the context of the proposed Trans-Pacific Partnership (TPP) agreement. Three of the four Pacific Alliance member countries are parties to the TPP. The Alliance was officially created when the heads of state of Chile, Colombia, Mexico, and Peru signed a Presidential Declaration for the Pacific Alliance, now known as the Lima Declaration. The objectives are to build an area of deep economic integration; to move gradually toward the free circulation of goods, services, capital, and persons; to promote economic development, regional competiveness, and greater social welfare; and to become a platform for trade integration with the rest of the world, with a special emphasis on the Asia-Pacific region. One of the requirements for membership is that a country must have free trade agreements with all other member countries. The four member countries have embraced free trade as far back as the 1980s and have multiple free trade agreements with many countries, including the United States, Canada, China, and the European Union. They represent 37% of Latin America's population, 35% of its total GDP; 46% of its exports, and 50% of its imports. Mexico accounts for much of the economic strength of the group, representing 61% of the combined gross domestic product. Observer countries play an important role within the Alliance. Being an observer country may help a country better understand the issues being negotiated and also provides opportunities for participation in activities such as trade forums and educational seminars. The Alliance has 42 observer countries, including the United States, Australia, Canada, China, several Central and South American countries, numerous European countries, Israel, Japan, Turkey, and others. The Alliance's approach to trade integration is often looked upon as a pragmatic way of deepening economic ties. It is more outward focused than other regional initiatives such as the Common Market of the South (Mercosur). Another unique characteristic is that the four member countries share similar economic and political ideals and are moving forward quickly to accomplish their goals. Member countries have signed various agreements to share use of their facilities or embassies and consulates to further advance the objectives of the integration process. In February 2014, Presidents of Pacific Alliance countries signed the Additional Protocol of the Framework Agreement, which immediately eliminated 92% of tariffs among members. Some analysts see the Pacific Alliance as a potential rival to Mercosur and have noted that it could put pressure on other Latin American countries to pursue more market-opening policies. The Alliance has a larger scope than free trade agreements, such the proposed TPP, since the Alliance involves the free movement of people and includes measures to integrate the stock markets of member countries.
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Immigration has not been a front-burner issue for the 112 th Congress. Unlike in some past years, there has been little discussion in this Congress of comprehensive immigration reform legislation, which typically has encompassed border security, employment eligibility verification, temporary worker programs, permanent admissions, and unauthorized aliens, among other issues. The 112 th Congress has, however, taken legislative action on some immigration-related measures. The Consolidated Appropriations Act, 2012 ( P.L. 112-74 ) contains provisions on border security, visa security, tourist visas, refugees, and other immigration issues. P.L. 112-176 extends the authorization for four immigration programs (EB-5 visa program, E-Verify, Conrad State program, and special immigrant religious worker program) for three years, until September 30, 2015. Legislation has also been enacted on military service-based immigration benefits ( P.L. 112-58 ), border tunnels ( P.L. 112-127 ), the Border Enforcement Security Task Force (BEST) initiative ( P.L. 112-205 ), and E-2 treaty investor visas ( P.L. 112-130 ). In addition, the House and Senate have each passed other immigration-related legislation. Both houses have passed different bills ( H.R. 4970 , S. 1925 ) to reauthorize the Violence Against Women Act (VAWA). The House has passed bills that would reform permanent employment-based and family-based admissions ( H.R. 3012 ); create new visa categories for prospective LPRs with graduate degrees in science, technology, engineering, or mathematics (STEM) fields ( H.R. 6429 ); and reauthorize the H-1C temporary worker category for nurses ( H.R. 1933 ). It also has passed legislation on border security at and between ports of entry ( H.R. 1299 ) and student visa reform ( H.R. 3120 ). Among the other subjects of immigration-related legislation before the 112 th Congress are victims of trafficking ( S. 1301 , H.R. 2830 ), immigrant detention ( H.R. 1932 ), and diversity visas ( H.R. 704 ). This report discusses these and other immigration-related issues that have received legislative action or are of significant congressional interest in the 112 th Congress. Department of Homeland Security (DHS) appropriations are addressed in a separate report and, for the most part, are not covered here. DHS is charged with protecting U.S. borders from weapons of mass destruction, terrorists, smugglers, and unauthorized aliens. Border security involves securing the many means by which people and things can enter the country. Operationally, this means controlling the official ports of entry (POE) through which legitimate travelers and commerce enter the country, and patrolling the nation's land and maritime borders to safeguard against and interdict illegal entries. At ports of entry, the U.S. Customs and Border Protection (CBP) Office of Field Operations is responsible for conducting immigration, customs, and agricultural inspections of travelers seeking admission to the United States. Between POEs, CBP's border patrol is responsible for enforcing U.S. immigration law and other federal laws along the border and for preventing unlawful entries into the United States. In the course of discharging its duties, the border patrol patrols 8,500 miles of U.S. international borders with Mexico and Canada and the coastal waters around Florida and Puerto Rico. Border security has been an important issue for the last several Congresses, with much of the debate focused on whether DHS has sufficient resources to fulfill its border security mission. Some Members of Congress have argued that Congress should not consider other reforms to the immigration system, including any proposed legalization provisions or changes to the family- or employment-based visas systems, until DHS is better able to secure the border. With apprehensions of unauthorized immigrants at a 42-year low, administration officials have argued that significant progress has been made at the border, though continued investments are needed. The following discussion focuses on key border-related provisions that have been considered by the 112 th Congress and may be considered in the future concerning staffing and enforcement at and between POEs, including on federal lands. The overarching immigration challenge at POEs is to prevent terrorists and unauthorized migrants from being admitted to the United States, while also facilitating legal migration flows. This challenge translates into policy questions about funding for various CBP screening and enforcement programs, including the number of CBP officers at POEs, which has grown from 17,881 in FY2005 to 21,186 in FY2012. Three hundred additional CBP officers were funded during the FY2012 appropriations process, and several other bills that would address additional POE staffing increases have been considered in the 112 th Congress. For example, the Secure Border Act of 2012 ( H.R. 1299 ), passed by the House in May 2012, would direct DHS to develop metrics to measure security at ports of entry and to estimate the required number of CBP officers at POEs. The Department of Homeland Security Authorization (DHSA) Act of 2011 ( S. 1546 ), as reported by the Senate Homeland Security and Governmental Affairs Committee, would direct DHS to develop a workforce staffing model and to ensure that CBP has instituted an outbound inspections program at land, air, and maritime ports of entry. The Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ( P.L. 104-208 , Div. C), as amended, requires DHS to maintain an automated, biometric entry-exit system that collects a record of arrival and departure for every alien arriving to and departing from the United States. The U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program is responsible for collecting and storing biometric and biographic data about foreign visitors to the United States, and for providing biometric and biographic information about U.S. visitors to other components within DHS and other federal agencies. US-VISIT, which is active at all POEs, has been a subject of debate because it does not collect biometric data from all visitors entering the United States and does not collect any biometric data from visitors leaving the United States, potentially weakening its effectiveness as an enforcement tool. (CBP collects biographic data from all visitors lawfully admitted to the United States; from certain people exiting through land ports; and, based on carrier information, from all passengers departing though air and sea ports.) Department of Homeland Security Authorization bills, as ordered to be reported by the House Homeland Security Committee ( H.R. 3116 ) and as reported by the Senate Homeland Security and Governmental Affairs Committee ( S. 1546 ), would require DHS to develop a plan for implementing a biometric exit system. Between ports of entry, congressional attention in recent years has focused on border patrol staffing, surveillance technology, and fencing and other physical barriers. One effect of increased border enforcement has been that smugglers increasingly have turned to cross-border tunnels, particularly for moving illegal drugs into the United States. To combat this trend, Congress passed the Border Tunnel Prevention Act of 2012 ( P.L. 112-127 ), which creates a new federal crime relating to the unlawful construction or use of an underground tunnel between the United States and another country, and requires DHS to submit annual reports to Congress on the investigations of unlawful tunnels between Mexico and the United States. A new border patrol national strategy published in May 2012 continues to emphasize staffing, surveillance, and infrastructure, with an increased focus on intelligence and risk management to allocate enforcement resources efficiently. House and Senate FY2012 DHS authorization and appropriations bills include related provisions, as discussed below. In other related legislative action, Congress has passed the Jaime Zapata Border Enforcement Security Task Force Act ( P.L. 112-205 ), which provides statutory authority for the Border Enforcement Security Task Force. Congress may also take additional action on proposals to broaden DHS authority to conduct enforcement activities on federal lands and waive environmental and other regulations and to address concerns about metrics for measuring border security. With ongoing support from Congress, DHS has substantially increased border patrol staffing along the Southwest and northern borders over the last decade, with total border patrol staffing increasing from 9,821 in FY2001 to 21,370 for FY2012, including 1,000 border patrol agents added by the FY2010 Border Security Supplemental ( P.L. 111-230 ) and funded again in P.L. 112-74 . A number of bills have been introduced in the 112 th Congress to authorize further growth in the border patrol and/or to direct the Department of Defense (DOD) to deploy National Guard troops to the Southwest border. For several years, Congress has supported a series of DHS programs aimed at achieving "border situational awareness." Through these programs, CBP agents track movement in border areas, identify and classify (i.e., prioritize) illegal entries, correlate entries with the positions of nearby agents, and use this information to make tactical interdiction decisions. DHS's primary effort to provide such an integrated surveillance system between 2006 and 2011 was known as SBInet. But cost overruns, technical problems, and scheduling delays led the agency to terminate the SBInet contract in January 2011 in favor of a new Arizona Border Technology Plan that relies on a broader mix of off-the-shelf surveillance technology and continued investment in SBInet-style integrated surveillance towers. The new plan has been a subject of some scrutiny. P.L. 112-74 provides $400 million for border security fencing and technology for FY2012, $128 million less than the President's request, and both chambers have recommended additional cuts in FY2013. A pair of recent U.S. Government Accountability Office (GAO) reviews of the Arizona Technology plan found that DHS has not documented the analysis justifying the specific technologies being proposed; has not defined metrics to assess the plan; and has not developed robust life-cycle cost estimates for the plan. Recent Congresses have also supported DHS's use of surveillance aircraft, including unmanned aerial systems (UAS). Several bills in the current Congress would authorize additional collaboration between DHS and DOD on aerial surveillance, though questions have been raised about privacy and safety concerns with respect to increased domestic use of UAS. Since Congress passed the Secure Fence Act of 2006, DHS has installed over 400 miles of pedestrian fencing and vehicle barriers along the Southwest border. As of August 2012, DHS reports a total of 352 miles of pedestrian fencing and 299 miles of vehicle fencing in place along the Southwest border, along with 36 miles of secondary fencing. This represents 99.8% of the 652 miles of total fencing and barriers that CBP plans to install, and 93.1% of the 700 miles of fencing and barriers specified by Congress in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 , Div. E). Several pieces of legislation introduced in the 112 th Congress would authorize or require additional fencing and barriers. Since 2006, DHS's U.S. Immigration and Customs Enforcement (ICE) has partnered with federal, state, local, and foreign law enforcement in a pilot program known as the Border Enforcement Security Task Force (BEST) initiative. The BEST initiative fosters coordination among law enforcement officials in border communities through of a series of multi-agency teams developed to identify, disrupt, and dismantle criminal organizations posing significant threats to border security. The Jaime Zapata Border Enforcement Security Task Force Act ( H.R. 915 ), as passed by the House in May 2012, would provide statutory authority for the BEST program and would authorize program funding for FY2012-FY2016. The act also would require annual reports on the program's effectiveness. In August 2012, the Senate Homeland Security and Governmental Affairs Committee reported H.R. 915 without the funding authorization (given that the initiative is already operational) and without authority to fund foreign law enforcement agencies. In November, the House approved a motion to suspend the rules and agree to the Senate version of the bill; the President signed the bill into law ( P.L. 112-205 ) on December 7, 2012. Over 800 miles of the Southwest border and over 1,000 miles of the northern border consist of national forests and parks and other federal lands. The 112 th Congress has held hearings on challenges associated with immigration enforcement on federal lands. Historically, these challenges have included jurisdictional conflicts between the border patrol and agencies within the Departments of the Interior (DOI) and Agriculture (USDA) that are responsible for law enforcement on federal borderlands, and lawsuits filed under environmental laws and regulations that have blocked or delayed fence construction. Administration officials report that recent memoranda of agreement among DHS, DOI, and USDA have led to greater cooperation with respect to immigration enforcement on federal lands, and legislation passed between 1996 and 2006 gave DHS broad authority to waive environmental statutes and other requirements that might otherwise delay construction. Nonetheless, a recent GAO report recommended that additional steps be taken to improve information sharing and interagency communication. Legislation has been introduced in the 112 th Congress that would waive application of certain environmental laws to border enforcement activities on lands near the border and would allow DHS to conduct certain security activities on federal lands without permission from DOI or USDA, including routine motorized patrols and deployment of temporary tactical infrastructure. Obama Administration officials have described the Southwest border as being "more secure than ever," but some Members of Congress question the Administration's metrics for measuring border security. For many years, DHS and its predecessor, the Immigration and Naturalization Service, have used apprehensions by the border patrol as a proxy measure of illegal entries (and thus, of border security), but analysts consider apprehensions an imperfect measure. CBP plans to begin using a new "border conditions index" in 2013; the index reportedly will include apprehensions as one of several elements in an effort to more comprehensively describe security, trade and tourism conditions, and quality of life on the border. Some Members of Congress have expressed skepticism about the border conditions index. Members also have expressed frustration that DHS in 2010 stopped publishing annual estimates of the number of miles of the border under "operational" or "effective" control. The Border Security Act of 2012 ( H.R. 1299 ), as passed by the House, would direct DHS to either (1) develop a strategy for achieving operational control of the border as defined in section two of the Secure Fence Act of 2006 ( P.L. 109-367 ) as "the prevention of all unlawful entries into the United States," or (2) work with a Department of Energy National Laboratory to develop a new metric for border security between ports of entry. H.R. 1299 also would direct DHS to develop metrics to measure the effectiveness of border security at ports of entry. Employment eligibility verification has received attention in the 112 th Congress. Several related bills have been introduced, including the Legal Workforce Act ( H.R. 2885 ), which was ordered reported by the House Judiciary Committee in September 2011. An earlier version of this bill ( H.R. 2164 ) was the subject of a hearing by the House Judiciary Committee's Subcommittee on Immigration Policy and Enforcement. Employment eligibility verification and the related issue of worksite enforcement are widely viewed as essential components of a strategy to reduce unauthorized immigration. Under §274A of the Immigration and Nationality Act (INA), it is unlawful for an employer to knowingly hire, recruit or refer for a fee, or continue to employ an alien who is not authorized to be so employed. Employers are further required to participate in a paper-based (I-9) employment eligibility verification system in which they examine documents presented by new hires to verify identity and work eligibility, and to complete and retain I-9 verification forms. Employers violating prohibitions on unlawful employment may be subject to civil and/or criminal penalties. Enforcement of these provisions is termed "worksite enforcement" and is the responsibility of DHS's ICE. While all employers must meet the I-9 requirements, they may also elect to participate in the E-Verify electronic employment eligibility verification system. E-Verify is administered by DHS's U.S. Citizenship and Immigration Services (USCIS). Participants in E-Verify electronically verify new hires' employment authorization through Social Security Administration (SSA) and, if necessary, DHS databases. E-Verify is a temporary program. P.L. 112-176 extends its authorization for three years, until September 30, 2015. Several bills introduced in the 112 th Congress would variously make E-Verify permanent, require its use for verification of new hires, and permit or require its use for verification of previously hired workers. Other bills would authorize a new electronic employment eligibility verification system to replace E-Verify. Discussion of proposals to expand electronic employment eligibility verification requirements—whether though E-Verify or another system—have raised some concerns about labor shortages in sectors of the economy that are known to employ large numbers of unauthorized aliens, such as agriculture. (Legislative proposals on foreign agricultural workers are discussed in a subsequent section.) Among the bills that would authorize a new electronic verification system is H.R. 2885 , which has been ordered reported by the House Judiciary Committee. The new system would be modeled on E-Verify and the authorizing language would be added to INA §274A. Under H.R. 2885 , as ordered reported, the new verification system would be mandatory for all employers in cases of hiring, recruitment, and referral. The verification requirements with respect to hiring would be phased in by employer size, with the largest employers required to participate six months after the date of enactment and the smallest employers required to participate two years after the date of enactment. The requirements with respect to recruitment and referral would apply one year after the date of enactment. The bill would also provide for mandatory reverification of workers with limited work authorization. These reverification requirements would be phased in on the same schedule as the hiring requirements. Special provisions would apply to agriculture; the hiring, recruitment and referral, and reverification provisions would not apply to agricultural workers until three years after the date of enactment. As introduced, the bill also provided that seasonal agricultural workers returning to work for a previous employer would not be treated as new hires for verification purposes, but an amendment to strike this language was agreed to at the markup. H.R. 2885 , as ordered reported, would require or permit electronic verification in ways not currently allowed under E-Verify. Verification of previously hired individuals would be mandatory in some cases (such as, federal, state, and local government employees), while employers could verify current employees on a voluntary basis beginning 30 days after enactment. Under H.R. 2885 , employers could conduct electronic verification after making an offer of employment but before hiring, and could condition a job offer on final verification under the system. H.R. 2885 , as ordered reported by the House Judiciary Committee, would increase existing civil and criminal penalties for violations of INA §274A provisions on unauthorized employment. It would also establish new penalties, including for individuals who knowingly provide social security numbers or DHS identification numbers that belong to others and for employers who submit such numbers for verification knowing that they belong to someone other than the subject of the query. Lastly, the bill would direct the Secretary of Homeland Security, in consultation with the Social Security Commissioner and the Director of the National Institute of Standards and Technology, to establish a biometric employment eligibility verification pilot program that would be voluntary for employers. P.L. 112-74 contains some E-Verify-related language. For example, a provision in Division D of the bill on DHS appropriations (§530) states that none of the funds made available to the DHS Office of the Secretary and Executive Management under the act may be used for any new hires not checked through E-Verify. Some states and localities have sought to deter unauthorized aliens from entering or remaining within their jurisdiction by requiring employers to use E-Verify and/or imposing sanctions on employers found to have hired unauthorized aliens. In its May 26, 2011, decision in Chamber of Commerce v. Whiting , the Supreme Court held that one such measure, the Legal Arizona Workers Act, was not preempted by federal immigration law. Some lower courts had previously found that similar measures were preempted, in part, because of the burdens that employers operating in multiple states would bear in complying with different state laws. Some business groups have responded to the Supreme Court's decision in Whiting by lobbying for a single national electronic verification regime. H.R. 2885 , as ordered reported by the House Judiciary Committee, would establish such a regime, expressly preempting state and local E-Verify measures, along with other measures "relat[ing] to the hiring, continued employment, or status verification for employment eligibility purposes, of unauthorized aliens." However, H.R. 2885 would allow states and localities to revoke the business or other licenses of employers who fail to electronically verify the employment eligibility of their workers. Other bills introduced in the 112 th Congress would expressly preempt state and local measures prohibiting employers from verifying new hires or current employees through E-Verify. Illinois had enacted such a prohibition, but a reviewing court found it to be preempted by federal immigration law. Certain removable aliens cannot be removed from the United States because they do not have travel documents permitting them to return to their country of origin or because the aliens are more likely than not to be subject to torture if returned to the country of origin. The U.S. Supreme Court ruled in Zadvydas v. Davis (2001) that such aliens could only be detained following an order of removal for so long as is "reasonably necessary to bring about that alien's removal from the United States," but that the INA "does not permit indefinite detention." The Court found that the presumptively reasonable limit for the post-removal-period detention is six months, but indicated that continued detention may be warranted when the policy is limited to specially dangerous individuals, such as terrorists or those in other special circumstances, and strong procedural protections are in place. Following the Court's ruling in Zadvydas , new regulations were issued to comply with the Court's holding. ICE generally can only detain an alien beyond the initial 90-day removal period if ICE determines that the alien is likely to abscond if released or that the alien poses a danger to the public, or if ICE is likely to obtain travel documents for the alien in the near future. Under regulation, ICE may not detain an alien for more than six months unless the alien's removal is likely in the reasonably foreseeable future, except in special circumstances, including aliens who are detained on account of (1) having a highly contagious disease that is a threat to public safety, (2) serious adverse foreign policy consequences of release, (3) security or terrorism concerns, or (4) being considered specially dangerous due to having committed one or more crimes of violence and having a mental condition making it likely that the alien will commit acts of violence in the future. The House Judiciary Committee has reported the Keep Our Communities Safe Act of 2011 ( H.R. 1932 ). Among other provisions, the bill would allow DHS to detain indefinitely, subject to six-month reviews, an alien under orders of removal who cannot be removed if (1) there is a significant likelihood that the alien will be removed in the reasonably foreseeable future; (2) the alien would have been removed but for the alien's refusal to cooperate with the DHS Secretary's identification and removal efforts; (3) the alien has a highly contagious disease that poses a public safety threat; (4) release would have serious adverse foreign policy consequences; (5) release would threaten national security; (6) release would threaten the safety of the community, and the alien has either been convicted of one or more aggravated felonies or other designated crimes or been convicted of one or more crimes of violence and due to a mental condition or personality disorder is likely to engage in future acts of violence; or (7) release would threaten the safety of the community, and the alien has been convicted of at least one aggravated felony. The bill would limit habeas corpus reviews of such detention and related actions or decisions to the U.S. District Court for the District of Columbia. Also, the bill would permit unlimited detention of certain aliens during pending removal proceedings. The Department of State (DOS) and DHS both play key roles in administering the law and policies on the admission of aliens to the United States. Although DOS's Consular Affairs is responsible for issuing visas, USCIS in DHS approves immigrant petitions, ICE in DHS operates the Visa Security Program in selected U.S. embassies abroad, and CBP in DHS inspects all people who enter the United States. All foreign nationals seeking visas must undergo admissibility reviews performed by DOS consular officers abroad. These reviews are intended to ensure that applicants are not ineligible for admission to the United States under the grounds for inadmissibility spelled out in INA §212. These criteria include health-related grounds, criminal history, security and terrorist concerns, public charge (e.g., indigence), and previous immigration offenses. Consular officers use the Consular Consolidated Database (CCD) to screen visa applicants. Records of all visa applications are now automated in the CCD, with some records dating back to the mid-1990s. Since February 2001, the CCD has stored photographs of all visa applicants in electronic form, and the CCD has stored 10-finger scans since 2007. In addition to indicating the outcome of any prior visa application and comments by consular officers, the system links to other security databases to flag problems that may have an impact on the issuance of the visa. Congress is particularly interested in the Visa Security Program (VSP), which the ICE Office of International Affairs (OIA) operates in certain high-risk consular posts. As described by DHS, the VSP sends ICE special agents with expertise in immigration law and counterterrorism to foreign consulates, where they perform visa security activities that complement the DOS visa screening process. According to DHS, the VSP provides law enforcement resources not available to consular officers. One of the major tasks for VSP agents is to screen visa applicants to determine their risk profiles. GAO released an evaluation of the VSP in 2011 that identified several shortcomings. In addition to noting that tensions exist between consular officials and VSP agents, GAO was especially concerned about the lack of standard operating procedures for VSP agents across the various posts. Most importantly, perhaps, GAO stated that ICE has not expanded VSP to key high-risk posts despite well-publicized plans to do so. Despite the VSP's implementation problems, some observers maintain that DHS should play a larger role in visa security. In their view, DOS retains too much power over visa issuances, and consular officers are too concerned about facilitating tourism and trade to thoroughly scrutinize visa applicants. From this perspective, greater responsibility should be given to the VSP, which does not have competing priorities of diplomatic relations and reciprocity with foreign governments, and may subject visa applications to greater scrutiny. Along these lines, the House Committee on the Judiciary has reported the Secure Visas Act ( H.R. 1741 ) that would give the Secretary of Homeland Security "exclusive authority to issue regulations, establish policy, and administer and enforce the provisions of the Immigration and Nationality Act (8 U.S.C. §1101 et seq.) and all other immigration or nationality laws relating to the functions of consular officers of the United States in connection with the granting and refusal of a visa." In addition to these broader concerns about visa security, Congress has also addressed matters of exclusion and inadmissibility. More specifically, Division I, §4505(a)(3)(A), of P.L. 112-74 instructs the Secretary of State not to issue a visa to any alien who has willfully supported the Revolutionary Armed Forces of Colombia (FARC), the National Liberation Army (ELN), the United Self-Defense Forces of Colombia (AUC), or other illegal armed group. The ban also includes aliens who have committed, ordered, incited, assisted, or otherwise participated in the commission of a violation of human rights in Colombia. The law states that the denial must be based upon credible evidence and allows the Secretary to grant waivers on a case-by-case basis if deemed necessary to support the peace process or for urgent humanitarian reasons. The INA specifies that each year, countries are held to a numerical limit of 7% of the total worldwide level of U.S. immigrant admissions, known as the per-country limit. This provision was intended to prevent any single country from dominating admissions to the United States. The per-country level is not a "quota" set aside for individual countries, as each country in the world could not receive 7% of the overall limit. The per-country limit applies to legal permanent resident (LPR) admissions under the four family-sponsored admission classes and the five employment-based admissions classes. The limit applies to total annual admissions under the preference system, as well as within the employment-based and family-based preference categories. In recent years, two countries that send large numbers of skilled immigrants to the United States, India and China, have been oversubscribed in the 2 nd and 3 rd employment-based preference categories for persons with advanced degrees and professional and skilled workers, respectively. To be "oversubscribed" means that more visa petitioners are eligible and approved for the preference category than the number allocated for that year, in that category, from that country. As a result, petitioners and their employers applying under these employment-sponsored categories could expect to wait several years to receive a visa. Even as U.S. unemployment levels remain high, some employers assert that they continue to need the "best and the brightest" workers, regardless of their country of birth, to remain competitive in a worldwide market and to keep their firms in the United States. While support for increasing employment-based immigration may be dampened by current economic conditions, proponents argue it is essential for economic growth. Those opposing increases in employment-based LPRs assert that there is no compelling evidence of labor shortages and cite the rate of unemployment across various occupations and labor markets. They argue that recruiting foreign workers while unemployment levels remain high would have a deleterious effect on salaries, compensation, and working conditions of U.S. workers. The Fairness for High-Skilled Immigrants Act ( H.R. 3012 ), as reported by the House Judiciary Committee and passed by the House, would amend the INA to eliminate per-country ceilings on permanent employment-based admissions and increase the per-country ceiling on permanent family-based admissions from 7% to 15%. The bill would not alter the total number of LPRs admitted under the family-based and employment-based preference systems. These changes in H.R. 3012 would be instituted over four years. On November 29, 2011, the House passed H.R. 3012 by a vote of 389-15. In the Senate, a similar bill ( S. 1983 ) was introduced in December 2011. Rather than change the per-country limits on permanent admissions to address the issue of oversubscribed countries in the employment-based system, as discussed in the preceding section, some policymakers have proposed creating a separate visa category for prospective LPRs with graduate degrees in science, technology, engineering, or mathematics (STEM) fields. By pulling these individuals out of the numerically limited employment-based categories, this option would free up visas for the other prospective LPRs waiting in the employment-based queue. The STEM Jobs Act of 2012 ( H.R. 6429 ) would eliminate the Diversity Visa Lottery and re-allocate those 55,000 Diversity Visas to two new categories it would create for foreign STEM graduates who have job offers in related fields. In September 2012, H.R. 6429 failed to receive the necessary two-thirds vote to pass under suspension of the rules. The legislation garnered 257 yeas and 158 nays, with bipartisan support as well as bipartisan opposition. The House passed a revised version of H.R. 6429 in November 2012. There are several differences between this version and the one the House considered in September. Perhaps the most significant addition to H.R. 6429 in the House-passed version is the expansion of the nonimmigrant visa for family members with approved or pending LPR petitions, commonly known as the "V" visa. The House-passed bill would allow the spouses and minor children of LPRs to live in the United States on V visas (without employment authorization) while they wait for their LPR petitions or visa applications to be adjudicated or their visas to become available. Immediate relatives of LPRs would become eligible for V visas after a one-year wait. The purpose of the diversity immigrant visa lottery is, as the name suggests, to encourage legal immigration from countries other than the major sending countries of current immigrants to the United States. Current law weights the allocation of immigrant visas heavily toward aliens with close family in the United States and, to a lesser extent, toward aliens who meet particular employment needs. The diversity immigrant category was added to the INA by the Immigration Act of 1990 ( P.L. 101-649 ) to stimulate "new seed" immigration (i.e., to foster new, more varied migration from other parts of the world). To be eligible for a diversity visa, the INA requires that the foreign national must have a high school education or the equivalent, or two years of experience in an occupation that requires at least two years of training or experience. The foreign national or the foreign national's spouse must be a native of one of the countries listed as a foreign state qualified for the diversity visa lottery. Diversity lottery winners, like all other aliens wishing to come to the United States, must undergo reviews performed by DOS consular officers abroad and DHS immigration officers upon entry to the United States. These reviews are intended to ensure that the aliens are not ineligible for visas or admission under the grounds for inadmissibility spelled out in the INA. The diversity lottery currently makes 50,000 visas available annually to natives of countries that accounted for fewer than 50,000 immigrant admissions in total over the preceding five years. The formula for allocating visas is based upon the statutory specifications; visas are divided among six global geographic regions according to the relative populations of the regions. Some argue that the diversity lottery should be eliminated and its visas used for backlog reduction in other visa categories. Supporters of the diversity visa, however, argue that the diversity visa provides "new seed" immigrants for an immigration system weighted disproportionately toward family-based immigrants from a handful of countries. Critics of the diversity lottery warn that it is vulnerable to fraud and misuse, and potentially an avenue for terrorists, citing the difficulties of performing background checks in many of the countries eligible for the diversity lottery. Supporters respond that background checks for criminal and national security matters are performed on all prospective immigrants seeking to come to the United States, including those winning diversity visas. The House Committee on the Judiciary has reported H.R. 704 , the Security and Fairness Enhancement for America Act of 2011 (SAFE for America Act), which would amend the INA to eliminate the diversity visa lottery. On November 30, 2012, the House passed H.R. 6429 (see preceding section), which includes the elimination of the Diversity Visa Lottery. The H-1C nonimmigrant (temporary admission) category for nurses was established by a 1999 law ( P.L. 106-95 ) and reauthorized in 2006 ( P.L. 109-423 ) as a short-term solution for nursing shortages in a limited number of medically underserved areas. Facilities have to be approved to employ H-1C nurses. The authority to issue H-1C visas expired on December 20, 2009. Previously, the law allowed for the issuance of 500 nonimmigrant visas to nurses each year, with the proviso that the number of visas issued annually for employment in smaller states could not exceed 25 and the number issued for employment in larger states could not exceed 50. The law limited an H-1C nurse's stay to three years. H.R. 1933 , as passed by the House, would reauthorize the H-1C category for three years. It also would amend the law to allow for the issuance of 300 nonimmigrant visas to nurses each year, and to limit an H-1C nurse's initial stay to three years with the opportunity to renew the visa for another three years (i.e., a total stay of six years). The bill would provide H-1C nurses with portability by allowing an H-1C nurse to begin employment at another hospital approved to employ aliens in this visa category while the petition filed by the new employer is being adjudicated. Employment at the new facility would end if the petition is denied. The admission of refugees to the United States is a perennial immigration issue. Refugee admission and resettlement are authorized by the INA. Under the INA, a refugee is a person who is outside his or her country and who is unable or unwilling to return because of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. Refugees are processed and admitted to the United States from abroad. The Department of State handles overseas processing of refugees, and DHS/USCIS makes final determinations about eligibility for admission. After one year in refugee status in the United States, refugees are required to apply to adjust to LPR status. Several bills have been introduced in the 112 th Congress that would make various changes to the U.S. refugee program. Some of these measures propose to reform the refugee admissions process, such as by authorizing the President to designate groups of aliens of humanitarian concern that, absent countervailing factors, would be considered refugees for purposes of admission and by changing existing INA provisions regarding the admission of refugee spouses and children. Other proposals focus more directly on the resettlement assistance program for refugees and other designated groups administered by the Department of Health and Human Services' Office of Refugee Resettlement (HHS/ORR). Special legislative provisions facilitate relief for certain refugee groups. The "Lautenberg amendment," first enacted in 1989, required the Attorney General (now the Secretary of DHS) to designate categories of former Soviet and Indochinese nationals for whom less evidence is needed to prove refugee status, and provided for adjustment to LPR status for certain former Soviet and Indochinese nationals denied refugee status. P.L. 108-199 amended the Lautenberg amendment to add a new provision, known as the "Specter amendment," to direct the Attorney General to establish categories of Iranian religious minorities who may qualify for refugee status under the Lautenberg amendment's reduced evidentiary standard. The Lautenberg amendment was regularly extended through FY2010. For FY2011, Congress extended the amendment only until June 1, 2011, in P.L. 112-10 (Div. B, §2121(m)), and it temporarily terminated on that date. It was re-enacted for FY2012 by P.L. 112-74 (Div. I, §7034(r)). FY2013 extension language is included in the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2013 ( S. 3241 ), as reported by the Senate Appropriations Committee. Two of ICE's main programs designed to identify and remove certain aliens from within the United States are Secure Communities and the 287(g) program. Under Secure Communities, when participating law enforcement agencies submit the fingerprints of arrestees to the Federal Bureau of Investigation (FBI) for criminal background checks, the fingerprints are also checked against DHS databases. When an arrestee appears to be subject to removal, local ICE officials may issue an immigration detainer to request that the arresting jurisdiction hold the person for up to 48 hours and transfer them to ICE custody so that ICE may initiate removal proceedings. ICE views Secure Communities as an efficient way to carry out the agency's mandate to identify aliens who have been convicted of crimes and to make the removal of these criminal aliens an enforcement priority. Secure Communities was active in 3,074 of 3,181 (97%) law enforcement jurisdictions as of August 1, 2012, and the Obama Administration plans to expand the program to every law enforcement jurisdiction in the country by the end of 2013. Congress has consistently met DHS funding requests for Secure Communities and some Members support the program. The program has generated controversy, however, because some aliens identified and removed through Secure Communities have not been convicted of "serious" crimes or any criminal offense and because of concerns that state and local involvement in enforcing federal immigration law could lead to racial profiling or strain police-community relations. Partly for these reasons, some states and localities have sought to limit their participation in Secure Communities in various ways; but after initially describing the program as optional, DHS has taken the position since 2010 that communities may not "opt out" of the program. Under the 287(g) program, state and local law enforcement agencies may enter into agreements with ICE to allow state and local law enforcement officials to receive ICE training and to perform certain immigration enforcement activities under ICE supervision. Some 287(g) programs ("jail screening" programs) allow local law enforcement officials to conduct migration screening as persons are being booked into prisons or jails. Other 287(g) programs ("task force" programs) allow them to conduct migration screening during the course of their regular police work outside of the booking process. As with Secure Communities, some people have raised concerns that the 287(g) program may promote racial profiling and/or strain police-community relations. And a 2009 GAO report found several problems with DHS' oversight of the program. The program expanded from 3 to 55 jurisdictions between 2006 and 2008, but only 8 jurisdictions were added in 2009-2011, according to ICE data. The Administration's FY2013 budget proposes to reduce 287(g) funding by 25% ($17 million) by discontinuing certain 287(g) programs in jurisdictions in which Secure Communities has been activated and by not supporting new 287(g) task force programs. Legislation related to Secure Communities and the 287(g) program has been introduced in the 112 th Congress. In line with efforts to expand Secure Communities, several bills would deny funding for various Department of Justice programs, including the State Criminal Alien Assistance Program (discussed below), to jurisdictions that do not participate fully in Secure Communities. Other proposed legislation would respond to concerns about whether state and local participation in Secure Communities leads to racial profiling or interferes with police-community relations. Congress also may address proposed changes to Secure Communities and 287(g) funding through the appropriations process. For example, the Senate-reported S. 3216 would provide the same reduced level of FY2013 funding for the 287(g) program as the FY2013 budget request, while the House-passed H.R. 5855 would fund the program for FY2013 at the higher FY2012 level and would prohibit any funds made available under the act from being used to terminate a 287(g) agreement that is in existence on the date of enactment of the act. In recent years, several states and localities have sought to deter the presence of unauthorized aliens within their jurisdictions through a variety of enforcement measures, with Arizona's S.B. 1070 being perhaps the most notable example. Many of these measures have been challenged in federal court, with litigation generally focusing on whether these enactments are consistent with federal immigration law. The Supreme Court recently held in Arizona v. United States that some aspects of S.B. 1070 that were intended to deter unlawfully present aliens from remaining in the state were preempted by federal law, but the Court also held that federal law did not facially preempt S.B. 1070's requirement that Arizona police run immigration status checks on persons stopped for state or local offenses. Several other state and local measures intended to deter the presence of unlawfully present aliens (e.g., requiring schools to determine whether enrolling students were born outside the United States or are the children of unauthorized aliens; prohibiting unlawfully present aliens from entering into certain "public records transactions") are the subject of ongoing litigation. Given the unsettled state of the law in this area, particularly prior to the Court's recent decision in Arizona , some legislation introduced in the 112 th Congress would purport to recognize that state and local officers have "inherent authority" to enforce federal immigration law, or conversely, would establish that state and local officers may only enforce federal immigration law pursuant to a written agreement authorized under Section 287(g) of the INA. The Obama Administration has observed that ICE does not have the funding or capacity to deport every potentially removable alien identified by DHS, especially with the increased number of such aliens identified through Secure Communities. In March and June 2011, ICE published a pair of updated agency guidance memoranda governing the use of prosecutorial discretion during immigration enforcement to ensure that removal resources go to high-priority cases. (These memoranda are often referred to as the "Morton Memos.") On August 18, 2011, DHS Secretary Janet Napolitano announced in a letter to Senator Richard Durbin and others that the March and June guidance would apply to all DHS immigration agencies. DHS and the Department of Justice (DOJ) also created an interagency working group to review about 300,000 pending removal cases on a case-by-case basis to consider administratively closing certain cases, and to conduct expedited reviews of those cases that are not administratively closed. As of May 29, 2012, about 7% of the cases reviewed by the DHS-DOJ working group reportedly had been identified as candidates for administrative closure. Some Members of Congress object to the Administration's prosecutorial discretion policies and have argued that for the Administration explicitly to identify certain types of cases that may be closed amounts to an "administrative amnesty"; others describe prosecutorial discretion as a critical tool to prevent misallocation of agency resources. The Department of Homeland Security Appropriations Act, FY2013 ( H.R. 5855 ), as passed by the House, would prohibit any funding made available in the act from being used to "finalize, implement, administer, or enforce the 'Morton Memos'." Partly in response to the June 2011 agency guidance, some bills introduced in the 112 th Congress would tighten the standards for certain forms of executive branch discretion. Other proposed legislation, by contrast, could expand judicial relief from removal by allowing immigration judges to consider factors not currently considered when determining whether to grant cancellation of removal. The INA includes provisions to assist foreign national victims of domestic abuse. These provisions were enacted by Congress with the Immigration Act of 1990 ( P.L. 101-649 ) and the Violence Against Women Act (VAWA) of 1994 ( P.L. 103-322 , Title IV). They afford benefits to abused foreign nationals and allow them to self-petition for LPR status independently of their U.S. citizen or LPR relatives. Congress reauthorized VAWA in 2000 (VAWA 2000), as part of the larger Victims of Trafficking and Violence Protection Act (TVPA, P.L. 106-386 ). VAWA 2000 included the Battered Immigrant Women Protection Act of 2000 (Title V). This title created the nonimmigrant U visa for foreign national victims of certain crimes—including domestic abuse—who assist law enforcement. A second VAWA reauthorization in 2005 added protections and expanded eligibility for abused aliens. Program authorizations in VAWA expired in 2011. The Senate Judiciary Committee has reported S. 1925 to reauthorize VAWA. Title VIII of the reported bill expands some protections under VAWA and the U visa provisions of the INA. The bill would require DHS to conduct additional background checks of U.S. citizen and LPR spouse petitioners who are sponsoring foreign national fiancées or fiancés. It would prohibit international marriage brokers from marketing information about foreign nationals under age 18 and would clearly define penalties for doing so. It also would extend VAWA coverage to derivative children whose self-petitioning parent died during the petition process. In addition, the bill would include "stalking" in the definition of criminal activity covered under the U visa. It would exempt VAWA self-petitioners, U visa petitioners, and battered foreign nationals from being classified as inadmissible for LPR status if their financial circumstances raised concerns about their potentially becoming public charges. It would also temporarily increase the annual numerical cap on the U visa from 10,000 to 15,000. The House passed a different VAWA reauthorization bill ( H.R. 4970 ) in May 2012. H.R. 4970 contains similar provisions to S. 1925 regarding additional background information requirements, restrictions on marketing by international marriage brokers, and inadmissibility protections for abused aliens. However, H.R. 4970 also differs from S. 1925 in certain key respects. It would permit DHS to admit credible evidence from alleged abusers for purposes of adjudicating VAWA petitions; require local USCIS District Officers to interview VAWA petitioners in person; and require USCIS to consider law enforcement investigations or prosecutions of alleged abusers, or the lack thereof, as evidence when adjudicating petitions. Petition adjudication would be stayed until pending investigations or prosecutions of abusive conduct alleged by the petitioning alien were concluded. Likewise, the bill would require USCIS to consider previous applications for immigration benefits and their outcomes. H.R. 4970 would limit LPR status eligibility for U visa recipients to victims whose criminal perpetrators were aliens convicted of related crimes and deported to the same country of origin as the victim. The bill would maintain the current annual allocation of U visas at 10,000 and restrict circumstances under which U visa petitions could be certified by law enforcement. Two sets of concerns for Congress may arise regarding the immigration provisions of the VAWA reauthorization legislation. The first is whether the proposed legislation provides sufficient relief to foreign nationals who are abused by their U.S. citizen or LPR sponsoring relatives. Advocates for battered immigrants suggest that additional provisions are needed to assist this population obtain legal and economic footing. Others have expressed concern over the extent to which these provisions may expand eligibility and incur costs to U.S. taxpayers. The second concern centers on alleged immigration fraud perpetrated through VAWA and the extent to which the reported legislation should address this issue. While some suggest that VAWA provides opportunities for dishonest and enterprising immigrants to circumvent U.S. immigration laws, reliable empirical support for these assertions is limited. It is an international and a domestic crime to engage in trafficking in persons (TIP) for the purposes of exploitation. TIP involves violations of labor, public health, and human rights standards. Congress passed the Victims of Trafficking and Violence Protection Act in 2000 and has reauthorized TVPA several times since, most recently in the 110 th Congress ( P.L. 110-457 ). The current program authorizations expired at the end of FY2011. Domestically, TVPA and its subsequent reauthorizations created two nonimmigrant visa categories: the T visa for victims of severe forms of trafficking and, as discussed above, the U visa for victims of certain specified crimes. The 2000 act and the reauthorizations also created several grant programs to aid trafficking victims and to train law enforcement to combat TIP. A House reauthorization bill, the Trafficking Victims Protection Reauthorization Act of 2011 ( H.R. 2830 ), has been ordered reported by the House Foreign Affairs Committee. A Senate reauthorization bill, the Trafficking Victims Protection Reauthorization Act of 2011 ( S. 1301 ), has been reported by the Senate Judiciary Committee. H.R. 2830 would extend current authorization s in TVPA and its reauthorizations for FY2012 and FY2013, and would maintain most programs at current authorization levels. S. 1301 would extend current authorizations in TVPA and its reauthorizations through FY2015 and would increase authorization levels by $2 million each for the two main victim service grant programs. Both H.R. 2830 and S. 1301 would make it a criminal offense to knowingly destroy—or, for a period of more than 48 hours, to conceal, remove, confiscate, or possess—another person's passport or immigration or personal identification documents in the course of attempting to commit fraud in foreign labor contracting or alien smuggling, or in order to unlawfully maintain, prevent, or restrict the labor or services of the individual. In addition, both bills would make several changes to the INA related to the custody and care of unaccompanied alien children. The Senate bill would further specify that children who receive U status and are in the custody of HHS are eligible for programs and services to the same extent as refugees. S. 1301 would also create a new grant program to provide services to child victims of sex trafficking. There is currently one immigrant visa category specifically for foreign investors (LPR investors) coming to the United States. LPR investors comprise the fifth preference category under the employment-based immigration system in the INA, and this immigrant visa is commonly referred to as the EB-5 visa. The basic purpose of the LPR investor visa is to benefit the U.S. economy, primarily through employment creation and an influx of foreign capital into the United States. Employment-based LPR investor visas are designated for individuals wishing to develop a new commercial enterprise in the United States. The INA stipulates that for the investor to qualify for the EB-5 visa, the enterprise must employ at least 10 people, the investor must invest $1 million into the enterprise, and the business and jobs created must be maintained for a minimum of two years. In 1992, a pilot program was authorized under the EB-5 visa category to achieve the economic activity and job creation goals of that category by encouraging investment in economic units known as Regional Centers. The Regional Center Pilot Program is intended to provide a coordinated focus for foreign investment toward specific geographic regions. The majority of EB-5 immigrant investors come through the pilot program. The Regional Center Pilot Program was set to expire on September 30, 2012, but Congress passed P.L. 112-176 , reauthorizing the program through September 30, 2015. In addition, there are bills in the 112 th Congress that would amend the requirements for EB-5 visas or create a new, sixth employment-based preference (EB-6) for sponsored alien entrepreneurs. Special immigrants comprise the fourth preference category under the employment-based immigration system in the INA. Over the years, the special immigrant category has been used to confer immigration benefits on particular groups and there are various subcategories of special immigrants under current law. Ministers of religion and religious workers make up the largest number of special immigrants. Religious work is currently defined as habitual employment in an occupation that is primarily related to a traditional religious function and that is recognized as a religious occupation within the denomination. While the INA provision for the admission of ministers of religion is permanent, the provision admitting religious workers has always had a sunset date. P.L. 112-176 extends the authorization for the special immigrant religious worker program for three years, until September 30, 2015. There is interest in Congress in promoting international tourism to the United States. P.L. 112-74 contains provisions intended to help increase tourism. Section 7076 of the act requires the Secretary of State to "implement the necessary steps" (e.g., hiring more consular officers) to reduce the wait time to interview visa applicants in China, Brazil, and India. The provision also gives the Secretary of State the authority to develop and conduct a pilot program for processing B visas (i.e., short-term visas for business or leisure) using videoconferencing technology to conduct interviews of the applicants. The act further requires the Secretary of State to conduct a risk and benefit analysis regarding the extension of the expiration period for a B visa, before requiring an interview . Under current law, an in-person interview by a consular officer is required for visa applicants age 14 through 79 years, with few exceptions. An interview may be waived if the alien is applying for a new visa within 12 months of the old visa's expiration and certain other conditions are met. In addition, there have been two hearings related to promoting tourism to the United States. In March 2012, the Senate Judiciary Committee's Subcommittee on Immigration, Refugees and Border Security held a hearing on promoting international travel to the United States. During the hearing, there were discussions of S. 2233 , the Jobs Originated through Launching Travel (JOLT) Act. Among other provisions, the Jolt Act would allow premium processing for B visas and lower the fees charged in select countries during periods of low demand for B visas. As with other bills introduced in this Congress, S. 2233 would also make changes to admissions criteria for the Visa Waiver Program. In May 2012, the House Judiciary Committee, Subcommittee on Immigration Policy and Enforcement held a hearing on H.R. 3039 , the Welcoming Business Travelers and Tourist to America Act of 2011. H.R. 3039 would direct the Secretary of State to: (1) set a visa processing standard of 12 or fewer calendar days at U.S. missions in China, Brazil, and India; and (2) use machine-readable nonimmigrant visa fees to hire a sufficient number of Foreign Service officers and non-career appointment consular officers to maintain such standard. The bill would also require that the Secretary of State conduct a pilot program for processing B visas using videoconferencing technology to conduct interviews of the applicants, and work with other federal agencies to ensure the security of the videoconferencing transmissions. H.R. 3039 would also authorize the Secretary of State to allow for longer visa validity periods for certain countries on a non-reciprocal basis. Under current law, there is one program that provides for the admission of foreign temporary agricultural workers to the United States: the H-2A nonimmigrant visa program. This program allows for the temporary admission of foreign workers to the United States to perform agricultural labor or services of a seasonal or temporary nature, provided that U.S. workers are not available. An approved H-2A visa petition is generally valid for an initial period of up to one year. An employer can apply to extend an H-2A worker's stay in increments of up to one year, but an alien's total period of stay as an H-2A worker may not exceed three consecutive years. The H-2A program, which is not subject to a numerical cap, is administered by the Employment and Training Administration (ETA) of the Department of Labor (DOL) and USCIS of DHS. The Obama Administration issued new final rules on the H-2A program in 2010. An employer who wants to import H-2A workers must first apply to DOL for a certification that (1) there are not sufficient U.S. workers who are qualified and available to perform the work; and (2) the employment of foreign workers will not adversely affect the wages and working conditions of U.S. workers who are similarly employed. Prospective H-2A employers must attempt to recruit U.S. workers and must cooperate with DOL-funded state workforce agencies (SWAs) in local, intrastate, and interstate recruitment efforts. In addition, under the "50 percent rule," H-2A employers are required to hire any qualified U.S. worker who applies for a position until 50% of the work contract under which the H-2A workers are employed has elapsed. H-2A employers must pay their H-2A workers and similarly employed U.S. workers the highest of several wage rates (including the adverse effect wage rate) and must provide workers with housing, transportation, and other benefits. The American Specialty Agriculture Act ( H.R. 2847 ), which was the subject of a hearing by the House Judiciary Committee's Subcommittee on Immigration Policy and Enforcement in September 2011, would establish a new H-2C visa for temporary agricultural workers as an alternative to the H-2A visa. Unlike the H-2A visa, the H-2C visa would not be limited to agricultural labor of a temporary or seasonal nature and could be used to bring in workers to perform non-seasonal agricultural work. An H-2C worker's continuous period of stay would be limited to 10 months, and the program would be capped at 500,000 annually. The new program would be administered by USDA and would not be subject to the same labor certification process as the H-2A visa. Instead, prospective H-2C employers would attest in their applications that they had satisfied applicable recruitment, wage, and benefit requirements, which would differ from those under the H-2A visa. With respect to wages, the H-2C visa would not be subject to the adverse effect wage rate; H-2C employers would be required to pay the higher of the prevailing wage rate or the applicable minimum wage rate. Among other differences between the H-2A program and the proposed H-2C program, the H-2C program would be subject to more limited U.S. worker recruitment requirements; the H-2C program would not have a "50 percent rule;" and H-2C employers could provide housing vouchers instead of housing. Other bills would establish different new foreign agriculture worker programs or would amend the existing H-2A program. Unauthorized alien students are a subpopulation of the larger unauthorized alien population in the United States. They are able to receive free public education through high school despite their illegal status, but face various obstacles in the pursuit of higher education. More broadly, as unauthorized aliens they are typically unable to work legally and are subject to removal from the United States. Legislation commonly referred to as the "DREAM Act" (whether or not a particular bill carries that name) has been introduced in the past several Congresses to provide unauthorized alien students with access to both educational opportunities and immigration status. Typically, DREAM Act bills propose to enable eligible individuals to obtain LPR status in the United States through a two-stage process. In the first stage, aliens meeting specified criteria could go through an immigration procedure known as "cancellation of removal" to obtain a conditional legal status. In the second stage, aliens, after meeting additional requirements, could apply to become full-fledged LPRs. DREAM Act bills also often contain a repeal of a provision of current law (§505 of the Illegal Immigration Reform and Immigrant Responsibility Act) that restricts the ability of states to provide postsecondary educational benefits to unauthorized aliens. Attempts to enact a DREAM Act bill in the 110 th and 111 th Congresses were unsuccessful. DREAM Act bills have once again been introduced in the 112 th Congress, both as stand-alone measures and as parts of larger bills. In a related development, DHS issued a memorandum in June 2012 stating that certain individuals who were brought to the United States as children and meet other criteria would be considered for relief from removal in the form of deferred action. The eligibility criteria are similar to those included in DREAM Act bills. This deferred action process, however, would not grant eligible individuals a legal immigration status. USCIS began accepting requests for consideration of deferred action for childhood arrivals (DACA) in August 2012. Over the past decade or so, concern about illegal immigration has led some legislators to reexamine the long-established tenet of U.S. citizenship that a person, who is born in the United States, and subject to its jurisdiction, is a citizen of the United States regardless of the race, ethnicity, or alienage of the parents. This concept of birthright citizenship is codified in the Citizenship Clause of the Fourteenth Amendment of the U.S. Constitution and §301(a) of the INA. The war on terror and the case of Yaser Esam Hamdi, a U.S.-Saudi dual national captured in Afghanistan fighting with Taliban forces, further heightened attention to and interest in restricting automatic birthright citizenship. Although Hamdi's parents were Saudi nationals in the United States on nonimmigrant work visas, Hamdi was a U.S. citizen by right of his birth in Louisiana and arguably entitled to rights not available to foreign enemy combatants. In the 112 th Congress, some Members have supported introducing legislation that would revise or reinterpret the Citizenship Clause to address concerns that (1) children born to unauthorized aliens become an avenue to legal status for their parents and siblings when they turn 21 years old, and (2) affluent pregnant foreigners come to the United States on tourist visas to give birth to their children and thus provide them with U.S. citizenship. Several bills have been introduced to amend the Constitution and/or the INA to exclude persons born in the United States from citizenship at birth if their parents were unlawfully present in the United States or were nonimmigrant aliens. In order for a child to be a citizen at birth under these proposals, at least one parent would have to be a U.S. national, an LPR who resides in the United States, or an alien serving on active duty in the U.S. Armed Forces. Furthermore, some state legislators have voiced support for state legislation that would define state citizenship as excluding persons born to undocumented aliens and for a state compact under which states would issue a different type of birth certificate to such persons. State legislators from Arizona and 13 other states unveiled model legislation in January 2011, intending to set the stage for a U.S. Supreme Court review of the Citizenship Clause. Such legislation has been introduced in some states but has not been enacted. Title VII of P.L. 110-229 made the INA applicable to the Commonwealth of the Northern Mariana Islands (CNMI), a U.S. territory in the Pacific. Previously, in accordance with an agreement known as the Covenant that sets forth the relationship between the CNMI and the United States, the CNMI had not been subject to U.S. immigration law. Among other provisions, P.L. 110-229 established a transition period for implementing the INA in the CNMI that began on November 28, 2009. It aimed, in particular, to provide federal regulation and oversight of the admission of foreign workers to the CNMI, including by establishing a CNMI-only transitional worker visa. Aliens who were not eligible for the transitional foreign worker visas were able to remain in the CNMI on entry permits issued under the former territorial immigration laws until the earlier of the original permit expiration date or November 28, 2011. In the 112 th Congress, H.R. 1466 would resolve the status of certain long-term foreign residents of the CNMI who otherwise may not be able to remain in the territory after November 28, 2011. The bill was reported by the House Natural Resources Committee, while the House Judiciary Committee discharged it without a report. Some long-term foreign residents of the CNMI have U.S. citizen spouses and children who, for various reasons, are unable to sponsor them for U.S. immigrant status. For example, some have U.S. citizen spouses and adult sons or daughters who are eligible to file a family-based immigrant petition on their behalf; however, due to the economic conditions in the CNMI, many citizens apparently are unable to satisfy the requisite household income level for sponsoring a relative as an immigrant under U.S. law. Other long-term foreign residents were granted permanent resident status in the CNMI under former territorial immigration laws, but this status will no longer be valid under federal immigration law after November 28, 2011. Still other persons who were born in the CNMI were not eligible for U.S. citizenship under the terms of the Covenant. As reported, H.R. 1466 would authorize admission of these various long-term foreign residents, subject to certain requirements, as immigrants to the CNMI only, and provide a path for most of these CNMI-only residents to adjust later to regular LPR status. On November 23, 2011, USCIS announced that certain prospective beneficiaries of H.R. 1466 , namely immediate relatives of U.S. citizens and certain persons born in the CNMI who did not receive U.S. citizenship (also their spouses and unmarried children under 21 years old), would be eligible for parole. Parole would be granted on a case-by-case, discretionary basis and would permit recipients to stay lawfully in the CNMI. On December 9, 2011, USCIS issued guidelines clarifying that a grant of parole based on an application filed on or before January 31, 2012, would be backdated to November 27, 2011. If parole is denied, unlawful presence would accrue after the expiration of the CNMI permit on November 27, 2011. A grant of parole based on an application filed after January 31, 2012, would be valid from the date of grant, so unlawful presence would accrue after the expiration of the CNMI permit on November 27, 2011, until the date for the grant of parole. The maximum grant would be until December 31, 2012. In the meantime, discussions about H.R. 1466 continue, with some critics seeking to remove or limit the fourth group of beneficiaries in the current bill (foreign parents of minor U.S. citizen children) and some supporters pushing to extend the benefits of H.R. 1466 to other groups of long-term foreign workers. The 112 th Congress is taking renewed interest in foreign temporary workers engaged in professional occupations. As discussed above, one issue focuses on whether Congress should revise the immigration law to expand temporary visas for professional specialty occupations, particularly for graduates with degrees in STEM fields. Another issue is whether other temporary visa categories, such as those designated for foreign study, cultural exchange, and intracompany transfers, are being misused by employers unable to obtain numerically limited professional workers visas. A corollary to these two issues is whether the wages and working conditions of U.S. workers are adversely affected by the recruitment of temporary foreign workers. Since 2003, Congress has enacted a range of measures to facilitate naturalization and maintenance of LPR status for military service members and their families, particularly when such persons are posted abroad. In the 112 th Congress, several bills have been introduced to address additional issues that have resulted from military service. One of these bills ( H.R. 398 ) has been enacted as P.L. 112-58 . The new law extends the time to qualify for non-conditional LPR status to account for military service. Under the INA, an alien who obtains LPR status through a marriage to a U.S. citizen or LPR that was entered into less than two years earlier is initially granted LPR status on a conditional basis. In order to have the condition removed, both spouses must jointly satisfy certain requirements during specified periods, including appearing together at a personal interview with DHS. P.L. 112-58 tolls the time for meeting such requirements during any period in which either spouse is a member of the U.S. Armed Forces and serving abroad in active-duty status. Although DHS had discretion to waive the requirements in certain circumstances before the new law, it obviates the need for discretionary waivers by tolling the time periods. In addition, the enactment of P.L. 112-74 added a new statute, 10 U.S.C. §1790, providing for reimbursement to USCIS by the Department of Defense of fees for processing military-service-based naturalization applications (Div. A, §8070). Current law prohibits charging the applicants fees for such applications. While LPR investors enter the United States on EB-5 visas, as discussed above, the INA also provides for the admission of temporary investors. There are two classes of nonimmigrant visas for investors: the E-1 visa for treaty traders and the E-2 visa for treaty investors. An E-1 treaty trader visa allows a foreign national to enter the United States for the purpose of conducting "substantial trade" between the United States and the individual's country of citizenship. An E-2 treaty investor can be any person who comes to the United States to develop and direct the operations of an enterprise in which he or she has invested, or is in the process of investing, a "substantial amount of capital." P.L. 112-130 makes Israeli nationals eligible for E-2 status if Israel offers a similar status to U.S. citizens and nationals. Israelis have been eligible to enter under the E-1 visa category since 1954. The 1954 treaty allowed E-1 status but did not grant E-2 status. The most common nonimmigrant visa for foreign students is the F visa. This visa is for international students pursuing an education at an "established college, university, seminary, conservatory, academic high school, elementary school, or other academic institution or in an accredited language training program." H.R. 3120 , as passed by the House, would require a college or university to be accredited by an accrediting agency recognized by the Secretary of Education in order to accept foreign students (i.e., students on F visas). Under certain circumstances, the Secretary of Homeland Security would be able to waive the accreditation requirement. In addition, H.R. 3120 would allow the Secretary of Homeland Security to require that other institutions (except seminaries and other religious institutions) be accredited if (1) there is an accrediting agency recognized by the Secretary of Education that can provide such accreditation; and (2) the institution has or will have 25 or more foreign students on F visas. Furthermore, the bill would prohibit persons convicted of certain offenses—such as alien smuggling, visa fraud, and human trafficking—from being involved in a position of ownership, authority, or management with an institution allowed to accept F students. The visa waiver program (VWP) allows nationals from certain countries to enter the United States as temporary visitors (nonimmigrants) for business or pleasure without first obtaining a visa from a U.S. consulate abroad. Temporary visitors for business or pleasure from non-VWP countries must obtain a visa from DOS officers at a consular post abroad before coming to the United States. The INA specifies the criteria that a country must meet to be designated as a VWP country, including offering reciprocal privileges to U.S. citizens; having had a nonimmigrant refusal rate of less than 3% for the previous year; and not compromising the law enforcement or security interests of the United States by its inclusion in the program. Countries can be terminated from the VWP if an emergency occurs that threatens U.S. security interests S. 3216 , as reported by the Senate Appropriations Committee, would allow the Secretary of DHS to use visa overstay rates instead of nonimmigrant visa refusal rates to determine which countries to admit to the VWP. Countries could be eligible for the VWP if their refusal rate or overstay rate was less than 3% in the previous fiscal year. S. 3216 would also allow the Secretary of DHS to waive the refusal or overstay rate requirement if certain conditions are met, such as meeting all the security requirements of the program and cooperating with the United States on counterterrorism initiatives and information sharing. The bill would also create a probationary period and procedures for terminating a country's participation in the VWP if that country failed to comply with any of the program's requirements. Foreign medical graduates (FMGs) may enter the United States on J-1 nonimmigrant visas in order to receive graduate medical education and training. Such FMGs must return to their home countries after completing their education or training for at least two years before they can apply for certain other nonimmigrant visas or LPR status, unless they are granted a waiver of the foreign residency requirement. States are able to request waivers on behalf of FMGs under a temporary program, known as the Conrad State Program or the Conrad 30 Program. Established by a 1994 law, this program initially applied to aliens who acquired J status before June 1, 1996. The Conrad State Program has been extended several times, most recently by P.L. 112-176 , which makes the program applicable to aliens who acquire J status before September 30, 2015. The H-2B visa allows for the temporary admission of foreign workers to the United States to perform temporary nonagricultural labor or service if unemployed U.S. workers cannot be found. H-2B employers are required to pay workers the highest of the prevailing wage rate or the federal, state, or local minimum wage. In January 2011, DOL issued a final rule to change the methodology for determining prevailing wage rates for the H-2B program. This rule has not yet gone into effect. Congress has blocked its implementation through a series of enactments. P.L. 112-55 (Div. B, §546) prohibited any funds made available by the act or another act for FY2012 to be used to implement or enforce the H-2B wage rule before January 1, 2012, and P.L. 112-74 prohibited any funds made available under the act to be used to implement the rule for the remainder of FY2012 (Div. F, §110). Currently, the Continuing Appropriations Resolution, 2013 ( P.L. 112-175 ) prohibits DOL from using funds to implement the new wage methodology until March 27, 2013. In response, DOL announced that it was postponing the effective date of the new wage methodology until March 27, 2013.
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Immigration has not been a front-burner issue for the 112th Congress. During the past two years, however, Congress has taken legislative action on some measures containing provisions on a range of immigration-related topics. The Consolidated Appropriations Act, 2012 (P.L. 112-74) contains provisions on border security, visa security, tourist visas, and refugees. It also includes limited language on other issues, such as employment eligibility verification and the H-2B temporary worker visa. P.L. 112-176 extends the authorization for four immigration programs (EB-5 visa program, E-Verify, Conrad State program, and special immigrant religious worker program) for three years, until September 30, 2015. P.L. 112-205 provides statutory authority for the Border Enforcement Security Task Force (BEST) initiative. P.L. 112-58 concerns military service-based immigration benefits; P.L. 112-127 concerns border tunnels. P.L. 112-130 makes Israeli nationals eligible for E-2 treaty investor visas. Both the House and the Senate have passed different bills (H.R. 4970, S. 1925) to reauthorize the Violence Against Women Act (VAWA). In addition, the House has passed bills that would make changes to permanent employment-based and family-based admissions (H.R. 3012); create new visa categories for prospective LPRs with graduate degrees in science, technology, engineering, or mathematics (STEM) fields (H.R. 6429); and reauthorize a temporary worker category for foreign nurses (H.R. 1933). It has also passed legislation with provisions on border security at and between ports of entry (H.R. 1299) and student visa reform (H.R. 3120). In other action on immigration-related legislation, the House Judiciary Committee has reported or ordered reported bills on electronic employment eligibility verification (H.R. 2885), immigrant detention (H.R. 1932), visa security (H.R. 1741), and the diversity visa (H.R. 704). House and Senate Committees have considered different DHS authorization bills. The Senate Homeland Security and Governmental Affairs Committee has reported S. 1546, and the House Homeland Security Committee has ordered reported H.R. 3116. Bills on victims of trafficking have been reported by the Senate Judiciary Committee (S. 1301) and ordered reported by the House Foreign Affairs Committee (H.R. 2830). The House Natural Resources Committee has reported bills addressing border enforcement activities on federal lands (H.R. 1505, which also was included as an amendment to H.R. 3116) and foreign residents of the Commonwealth of the Northern Mariana Islands (CNMI), a U.S. territory in the Pacific (H.R. 1466). In addition, House and Senate committees and subcommittees have held hearings on a number of immigration-related issues. This report discusses immigration-related issues that have received legislative action or are of significant congressional interest in the 112th Congress. Department of Homeland Security (DHS) appropriations are addressed in CRS Report R41982, Homeland Security Department: FY2012 Appropriations, and, for the most part, are not covered here.
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Debarment and suspension (collectively known as "exclusion") are of perennial interest to Congress because exclusion is one of the primary techniques that federal agencies use to avoid dealings with vendors who have failed, or are deemed likely to fail, to meet their obligations under federal law or government contracts. Debarred contractors are generally ineligible for new federal contracts for a fixed period of time, while suspended contractors are generally ineligible for the duration of any investigation or litigation involving their conduct. Federal law specifies various grounds for exclusion, only some of which expressly relate to procurement. The grounds and procedures for nonprocurement exclusions are outside the scope of this report. However, all persons excluded on procurement or other grounds are listed in the System for Award Management (SAM) (previously the Excluded Parties List System (EPLS)). Contracting officers are generally barred from soliciting offers from, awarding contracts to, or consenting to subcontracts with contractors who are listed as excluded in SAM. This report discusses grounds and procedures for procurement-related exclusions. In particular, it surveys the authorities requiring or allowing federal agencies to debar or suspend contractors, as well as the due process and other protections for contractors in exclusion proceedings. Contractors can currently be debarred or suspended under federal statutes or under the Federal Acquisition Regulation (FAR), an administrative rule governing contracting by executive branch agencies. There are only two explicit overlaps between the causes of debarment and suspension under statute and those under the FAR, involving debarments and suspensions for violations of (1) the Drug-Free Workplace Act of 1988 and (2) various statutes proscribing intentionally affixing a "Made in America" label to an ineligible product sold in or shipped to the United States. However, the FAR includes certain "catch-all" provisions that could potentially make the same conduct grounds for debarment or suspension under statute and under the FAR. One of these provisions authorizes debarment for "any ... offense indicating a lack of business integrity or business honesty." The other authorizes debarment or suspension for "any other cause of [a] serious or compelling nature." Some federal statutes include provisions specifying that contractors who engage in certain conduct prohibited under the statute shall or may be debarred or suspended from future contracts with the federal government. Such debarments or suspensions are often referred to as "statutory debarments" or "statutory suspensions" because they are expressly provided for in statute. They are sometimes also described as "inducement debarments" or "inducement suspensions" because they are designed to provide additional inducement for contractors' compliance with the statutes. Statutes providing for debarment and suspension often require that the excluded party be convicted of wrongdoing under the statute, but at other times, findings of wrongdoing by agency heads suffice for exclusion. Sometimes the exclusion applies only to certain types of contractors, or dealings with specified agencies (e.g., institutions of higher education who contract with the government, contracts with the Department of Defense). Most of the time, however, the exclusion applies more broadly to all types of contractors dealing with all federal agencies. Persons identified by statute—often the head of the agency administering the statute requiring or allowing exclusion—make the determination to debar or suspend contractors. Debarments last for a fixed period specified by statute, while suspensions last until a designated official finds that the contractor has ceased the conduct that constituted its violation of the statute. Generally, statutory exclusions can only be waived by a few officials under narrow circumstances. Heads of procuring agencies generally cannot waive exclusions to allow debarred or suspended contractors to contract with their agency. Table 1 surveys the procurement-related statutory exclusions presently in effect. It attempts to be comprehensive, listing all such exclusions codified in the United States Code (including as notes). It does not list any un-codified provisions that may exist. As a matter of policy, the federal government seeks to "prevent improper dissipation of public funds" in its contracting activities by dealing only with responsible contractors. Debarment and suspension promote this policy by precluding agencies from entering into new contracts with contractors whose prior violations of federal or state law, or failure to perform under contract, suggest they are nonresponsible. However, because exclusions under the FAR are designed to protect the government's interests, they may not be imposed solely to punish prior contractor misconduct. Federal courts could overrule challenged agency decisions to debar contractors when agency officials seek to punish the contractor—rather than protect the government—in making their exclusion determinations. Where grounds for debarment or suspension exist, as discussed below, any agency may act to exclude the contractor, potentially including one that does not currently have a contract with the contractor or is not the contractor's "primary" business partner. In practice, though, exclusions are most commonly initiated by the agency under or in regard to whose contract or proposed contract the alleged misconduct occurred. The FAR authorizes agency officials to debar contractors from future contracts under three circumstances. First, debarment may be imposed when a contractor is convicted of or found civilly liable for any so-called "integrity offense." Integrity offenses include fraud or criminal offenses in connection with obtaining, attempting to obtain, or performing a government contract or subcontract; violations of federal or state antitrust laws relating to the submission of offers; embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal criminal tax laws, or receipt of stolen property; intentionally affixing a "Made in America" label, or similar inscription, on ineligible products; and other offenses indicating a lack of business integrity or honesty that seriously and directly affect the present responsibility of a contractor or subcontractor. Second, in the absence of convictions or civil judgments, debarment may be imposed when government officials find, by a preponderance of the evidence, that the contractor committed certain offenses. These offenses include serious violations of the terms of a government contract or subcontract; violations of the Drug-Free Workplace Act of 1988; intentionally affixing a "Made in America" label, or similar inscription, on ineligible products; commission of an unfair trade practice as defined in Section 201 of the Defense Production Act; delinquent federal taxes in an amount exceeding $3,000; and knowing failure by a principal to timely disclose to the government credible evidence of (1) violations of federal criminal laws involving fraud, conflict of interest, bribery, or gratuity offenses covered by Title 18 of the United States Code; (2) violations of the civil False Claims Act; or (3) significant overpayments on the contract that occurred in connection with the award, performance or closeout of a federal contract or subcontract and were discovered within three years of final payment. Debarment can also result, under this provision of the FAR, when the Secretary of Homeland Security or the Attorney General finds, by a preponderance of the evidence, that a contractor has not complied with the employment provisions of the Immigration and Nationality Act. Third, and finally, debarment may be imposed whenever there exists "any other cause of so serious or compelling a nature that it affects the present responsibility of a contractor." Debarments last for a "period commensurate with the seriousness of the cause(s)," generally not exceeding three years. As discussed below, due process generally requires that contractors receive written notice of and the opportunity for a hearing regarding any debarment. Debarment-worthy conduct by a contractor's officers, directors, shareholders, partners, employees, or other associates can be imputed to the contractor, and vice versa. The FAR also allows agency officials to suspend government contractors when they suspect, upon adequate evidence, any of the following offenses, or when contractors are indicted for these offenses: fraud or criminal offenses in connection with obtaining, attempting to obtain, or performing a public contract; violation of federal or state antitrust laws relating to the submission of offers; embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violations of federal criminal tax laws, or receipt of stolen property; violations of the Drug-Free Workplace Act of 1988; intentional misuse of the "Made in America" designation; unfair trade practices, as defined in Section 201 of the Defense Production Act; delinquent federal taxes in an amount exceeding $3,000; knowing failure by a principal to timely disclose to the government credible evidence of (1) violations of federal criminal laws involving fraud, conflict of interest, bribery, or gratuity offenses covered by Title 18 of the United States Code; (2) violations of the civil False Claims Act; or (3) significant overpayments on the contract that occurred in connection with the award, performance or closeout of a federal contract or subcontract and were discovered within three years of final payment; and other offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor. Agency officials may also suspend a contractor when they suspect, upon adequate evidence, that there exists "any other cause of so serious or compelling a nature that it affects the present responsibility of a ... contractor or subcontractor." A suspension generally lasts only as long as an agency's investigation of the conduct for which the contractor was suspended, or any ensuing legal proceedings. It generally may not exceed 12-18 months unless legal proceedings have been initiated within that period. As discussed below, certain due process protections apply with suspensions, as with debarment. Suspension-worthy conduct can be imputed, as can debarment-worthy conduct. The FAR expressly authorizes agencies to extend debarment or suspension decisions to "affiliates" of the contractor if the affiliates are specifically named, and are given written notice of the exclusion and an opportunity to respond. The FAR also provides that the "fraudulent, criminal, or other seriously improper conduct" of an officer, director, shareholder, partner, employee, or other individual associated with a contractor may be imputed to the contractor in certain circumstances, and vice versa. In addition, the conduct of one contractor participating in a joint venture or similar arrangement may be imputed to other contractors if "the conduct occurred for or on behalf of the joint venture or similar arrangement, or with the knowledge, approval, or acquiescence of these contractors." However, while these regulations have been described by one court as "administrative devices to protect the public welfare and to impose on government contractors a higher standard of care," they do not necessarily allow agencies to exclude persons simply based on their job titles or other nominal indicia of control. Similarly, agency exclusion determinations could potentially be vulnerable to challenge on the grounds that they are unreasonable if the agency makes "inconsistent" decisions when determining whether to exclude particular affiliates of a contractor. Not all contractors who engage in conduct that constitutes potential grounds for debarment or suspension under the FAR are excluded from contracting with executive branch agencies. Nor does the debarment or suspension of a contractor guarantee that agencies do not presently have contracts with that contractor, or will not contract with that contractor before the exclusion period ends. Several aspects of the exclusion process under the FAR explain why this is so. First, under the FAR, debarment or suspension of contractors is discretionary. The FAR says that agencies "may debar" or "may suspend" a contractor when grounds for exclusion exist, but it does not require them to do so. Rather, the FAR advises agency officials to focus upon the public interest when making debarment determinations. Because the public interest can be seen to encompass both safeguarding public funds by excluding contractors who may be nonresponsible and not excluding contractors who are fundamentally responsible and could otherwise compete for government contracts, agency officials could find that contractors who engaged in exclusion-worthy conduct should not be excluded, particularly if they appear unlikely to engage in similar conduct in the future. Any circumstance suggesting that a contractor is unlikely to repeat past misconduct—such as changes in personnel or procedures, restitution, or cooperation in a government investigation—can potentially incline an agency's decision against debarment. Moreover, exclusion can be limited to particular "divisions, organizational elements, or commodities" of a company if agency officials find that only segments of a business engaged in wrongdoing. Other contractors generally cannot challenge agency decisions not to debar a contractor who is alleged or could be said to have engaged in debarment-worthy conduct. They generally can only contest an agency's determination of a contractor's present responsibility, which is required prior to a contract award. Second, agencies can use administrative agreements as alternatives to debarment. In these agreements, the contractor generally admits its wrongful conduct and agrees to restitution; separation of employees from management or programs; implementation or extension of compliance programs; employee training; outside auditing; agency access to contractor records; or other remedial measures. The agency, for its part, reserves the right to impose additional sanctions, including debarment, if the contractor fails to abide by the agreement or engages in further misconduct. The FAR notes such agreements as a possible alternative to debarment, and their formation has historically been seen to be within agencies' general authority to determine with whom and on what terms they contract. Only the agency signing the agreement is a party to it, and other agencies would not necessarily have been aware of the agreement's existence prior to enactment of the Duncan Hunter National Defense Authorization Act for FY2009. Commonly known as the Clean Contracting Act, Sections 871-873 of this act required the General Services Administration to establish a database that includes information related to contractor misconduct beyond that contained in the former Excluded Party List System (EPLS), subsequently incorporated within the System for Award Management (SAM). Called the Federal Awardee Performance Integrity Information System (FAPIIS), the database established by the Clean Contracting Act is required to contain brief descriptions of administrative agreements relating to federal contracts within the past five years (along with terminations for default and nonresponsibility determinations and civil, criminal, and administrative proceedings involving federal contracts that resulted in a conviction or finding of fault) for persons holding a federal contract or grant worth $500,000 or more. Third, even when a contractor is debarred, suspended, or proposed for debarment under the FAR, an agency may generally allow the contractor to continue performance under any current contracts or subcontracts unless the agency head directs otherwise. The debarment or suspension generally serves only to preclude an excluded contractor from (1) receiving new contracts or orders from executive branch agencies; (2) receiving new work or an option under an existing contract; (3) serving as a subcontractor on certain contracts with executive branch agencies; or (4) serving as an individual surety for the duration of the debarment or suspension. Any contracts that the excluded contractor presently has remain in effect unless they are terminated for default or for convenience under separate provisions of the FAR. Finally, the FAR authorizes agencies to waive a contractor's exclusion and enter into new contracts with a debarred or suspended contractor. For an exclusion to be waived, an agency head must "determine[] that there is a compelling reason for such action." Some agencies have regulations defining what constitutes a "compelling reason," while others do not. Waivers are agency-specific and are not regularly communicated to other agencies, a situation which a 2005 Government Accountability Office (GAO) report suggested remedying. Agency determinations about the existence of compelling reasons are not, per se , reviewable by the courts; however, other contractors can challenge awards to formerly excluded contractors through customary bid protest processes. Moreover, even when an agency does not waive a contractor's exclusion, it can reduce the period or extent of debarment if the contractor shows (1) newly discovered material evidence; (2) reversal of the conviction or civil judgment on which the debarment was based; (3) bona fide changes in ownership or management; (4) elimination of other causes for which the debarment was imposed; or (5) other appropriate reasons. Although agencies generally have broad discretion in determining whether contractors should be excluded for particular conduct, contractors enjoy several protections in the exclusion process. Perhaps the foremost among these is an entitlement to due process of the law under the Fifth Amendment to the U.S. Constitution. Early government contractors were generally held to lack due process protections because contracting with the government was viewed as a privilege, not a right, and courts held that persons were entitled to due process only when deprived of rights. However, this changed in 1964, with the decision by the U.S. Court of Appeals for the D.C. Circuit in Gonzalez v. Freeman . Written by future Chief Justice Warren Burger, who was then a judge for the D.C. Circuit, Gonzalez held that while contractors may not have a right to government contracts, "that cannot mean that the government can act arbitrarily, either substantively or procedurally, against a person or that such a person is not entitled to challenge the processes and the evidence before he is officially declared ineligible for government contracts ." For this reason, the court found that the Commodity Credit Corporation (CCC) had improperly debarred the Thos. P. Gonzalez Corporation, in part, because the CCC failed to provide written notice of the charges against the contractor and did not give the contractor "the opportunity to present evidence and to cross-examine adverse witnesses, all culminating in administrative findings and conclusions based upon the record." A subsequent decision by the D.C. Circuit in Horne Brothers, Inc. v. Laird held that contractors are also entitled to due process in suspension determinations, although the court distinguished between suspensions of shorter and longer duration in finding that a contractor is entitled to pre-exclusion notice and an opportunity to be heard in suspensions of five months but not of three weeks. Because of these and subsequent decisions, the FAR currently provides that contractors must generally receive notice and an opportunity for a hearing before being debarred, but can be suspended without prior notice or an opportunity to be heard so long as they are "immediately advised" of the suspension and allowed to offer information in opposition to the suspension within 30 days. The judicially developed doctrine of de facto debarment can also serve to protect contractors from improper exclusion in certain circumstances. While the possibility of de facto debarment often arises in connection with agency conduct that also deprives the contractor of a protected liberty interest without due process, the de facto debarment analysis focuses primarily upon conduct outside the debarment and suspension process that effectively excludes contractors. For example, in its 1980 decision in Old Dominion Dairy Products, Inc. v. Secretary of Defense , the U.S. Court of Appeals for the D.C. Circuit found that the Air Force had improperly de facto debarred a contractor through repeated nonresponsibility determinations based on the same information. The Air Force had determined the contractor to be nonresponsible for the award of one contract because of an audit report showing three irregularities in billing statements. The Air Force never informed the contractor of these allegations, in part, because contractors do not routinely receive notice of nonresponsibility determinations concerning them. However, the contractor was later determined to be nonresponsible for the award of a second contract by another contracting officer, who had received news of the earlier determination and relied upon it to conclude that the contractor lacked integrity. The court found that the second nonresponsibility determination constituted an improper de facto debarment because the contractor was excluded from government contracts without any notice of or opportunity to challenge the allegations against it. Later judicial and administrative tribunals have similarly found that an agency improperly de facto debars a contractor based upon repeated nonresponsibility determinations based on the same information, as well as through words or conduct evidencing an intent to exclude the contractor from government contracts. Additionally, in certain circumstances, agencies' determinations to debar or suspend a contractor could potentially be found to violate the Administrative Procedure Act (APA), particularly if the agency excludes the contractor based upon circumstances that the agency was aware of when it previously found that contractor sufficiently responsible to be awarded a federal contract. Such a situation arose in the 2001 case of Lion Raisins, Inc. v. United States , where the U.S. Court of Federal Claims found that the U.S. Department of Agriculture's (USDA's) suspension of a contractor for falsifying raisin certifications violated the APA, given that the USDA knew of the contractor's conduct when making five prior determinations that the contractor was "responsible." According to the court, [e]ven assuming plaintiff's alleged conduct evidences "a lack of integrity or business honesty" so as to justify suspension, the court holds that [the suspending official] abused his discretion when he determined that the evidence of plaintiff's lack of integrity in April 1998, which was known to the agency as of May 1999, "seriously and directly" affected plaintiff's "present responsibility" as a Government contractor in February of 2001. The USDA awarded plaintiff five contracts between the completion of its investigation in May 1999 and its decision to suspend plaintiff in January 2001. The USDA statutorily was obligated to make an affirmative finding of plaintiff's responsibility before awarding each of those contracts. In other words, five times between May 26, 1999, and February 1, 2001, the USDA itself affirmed that plaintiff's business practices met the standards for present responsibility. Significantly, by the USDA's own representations, it did so despite the possession of all the evidence that it would later use to suspend plaintiff. The court finds these facts dispositive of the issue of plaintiff's present responsibility. That [the suspending official] knew of the five interim contracts is demonstrated by their incorporation into the administrative record and by his reference to them in his final report and decision. That he nevertheless concluded that suspension was immediately necessary to protect government interests, without pointing to any event as to the issue of immediacy, was arbitrary and capricious. While the decision in Lion Raisins has been strongly criticized by some commentators and distinguished by some courts, it has been followed or cited approvingly by others and could potentially be construed as precluding agencies from debarring or suspending contractors under the FAR based on "stale" allegations of wrongdoing.
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Debarment and suspension (collectively known as "exclusion") are of perennial interest to Congress because exclusion is one of the primary techniques that federal agencies use to avoid dealings with vendors who have failed, or are deemed likely to fail, to meet their obligations under federal law or government contracts. Debarred contractors are generally ineligible for new federal contracts for a fixed period of time, while suspended contractors are generally ineligible for the duration of any investigation or litigation involving their conduct. Federal law specifies various grounds for exclusion, only some of which expressly relate to procurement. The grounds and procedures for nonprocurement exclusions are outside the scope of this report. However, all persons excluded on procurement or other grounds are listed in the System for Award Management (SAM), which contracting officers must check prior to awarding a contract. Procurement-related exclusions can be broadly characterized as being either statutory or administrative. Statutory exclusions are required or authorized by congressional enactments that bar persons who have engaged in conduct prohibited under the statute from at least certain government contracts. Such exclusions are often mandatory, or at least beyond the discretion of the heads of procuring agencies, and are intended as punishments. The statute often prescribes the duration of the exclusion, and procuring agencies generally cannot waive the exclusion. Administrative exclusions, in contrast, are authorized by the Federal Acquisition Regulation (FAR). The FAR authorizes the debarment of contractors who are convicted of, found civilly liable for, or found by agency officials to have committed specified offenses, or when other causes affect contractor responsibility. It similarly authorizes suspension when contractors are suspected of or indicted for specified offenses, or when there are other causes that affect contractor responsibility. The FAR does not require the exclusion of a contractor, even when grounds for exclusion are present. Instead, agency officials retain discretion as to whether to exclude particular contractors, and they may enter into administrative agreements circumscribing the conduct of contractors in lieu of exclusion. Exclusion under the FAR is also intended to protect the government's interests, not for purposes of punishment. The length of the exclusion can vary depending upon the seriousness of the conduct in question and the duration of any investigation, among other things. However, agency heads could waive administrative exclusions. Excluded parties are generally ineligible for new government contracts and, in the case of administrative exclusions, are also expressly said to be ineligible to (1) receive new work or an option under an existing contract; (2) serve as a subcontractor on certain contracts; or (3) serve as an individual surety. However, existing contracts of the excluded contractor generally remain in effect unless they are terminated for default or convenience by the government. Because they are dealing with the federal government, contractors are entitled to due process before being excluded from government contracts, although the nature of the process due to them varies for debarments and suspensions. Agencies are generally prohibited from using means other than debarment or suspension proceedings to effectively exclude contractors. Such conduct is sometimes described as "de facto debarment." Conduct that results in de facto debarment could also result in contractors being deprived of constitutionally protected liberty interests in prospective government contracts. Additionally, agencies could be found to have violated the Administrative Procedure Act (APA) by acting arbitrarily and capriciously if they exclude a contractor based upon circumstances that the agency was aware of when it previously found the contractor sufficiently "responsible" to be awarded a federal contract.
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On September 29, 2006, Congress passed the Department of Defense FY2007 Appropriation bill ( H.R. 5631 / P.L. 109-289 ), which included a continuing resolution (CR) providing funding for Science, State, Justice and Commerce (SSJC) and related agencies through November 17, 2006. The funding is the lesser of House- or Senate-passed funding levels for FY2007 or the FY2006 enacted level. On November 15, 2006, Congress passed a second CR ( H.J.Res. 100 ), which extended funding provided in the initial continuing resolution through December 8, 2006. On December 8, the House passed a third CR ( H.J.Res. 102 ) extending funding through February 15, 2007. The Senate passed the measure on December 9. On February, 15, 2007, the 110 th Congress passed P.L. 110-5 , which amended P.L. 109-289 ( H.J.Res. 20 ) the Revised Continuing Appropriations Resolution, 2007 extending appropriations through FY2007. The House passed its SSJC appropriation bill ( H.R. 5672 / H.Rept. 109-520 / S.Rept. 109-280 ) on June 29, providing a total of $63.1 billion. The House funding level included $22.5 billion for the Department of Justice, $5.9 billion for the Department of Commerce and related agencies, $22.7 billion for the Science agencies, $9.7 billion for the Department of State and international broadcasting, and $2.3 billion for related agencies. The Senate CJS Appropriations Subcommittee marked up its version of the bill on July 11, and the full Senate committee began working on the bill on July 13. The Senate version recommends $22.0 billion for Justice, $7.1 billion for Commerce, $23.8 billion for Science, and $2.3 billion for related agencies. Department of State funding is in H.R. 5522 ( S.Rept. 109-277 ) and contains $9.6 billion for the State Department and international broadcasting. The Administration submitted its FY2007 budget to Congress on February 6, 2006. The Administration requested $62.5 billion for the agencies under the jurisdiction of the Science, State, Justice, Commerce Appropriations (SSJC) subcommittee of the House and $52.3 billion for the Agencies under the Commerce, Justice, Science (CJS) Appropriations subcommittee in the Senate. The Administration requests for the major departments and their related agencies are Department of Justice, $21.3 billion; Department of Commerce, $6.3 billion; Department of State, $10.2 billion; Science, $22.8 billion; and Related Agencies, $2.3 billion. The President signed the FY2006 Science, State, Justice, Commerce, and Related Agencies (SSJC) appropriations bill into law on November 22, 2005 ( P.L. 109-108 ). The law provided $62.1 billion ($63.1 billion including FY2006 supplementals) for the agencies under the jurisdiction of the Science, State, Justice, Commerce Appropriations subcommittee of the House. The estimated appropriations of the major departments and their related agencies (after rescissions and supplementals) were Department of Justice, $21.7 billion; Department of Commerce, $6.6 billion; Department of State, $9.5 billion; Science, $22.2 billion; and Related Agencies, $3.2 billion. Appropriations bills reflect the jurisdiction of the subcommittees of the House and Senate Appropriations Committees in which they are considered. Jurisdictions for the subcommittees of the House and Senate Appropriations Committees were changed at the beginning of the 109 th Congress. In the 108 th Congress, both the House and Senate subcommittees had identical jurisdiction and produced the Commerce, Justice, State, the Judiciary and Related Agencies appropriations bills. In the 109 th Congress, jurisdiction for the Judiciary appropriation was removed to the Treasury, Transportation, HUD Subcommittees in the House and the Senate. Science appropriations, namely the National Aeronautical and Space Administration and the National Science Foundation, were transferred to the former CJS subcommittees in both chambers. In the Senate, appropriations for the Department of State were transferred to the Foreign Operations subcommittee; however, they remain under the jurisdiction of SSJC in the House. In addition, the Senate Appropriations Committee has placed the National Institute of Science and Technology and the National Oceanic and Atmospheric Administration under its Title III Science Agencies. For the purposes of comparison, this report will retain reference to these agencies in Title II Commerce agencies. The Administration requested $64.2 billion/$54.2 billion for SSJC/CJS appropriations in its FY2006 budget request sent to Congress on February 7, 2005. The House Appropriations Committee reported its SSJC bill ( H.R. 2862 , H.Rept. 109-118 ) on June 7, 2005, and the House passed the bill on June 16 after three days of debate and 43 amendments. The Senate Appropriations Committee reported its bill ( H.R. 2862 , S.Rept. 109-88 ) on June 23, 2005. The Senate Appropriations Committee reported its State, Foreign Operations Appropriation bill ( H.R. 3057 / S.Rept. 109-96 ) June 30. It contains the Senate figures of $9,709.2 for the Department of State, International Broadcasting, and related agencies. The full Senate passed the bill on July 20. The Senate passed the CJS bill by a vote of 91-4 on September 15, 2005, after consideration of 122 amendments. The Conference Report ( H.Rept. 109-272 ) was filed on November 7, 2005. The House approved the measure by a vote of 397-19 on November 9; the Senate approved it on November 11 by a vote of 94-5. It was signed into law by President Bush on November 22, 2005 ( P.L. 109-108 ). The FY2006 appropriations were subject to a 1.28% across-the-board rescission, reflecting Sec. 638, P.L. 109-108 and P.L. 109-148 . The table below shows funding trends for the major agencies in CJS appropriations over the five-year period FY2002-FY2006, including supplemental appropriations. Over the five-year period, funding decreased for the Department of Justice by $2.082 billion (-8.8%). Funding increased for the Department of Commerce by $0.735 billion (12.8%), for the Title III Science Agencies by $2.473 billion (12.5%), and for the Department of State by $1.559 billion (21.2%). The Justice Department's budget declined from FY2002 to FY2003 by 17% when it was reduced by more than $4 billion due to the relocation of some activities to the Department of Homeland Security. The Justice Department total has continued to be below the FY2002 total. The Commerce Department budget has generally increased, with a slight decrease in FY2006 over the previous year due primarily to the rescissions applied to FY2006 enacted appropriations. The Science Agencies' funding has shown a gradual increase each of the five years; the State Department's increases each year through FY2005 reflect funding for the U.S. embassy in Iraq, embassy security, and international peacekeeping, largely through emergency supplemental appropriations. Department of Justice The President's FY2007 budget request proposes the consolidation of the state, local, and tribal law enforcement grant programs, the Weed and Seed program, and juvenile justice programs into the Justice Assistance account of the Office of Justice Programs (OJP). The FY2007 President's request would eliminate funding for a number of OJP programs, such as the Edward Byrne Memorial Justice Assistance Grants (JAG) program ($327.2 million in FY2006 after earmarks for Boys and Girls Clubs and National Institute of Justice), the Edward Byrne Discretionary Grants ($189.3 million in FY2006), Indian Country Prison Grants ($8.9 million in FY2006), and Tribal Court Grants ($7.9 million in FY2006). The Administration's budget request proposes an increase in funding for the Project Safe Neighborhoods (PSN) initiative, a program administered by ATF that is designed to combat firearms-related crime, to reach a level of $395 million. Under the President's budget proposal, the restructured PSN program would include Project ChildSafe, State and Local Gun Crime Prosecution Assistance/ Project Sentry, Gang Technical Assistance Program, Weed and Seed Program/Community Capacity Development Office (CCDO), National Stalker and Domestic Violence Database, and National Criminal History Improvement Program (NCHIP). The FY2007 President's budget proposes funding for expanding and improving Drug Courts, providing $69 million for the program, an increase of $60 million over the FY2006 enacted appropriations. The FY2007 budget proposal included funding of $40 million for the Meth Hot Spots program, a program designed to provide state and local law enforcement assistance in cleaning up toxic waste sites created through the illicit production of methamphetamine. The proposed funding level represented an increase of $20 million over funding enacted in FY2006. The President's FY2007 request for DEA included a proposal to transfer the High-Intensity Drug Trafficking Area (HIDTA) program from the Office of National Drug Control Policy (ONDCP) to DOJ and to coordinate the program with the efforts of the Organized Crime and Drug Enforcement Task Force (OCDETF) and other antidrug efforts that are part of DEA's comprehensive drug enforcement strategy. The budget request proposes $208 million for HIDTA funding in FY2007. Department of Commerce and Related Agencies Key issues include the following: Appropriations measures that limit the use by the U.S. Patent and Trademark Office (PTO) of the full amount of fees collected in the current fiscal year. A proposed shift from funding to support industrial technology development programs at the National Institute of Standards and Technology, particularly the Advanced Technology Program and the Manufacturing Extension Partnership and congressionally directed projects, to a greater concentration on funding basic research in the physical sciences as part of the President's "American Competitiveness Initiative." For FY2007, the Bush Administration has requested that $45 million be added to the National Telecommunications and Information Administration (NTIA) budget to fund the Digital Television Transition and Public Safety Fund, as mandated by the Deficit Reduction Act of 2005. There is a 2008 deadline for the Federal Communications Commission (FCC) to auction unused analog spectrum and a February 17, 2009, deadline for converting all U.S. analog television transmissions to digital. Policymakers will likely consider this budget request with regard to whether it will achieve this goal, and how NTIA will assist in the conversion process. Possible termination of the Census Bureau's longitudinal Survey of Income and Program Participation and its proposed replacement with a new data collection system focusing on income and wealth dynamics. Consolidation of 18 federal economic and community development programs in the Administration's proposed "Strengthening America's Communities Initiative," reduction of their aggregate funding levels, and creation of a new Regional Development Account within the Economic Development Administration. The ability of U.S. trade agencies and PTO to fight intellectual property infringement abroad. The efficacy of U.S. trade agency enforcement of U.S. trade remedy laws against unfair foreign competition. The possible consolidation of the National Oceanic and Atmospheric Administration's (NOAA's) budget authority under a single Organic Act and Congress's review of NOAA satellite programs. Proposed terminations of several ocean-related programs, provoking criticism from the Joint Ocean Commission Initiative. Science Agencies Key issues are as follows: President Bush's "Vision for Space Exploration" and its consequent reprioritization of NASA programs, and potential personnel cuts (especially in aeronautics research). Whether to use the space shuttle to service the Hubble Space Telescope. Department of State and International Broadcasting Key issues include the following: Secretary Rice's newly announced vision for diplomacy referred to as Transformational Diplomacy, which will involve reorganizing parts of USAID and State. Moving of diplomats away from Washington and Europe to countries where the Administration deems more critical need. Increased emphasis on critical need language capabilities within the Department. Greater emphasis on public diplomacy activities conducted by all State Department personnel overseas. Title I of the SSJC/CJS bill typically covers appropriations for the Department of Justice (DOJ). Established by an act of 1870 (28 U.S.C. 501) with the Attorney General at its head, DOJ provides counsel for citizens and protects them through law enforcement. It represents the federal government in all proceedings, civil and criminal, before the Supreme Court. In legal matters, generally, the Department provides legal advice and opinions, upon request, to the President and executive branch department heads. The major functions of DOJ agencies and offices are described below. United States Attorneys prosecute criminal offenses against the United States, represent the federal government in civil actions, and initiate proceedings for the collection of fines, penalties, and forfeitures owed to the United States. United States Marshals Service provides security for the federal judiciary, protects witnesses, executes warrants and court orders, manages seized assets, detains and transports unsentenced prisoners, and apprehends fugitives. Federal Bureau of Investigation (FBI) investigates violations of federal criminal law; helps protect the United States against terrorism and hostile intelligence efforts; provides assistance to other federal, state, and local law enforcement agencies; and shares jurisdiction with Drug Enforcement Administration (DEA) over federal drug violations. Drug Enforcement Administration (DEA) investigates federal drug law violations; coordinates its efforts with state, local, and other federal law enforcement agencies; develops and maintains drug intelligence systems; regulates legitimate controlled substances activities; and conducts joint intelligence-gathering activities with foreign governments. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces federal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. It was transferred from the Department of the Treasury to the Department of Justice by the Homeland Security Act of 2002 ( P.L. 107-296 ). Federal Prison System provides for the custody and care of the federal prison population, the maintenance of prison-related facilities, and the boarding of sentenced federal prisoners incarcerated in state and local institutions. Office of Justice Programs (OJP) manages and coordinates the activities of the Bureau of Justice Assistance, Bureau of Justice Statistics, National Institute of Justice, Office of Juvenile Justice and Delinquency Prevention, Community Oriented Policing Services (COPS), and the Office of Victims of Crime. Most crime control has traditionally been a state and local responsibility. With the passage of the Crime Control Act of 1968 (P.L. 90-351), however, the federal role in the administration of criminal justice has increased incrementally. Since 1984, Congress has approved five major omnibus crime control bills, designating new federal crimes, penalties, and additional law enforcement assistance programs for state and local governments. For FY2007, Congress appropriated $22.692 billion for discretionary DOJ programs, an increase of $977.9 million over FY2006 appropriations. The Government Performance and Results Act (GPRA) required the Department of Justice, along with other federal agencies, to prepare a five-year strategic plan, including a mission statement, long-range goals, and program assessment measures. The Department's Strategic Plan for FY2003-2008 sets forth four goals: prevent terrorism and promote national security; enforce federal criminal laws and represent the rights and interests of the American people; prevent and reduce crime and violence by assisting state, local, and tribal efforts; ensure the fair and efficient operation of the Federal justice system. The Department of Justice FY2007 budget request included $21.494 billion in spending. The FY2007 budget request would have represented a decrease of $220 million over appropriations enacted by Congress for FY2006 (see Table 3 ). According to DOJ budget justifications, the President's FY2007 budget request included increased funding for preventing terrorism and ensuring domestic security of $386 million over FY2006 enacted levels. For reducing violent crime, gun crime, illegal drug trafficking, and white collar crime, the FY2007 budget request included $9 billion, which would have been an increase of $489 million over FY2006 enacted levels. Support for state, local, and tribal crime and violence prevention would have been reduced to $2.9 billion by the President's budget request, a decrease of $1 billion from FY2006 enacted levels. Funding for the federal justice system under the President's request totaled $7.8 billion, which would have been an increase of $404 million over FY2006 appropriations. The House passed its SSJC bill ( H.R. 5672 ), which would have provided a total of $22.456 billion for the Department of Justice. This was $1.131 billion more than the Administration had requested and $741.7 million more than the enacted FY2006 funding level. The Senate-passed recommendation included $21.955 billion in DOJ funding, which would have been $461.3 million more than the President's request and $241.2 million more than enacted FY2006 levels. Under P.L. 110-5 , the Revised Continuing Appropriations Resolution, 2007, $22.692 billion was enacted for funding the Department of Justice, an increase of $977.9 million over FY2006 appropriations. (See Table 3 for more details.) The General Administration account for DOJ includes salaries and expenses, as well as other programs designed to ensure that the collaborative functions of the DOJ agencies are coordinated to help fight crime as efficiently as possible. Examples include the Joint Automated Booking System and the Automated Biometric Identification System. For FY2007, the President's budget proposal included $2.078 billion for General Administration, an increase of $233.9 million over FY2006 funding levels. The General Administration account funds the Attorney General's office, senior departmental management, the Inspector General's office, efforts to integrate fingerprint identification systems (e.g., IAFIS and IDENT), and narrowband communications, among other things. For FY2007, the budget request proposed funding of $175 million for the Justice Information Sharing Technology (JIST) initiative, $89.2 million for Narrowband Communications, and $1.332 billion for the Office of the Detention Trustee. For salaries and expenses, the President's FY2007 budget proposed $115.5 million, an increase of $7.4 million over FY2006 funding levels. These proposed funds would have supported the Attorney General and DOJ senior policy-level offices responsible for managing Department resources and developing policies for legal, law enforcement, and criminal justice activities. The FY2007 budget request did not include funding for the Office of Intelligence and Policy Review, which Congress had funded at $36.6 million in FY2006. The Administration's request for FY2007 proposed funding of $15.9 million for a National Drug Intelligence Center. The House-passed bill included $1.942 billion for General Administration funding, while the Senate recommendation included $1.859 million. The House bill would have allowed $35.4 million for Salaries and Expenses; the Senate recommendation would have provided $41.1 million. The House bill would have provided $125 million for JIST, while the Senate committee recommended $100 million in funding. For Narrowband Communications, the House bill would have provided $89 million, and the Senate recommended $75 million. For General Administration, the continuing resolution (CR), P.L. 110-5 , included $1,226 billion for General Administration funding. For the Federal Office of Detention Trustee (OFDT) , the FY2007 request included $1.332 billion in funding, a $170.4 million increase over FY2006 appropriations. The OFDT provides overall management and oversight for federal detention services relating to the detention of federal prisoners in non-federal institutions or otherwise in the custody of the U.S. Marshals Service. The House would have provided $1.331 billion for the Office of the Detention Trustee, while the Senate recommended $1.332 billion, an amount identical to the Administration's request. The CR included $1.255 billion for the Detention Trustee. The Office of the Inspector General (OIG) is responsible for detecting and deterring waste, fraud, and abuse involving DOJ programs and personnel and promoting economy and efficiency in DOJ operations. The OIG also investigates allegations of departmental misconduct. The Administration's FY2007 budget proposal requested $70.558 million for the OIG, a $2.7 million increase over the FY2006 appropriation. The House and Senate proposals would have provided $70.558 million for FY2007. The CR for FY2007 included $70.118 million. The U.S. Parole Commission adjudicates parole requests for prisoners who are serving felony sentences under federal and District of Columbia code violations. For FY2007, the Administration's budget request proposed $11.951 million for the parole commission, an increase of $1.0 million over the FY2006 appropriation. The House and Senate proposals would have provided $11.5 million for the Parole Commission. The CR included $11.424 million for FY2007. The Legal Activities account includes several subaccounts: (1) general legal activities, (2) U.S. Attorneys, (3) U.S. Marshals Service, (4) prisoner detention, and (5) other legal activities. For FY2007, the Administration's budget request included $3.446 billion for legal activities, an increase of $168.7 million over the FY2006 enacted appropriations of $3.277 billion. The House bill included $3.385 billion, and the Senate recommended $3.384 billion for total legal activities. Under the CR, Legal Activities received FY2007 appropriations of $3.335 billion. The General Legal Activities account funds the Solicitor General's supervision of the department's conduct in proceedings before the Supreme Court. It also funds several departmental divisions (tax, criminal, civil, environment and natural resources, legal counsel, civil rights, and antitrust). For these purposes, the Administration's FY2007 budget request included $684.3 million, an increase of almost $30.8 million over the FY2006 enacted appropriation. The House bill included $668.7 million, and the Senate provided $653.4 million for these activities. The CR included $672.6 million for FY2007. The U.S. Attorneys and the U.S. Marshals Service are present in all of the 94 federal judicial districts. The U.S. Attorneys prosecute criminal cases and represent the federal government in civil actions. For the U.S. Attorneys Office, the Administration's FY2007 request included $1.664 billion, an increase of nearly $64.8 million over the enacted FY2006 amount of $1.599 billion. The House bill proposed $1.664 billion, the same amount as the Administration's request, while the Senate proposed $1.646 billion for funding of the U.S. Attorneys Office. The CR included $1.646 billion for the U.S. Attorneys in FY2007. The U.S. Marshals are responsible for the protection of the Federal Judiciary, protection of witnesses, execution of warrants and court orders, custody and transportation of unsentenced federal prisoners, and fugitive apprehension. The FY2007 request included $825.9 million for the Marshals Service, an increase of $25.3 million over the Service's FY2006 enacted appropriation of $801.7 million. The House bill proposed funding of $825.9 million, while the Senate proposed funding of $856.0 million for the U.S. Marshals. The CR included $814.8 million in FY2007 appropriations for the U.S. Marshals. For other legal activities —the Community Relations Service, the Independent Counsel, the U.S. Trustee Fund (which is responsible for maintaining the integrity of the U.S. bankruptcy system by, among other things, prosecuting criminal bankruptcy violations), and the Asset Forfeiture program—the FY2007 request included $298.2 million, $64 million more than appropriated in FY2006 of $234 million. The CR specified FY2007 funding of $10.178 million for Salaries and Expenses of the Community Relations Service, and $21.211 million for the Assets Forfeiture Fund out of total funding for other legal activities of $202.4 million. The Interagency Law Enforcement account reimburses departmental agencies for their participation in the Organized Crime Drug Enforcement Task Force (OCDETF) program. Organized into nine regional task forces, this program combines the expertise of federal agencies with the efforts of state and local law enforcement to disrupt and dismantle major narcotics-trafficking and money-laundering organizations. From DOJ, the federal agencies that participate in OCDETF are the Drug Enforcement Administration; the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Marshals Service; the Justice, Tax and Criminal Divisions of DOJ; and the U.S. Attorneys. From the Department of Homeland Security, the U.S. Bureau of Immigration and Customs Enforcement and the U.S. Coast Guard participate in OCDETF. In addition, the Internal Revenue Service and Treasury Office of Enforcement also participate from the Department of the Treasury. State and local law enforcement agencies participate in approximately 87% of all OCDETF investigations. The FY2007 President's budget request included $706.1 million for OCDETF, of which $208 million was intended to be used for relocating the High Intensity Drug Trafficking Areas (HIDTAs) at DOJ, for a net OCDETF funding level of $498.1 million. For FY2006, $483.2 million was appropriated for OCDETF, $14.9 million less than the net FY2007 amount requested by the Administration. The House bill proposed funding of $498.5 million for OCDETF in FY2007. The Senate recommended $388.0 million for the program. Neither the House nor Senate proposals included the relocation of HIDTAs from the Department of Treasury. The CR included OCDETF funding of $494.8 million for FY2007. The Federal Bureau of Investigation (FBI), as the lead federal investigative agency, continues to reorganize to focus more sharply on preventing terrorism and other criminal activities. The Administration's FY2007 request proposed funding of $6.04 billion for the FBI. This funding level would have increased FBI funding by $302.4 million over the FY2006 enacted appropriations of $5.738 billion. Of the President's requested amount, $51.4 million would fund construction. The FY2007 budget request included funding for the FBI to improve its ability to prevent terrorist attacks, disrupt terrorist and their financing, and investigate and prosecute those responsible for committing terrorist acts against the United States. The President's FY2007 budget would have provided funding of $2.308 billion for counterintelligence and national security, compared with appropriations of $2.260 billion in FY2006, a proposed increase of $48 million. The House bill provided total FBI funding of $6.043 billion, including $80.4 million for construction. The Senate recommended funding of $5.975 billion for the agency, of which $120.7 million would be for construction expenses. The CR included FBI total appropriations for FY2007 of $6.014 billion, of which $5.962 billion was specified for salaries and expenses, and $51.4 million was specified for construction. The Drug Enforcement Administration (DEA) is the lead federal agency tasked with reducing the illicit supply and abuse of dangerous narcotics and drugs. DEA, along with OCDETF, dismantled 119 drug trafficking organizations operating in the United States and significantly disrupted the activities of 208 others in FY2005. The Administration's FY2007 request included $1.736 billion for DEA, almost $61.6 million more than the $1.675 billion appropriated by Congress in FY2006. For FY2007, the House proposed funding of $1.752 billion for DEA, while the Senate proposed $1.724 billion. The CR included $1.737 billion for DEA funding in FY2007. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces federal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. The FY2007 request proposed $860.1 million for ATF, a decrease of almost $71.7 million from FY2006 appropriations of $935.8 million. According to the FY2007 budget request, the Administration had proposed additional funding for ATF of $120 million to be collected from user fees related to explosives. The President's budget would have restructured and centralized a large portion of ATF's programmatic resources into the Project Safe Neighborhoods (PSN) initiative. The PSN initiative brings together federal, state, and local law enforcement agencies to identify the most pressing gun crime problems in their communities and develop strategies to attack those problems through prevention, deterrence, and aggressive prosecution. Under the PSN, a number of programs of several agencies, including OJP, ATF, the U.S. Attorneys, and the DOJ Criminal Division, would be coordinated to address the crime and violence in hard-hit neighborhoods across the country. For example, from OJP, the following programs would be brought into PSN: Project Childsafe , which distributes free gun safety kits; the State and Local Gun Crime Prosecution Assistance ( Project Sentry ) program, which provides support for prosecution of crimes involving misuse of firearms; the Gang Technical Assistance Program , a new program to assist states and localities in their efforts to disrupt criminal gang activity and enhance the sharing of criminal intelligence; the Weed and Seed program, which promotes multi-disciplinary community-based crime control strategies, including gang-related violence; the National Stalker and Domestic Violence Database , which supports law enforcement and prosecution efforts against stalking and domestic violence; and the National Criminal History Improvement Program (NCHIP) , which sponsors efforts to improve the quality, timeliness, and immediate availability of criminal history and related records used to support criminal investigations, and background checks for employment and eligibility to purchase a firearms. The Administration's FY2007 budget request proposed funding of $395 million for the PSN program. ATF also launched a companion initiative, the Violent Crime Impact Teams (VCIT), which combines the efforts of federal, state, and local law enforcement to target gun crime "hot spots." VCIT is currently active in 10 cities, and the FY2007 budget request included an expansion of the initiative to 15 additional cities. This expansion would have increased VCIT funding by $16 million, for a total request of $35.7 million. The House bill provided $950.1 million, and the Senate recommended $985.0 million for FY2007 funding for ATF. The CR included $979.2 million for ATF funding in FY2007. The Federal Prison System is administered by the Bureau of Prisons (BOP), which maintains penal institutions nationwide and contracts with state, local, and private concerns for additional detention space. The Administration requested almost $5.107 billion in FY2007 funding for the Federal Prison System, almost $173.2 million more than Congress appropriated for FY2006. The Administration estimates that as of January 26, 2006, there were nearly 188,463 federal inmates in 113 institutions, of which 11% represent immigration-related arrests and over 53% represent drug-related offenses. Of the total number of federal inmates, 159,872 are in facilities operated by the BOP. The BOP projects that the total federal prison population will increase to 195,972 in 2006, and increase to 203,880 by 2007. As required by the Violent Crime Control and Law Enforcement Act (VCCLEA) of 1994, the BOP provides substance abuse treatment for certain "eligible" inmates. According to BOP, over the past seven years, the percentage of all federal inmates with a substance abuse disorder increased from 34% to 40%. The House bill proposed funding of $5.079 billion for BOP, while the Senate recommended $5.303 billion for FY2007. The CR included FY2007 total funding for BOP of $5.407 billion, of which $4.974 billion was specified for salaries and expenses and $432.3 million for buildings and facilities. The Office of Justice Programs (OJP) manages and coordinates the National Institute of Justice, Bureau of Justice Statistics, Office of Juvenile Justice and Delinquency Prevention, Office of Victims of Crimes, Bureau of Justice Assistance, and related grant programs. For the Office of Justice Programs and related offices, bureaus, and programs, the Administration's request included $1.201 billion for FY2007, a reduction of more than $1.2 billion from FY2006 appropriated levels of just under $2.372 billion. For FY2007, the House bill provided $2.376 billion in total OJP funding, while the Senate proposed total funding of almost $1.934 billion for these programs. The CR included FY2007 funding for OJP programs of $2.479 billion. The President's FY2007 request proposed to eliminate funding for a number of OJP programs, similar to the President's FY2006 budget request, and consolidate the remaining programs under the Justice Assistance account. The following are selected examples of the President's budget-cutting proposals. The Administration's budget proposal would have eliminated funding for, among other programs, the Byrne Justice Assistance Grants (JAG) program ($411.2 million in FY2006), the Byrne Discretionary Grants ($189.3 million in FY2006), Indian Country Prison Grants ($8.9 million in FY2006), and Tribal Court Grants ($7.9 million in FY2006). The President's proposal also would have eliminated funding for most Juvenile Justice programs, which had received appropriations in FY2006 of $338.4 million, including the Juvenile Accountability Block Grant (JABG), funded at $49.4 million. Funding for the State Criminal Alien Assistance Program (SCAAP), would have been eliminated by the President's budget proposal, compared with FY2006 funding of $399.8 million for the program, and the Secure Our Schools (SOS) program funding would have been eliminated, resulting in a $14.8 million reduction from FY2006 funding levels. The President's FY2007 budget request would have reduced funding for the Bulletproof Vests program from $29.6 million in FY2006 to $9.8 million in FY2007, and the Prison Rape Prevention and Prosecution Program, funded at just under $16 million in FY2006, would have been reduced to slightly under $2 million in FY2007. The President's FY2007 budget proposal would have increased funding for the Southwest Border Prosecution Initiative, from $29.617 million in FY2006 to $29.757 million in FY2007. The Weed and Seed Program/Community Capacity Development Office (CCDO) budget request would have decreased slightly, from $49.361 million in FY2006 to $49.348 million in FY2007. The National Stalker and Domestic Violence Database funding would have been increased, from $2.934 million in FY2006 to $2.938 in FY2007. The FY2007 budget request would have funded the Boys and Girls Clubs of America but at a reduced funding level of $59.5 in FY2007, compared to $83.9 million in FY2006. Both the House and Senate proposals would have funded most of the programs not funded under the Administration's FY2007 budget request. The House proposed funding of almost $635.1 million for JAG grants, while the Senate proposed $555.1 million for the program. The House bill would not have included any funding for the Byrne Discretionary Grants, while the Senate proposed funding of $120 million for FY2007. The House proposed funding of $49.3 million for the Weed and Seed program, while the Senate proposed $40 million for the program, an amount that would have reflected a $9.3 million reduction in program funding. The CR included $1.184 billion for law enforcement assistance, which included amounts for JAG grants as well as other grant programs for state, local, and tribal law enforcement. The CR did not specify the FY2007 funding amounts for many of the grant programs under OJP, although it did specify funding of $50.0 million for the Weed and Seed program. The Administration's FY2007 request proposed $102.1 million for the Community Oriented Policing Services (COPS) program along with a rescission of $127.5 million, for a negative budget authority of $25.4 million. However, under the President's budget proposal some COPS programs would have been combined with other OJP programs and transferred into the Justice Assistance account (described below), to be awarded on a competitive basis. Funding for COPS Interoperability and Technology Grants would have been eliminated ($138.1 million in FY2006); the Meth Hot Spots program would have been funded at $40.1 million in FY2007, down from $62.7 million in FY2006; and the COPS Training and Technical Assistance program would have been funded at a slightly higher level, $3.997 million in FY2007, compared with $3.949 million in FY2006. In addition, beginning in FY2007, the Administration proposed that Indian Country activities be jointly administered by OJP and COPS, and included proposed funding of $31.1 million for tribal law enforcement. The House would have funded the COPS program at $541.7 million in FY2007, while the Senate would have provided funding of $537.6 million for the program. The House proposed $32 million for the Bullet Proof Vest initiative, while the Senate recommended $20 million for FY2007. The Meth Hot Spots program would have been funded at $99 million by the House proposal, while the Senate proposed funding of $85 million. COPS technology grants would have been funded at $100 million by the House and $110 million by the Senate. The CR included FY2007 funding for COPS of $541.7 million. The CR also included a rescission of up to $109 million in unobligated balances available from the prior year appropriation. The Justice Assistance account funds the operations of OJP bureaus and offices. Besides funding OJP management and administration, this account also funds the National Institute of Justice, the Bureau of Justice Statistics, cooperative efforts that address missing children, and regional criminal intelligence. For FY2007, the Administration's budget requested just under $1.098 billion. The House and Senate proposed total FY2007 funding for Justice Assistance of $223.6 million and $172 million, respectively. Under the CR, FY2007 funding for Justice Assistance received $237.7 million. The President's FY2007 budget proposed the realignment of most OJP grant programs under the Justice Assistance account, although Congress did not approve the Administration's proposal. Under the President's proposed realignment, selected OJP programs would have been used for the following purposes. Improving the Criminal Justice System. For Improving the Criminal Justice System, the Administration's request included $377.2 million along with a proposed $127.5 million rescission. The balance of the funds requested would include, among other programs, the following: $9.8 million for the Bulletproof Vest Partnership (formerly funded under COPS); $59.5 million for Boys and Girls Clubs; $165.8 million for the PSN program; $39.7 million for the Regional Information Sharing System; $29.8 million for the Southwest Border Project; $14.9 million for Faith-Based Prisoner Re-entry Initiative; and $1.9 million for Prison Rape Prevention & Prosecution. In addition, the Administration's FY2007 request proposed to eliminate funding for the State Criminal Alien Assistance program (SCAAP). The House bill proposed funding of $32 million for the Bulletproof Vest program, while the Senate proposal recommended $20 million in FY2007 funding. The House bill would have included $75 million for Boys and Girls Clubs, while the Senate proposed funding of $85 million for the program. The House bill included funding of $415 million for SCAAP, while the Senate proposed funding of only $100 million for the program. For the PSN program, the House bill provided $54.8 million, and the Senate recommended $30 million. Research, Development, Evaluation, and Statistics. For Research, Development, Evaluation and Statistics, the Administration's FY2007 budget requested $116 million: $59.8 million for criminal justice statistics and $56.2 million for research, evaluation, and demonstration projects. Technology for Crime Identification. The Administration's FY2007 budget request for the Technology for Crime Identification program proposed $238.2 million in funding, of which $175.6 million for the DNA analysis and capacity enhancement program. Of that amount, not less than $151 million could be for reducing and eliminating the backlog of DNA samples and for increasing state and local DNA laboratory capacity. Both the House and Senate bills would have funded the DNA backlog grants at almost $175.6 million for FY2007, an increase of more than $68 million over FY2006 levels. Juvenile Delinquency and Crime. For strengthening the juvenile justice system, the Administration's FY2007 request included $175.9 million, including $93.2 for state and local programs under the Juvenile Justice Formula Grant program; $33.5 million for the Juvenile Delinquency Block Grants; $6.5 million for demonstration projects; and $10 million for research, evaluation, training and technical assistance. The President's FY2007 budget did not request funding for the Juvenile Accountability Incentive Block Grant. Juvenile Justice programs would have been funded at $285.7 million by the House and $300.2 million by the Senate. Both the House and Senate bills included $25 million in funding for the Juvenile Justice Formula Grant program and $6.6 million for discretionary grants. The House proposal provided $49.4 million for Juvenile Accountability Incentive Block Grants, while the Senate would provided $50 million. The CR provided funding of $326 million for FY2007 Juvenile Justice programs. Substance Abuse Demand Reduction. The Administration's FY2007 budget request for Substance Abuse Demand Reduction provided for funding of $79.9 million, including $69.2 million for Drug Courts, and $10.7 million for the Cannabis Eradication Grant program. The President's FY2007 budget request did not include funding for the Residential Substance Abuse Treatment (RSAT), the drug treatment program for state prisoners. For Drug Courts, the House proposed $40 million in funding, compared to the Senate's recommendation of $15 million for the program. For the RSAT program, the House bill included $5 million and the Senate bill included $2 million. Neither bill included funding for the Cannabis Eradication grant program. Victims of Crime. The Administration's budget request for services for Victims of Crime (VOC) within the Justice Assistance account included $109.4 million. Among other things, this amount would have funded programs and initiatives authorized under the Violence Against Women Act (VAWA) and Victims of Child Abuse Act, including $50.9 million for the Missing Child program, just under $10 million for the Victim Notification System and for legal counsel and support services for victims, $11.7 million for improving the investigation and prosecution of child abuse, $1.9 million for the National Sex Offender Public Registry, and $1.5 million for victims of trafficking. In addition, the President's FY2007 budget request proposed a $625 million cap for the Crime Victims Fund. The budget request also included a proposal to rescind, or cancel, $1.255 billion from balances in the Crime Victims Fund, also frequently referred to as the "Rainy Day" fund. The House and Senate bills included provisions to set the Crime Victims Fund cap at $625 million for FY2007. The House and Senate bills did not include provisions to rescind the balance of the Crime Victims Fund. The Crime Victims Fund cap for FY2007 was $625 million, and the President's proposal to rescind the balance of the "Rainy Day" fund was not included in the CR. Office on Violence Against Women. The Office on Violence Against Women (OVW) was created in 1995 as a component of the Department of Justice, and the OVW is administratively separate from OJP. The Administration's FY2007 budget request for OVW would have provided funding of $347 million. Of that amount, $11.9 million would have been for the Court-Appointed Special Advocate (CASA) program, $2.3 million for Child Abuse Training programs for judicial personnel and practitioners, and $986,000 for grants for televised testimony. For VAWA, the House bill included $418.3 million and the Senate report recommended $390 million. The CR provided $382.5 million for VAWA programs. CRS Report RL33308, Community Oriented Policing Services (COPS): Background, Legislation, and Issues , by [author name scrubbed]. CRS Report RS22416, Edward Byrne Memorial Justice Assistance Grant Program: Legislative and Funding History , by [author name scrubbed]. CRS Report RL32824, Federal Crime Control: Background, Legislation, and Issues , by Kristin M. Finklea and Lisa M. Seghetti. CRS Report RS22458, Gun Control: Statutory Disclosure Limitations on ATF Firearms Trace Data and Multiple Handgun Sales Reports , by [author name scrubbed]. CRS Report RL32842, Gun Control Legislation , by [author name scrubbed]. CRS Report RL33403, Hate Crime Legislation , by [author name scrubbed]. CRS Report RL33011, Terrorist Screening and Brady Background Checks for Firearms , by [author name scrubbed]. CRS Report RL33033, Intelligence Reform Implementation at the Federal Bureau of Investigation: Issues and Options for Congress , by [author name scrubbed]. CRS Report RS22070, Juvenile Justice: Overview of Legislative History and Funding Trends , by [author name scrubbed]. CRS Report RL32800, Sex Offender Registration and Community Notification Law: Recent Legislation and Issues , by [author name scrubbed]. CRS Report RL32579, Victims of Crime Compensation and Assistance: Background and Funding , by [author name scrubbed]. CRS Report RL30871, Violence Against Women Act: History and Federal Funding , by [author name scrubbed]. Title II includes the appropriations for the Department of Commerce and related agencies. The origins of the department date to 1903 with the establishment of the Department of Commerce and Labor (32 Stat. 825). The separate Department of Commerce was established on March 4, 1913 (37 Stat. 7365; 15 U.S.C. 1501). The department's responsibilities are numerous and quite varied, but its activities center on five basic missions: (1) promoting the development of U.S. business and increasing foreign trade; (2) improving the nation's technological competitiveness; (3) encouraging economic development; (4) fostering environmental stewardship and assessment; and (5) compiling, analyzing, and disseminating statistical information on the U.S. economy and population. The following agencies within the Commerce Department carry out these missions: Economic Development Administration (EDA) provides grants for economic development projects in economically distressed communities and regions. Minority Business Development Agency (MBDA) seeks to promote private and public sector investment in minority businesses. Bureau of the Census collects, compiles, and publishes a broad range of economic, demographic, and social data. Economic and Statistical Analysis Programs provide (1) timely information on the state of the economy through preparation, development, and interpretation of economic data and (2) analytical support to department officials in meeting their policy responsibilities. Much of the analysis is conducted by the Bureau of Economic Analysis (BEA). International Trade Administration (ITA) seeks to develop the export potential of U.S. firms and to improve the trade performance of U.S. industry. Bureau of Industry and Security enforces U.S. export laws consistent with national security, foreign policy, and short-supply objectives (formerly the Bureau of Export Administration). National Oceanic and Atmospheric Administration (NOAA) provides scientific, technical, and management expertise to (1) promote safe and efficient marine and air navigation; (2) assess the health of coastal and marine resources; (3) monitor and predict the coastal, ocean, and global environments (including weather forecasting); and (4) protect and manage the nation's coastal resources. Patent and Trademark Office (PTO) examines and approves applications for patents for claimed inventions and registration of trademarks. Technology Administration , through the Office of Technology Policy, advocates integrated policies that seek to maximize the impact of technology on economic growth, conducts technology development and deployment programs, and disseminates technological information. National Institute of Standards and Technology (NIST) assists industry in developing technology to improve product quality, modernize manufacturing processes, ensure product reliability, and facilitate rapid commercialization of products based on new scientific discoveries. National Telecommunications and Information Administration (NTIA) advises the President on domestic and international communications policy, manages the federal government's use of the radio frequency spectrum, and performs research in telecommunications sciences. The President's FY2007 budget request called for $6.18 billion for the Commerce Department. This represented a decrease of $293.8 million, or about 4.5%, from the FY2006 appropriation for the department of $6.47 billion (after the FY2006 rescission). The House bill, H.R. 5672 , would have cut the Department's appropriation further, to $5.77 billion, about 6% less than the current level and 10% less than the request. The principal reductions made by the House were in the accounts for NOAA, EDA, Census, and departmental management. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for the Commerce Department for FY2007 was reported to be $6.53 billion. The President's FY2007 budget requested $98.5 million in new discretionary budget authority for Departmental Management: $57.0 million for salaries and expenses, $22.53 million for the Office of Inspector General (IG), and $18 million for renovation of the Department's headquarters, the Herbert C. Hoover Building. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for the Departmental Management for FY2007 was reported to be $47 million for salaries and expenses and $22 million for IG. The President's FY2007 budget request of $57 million for salaries and expenses would have been approximately $9.5 million above the FY2006 appropriation, a 20% increase. The $22.53 million for the IG would have been a slight increase from the FY2006 appropriation of $22.47 million. The House bill provided $30.1 million for salaries and expenses, $26.9 million less than requested and $16.8 million less than the FY2006 appropriation. No funds were provided for renovation of the Hoover Building, but the House did grant the full $22.5 million for the IG. The Senate committee report's recommendation was that $52.1 million be provided for salaries and expenses. Included in this figure was $5.9 million for blast protection windows in the Hoover Building, but the Senate, like the House, provided nothing for Hoover Building renovation. With the $22.5 million for the IG, the Senate committee's allowance for the departmental management account amounts to $74.6 million, $22 million more than the House's allowance. The International Trade Administration (ITA) provides export promotion services, works to assure compliance with trade agreements, administers trade remedies such as antidumping and countervailing duties, and provides analytical support for ongoing trade negotiations. The agency is divided into four policy units and an Executive and Administrative Directorate, with an estimated total full-time staff of 2,217 in FY2006. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for ITA for FY2007 was reported to be $393.8 million, which is the same as the agency's budget in FY2006. The President's FY2007 request for ITA was $408.8 million, a $14.9 million (3.6%) increase over the FY2006 appropriation of $393.8 million (after rescissions). The request anticipated the collection of $33 million in fees and other reimbursable obligations, raising available funds to $441.8 million. The House recommended $429.8 million for ITA for FY2007, $28 million more than the current level and $8 million more than the request. Of the total, $13 million was to be offset from fee collections, for a net appropriation of $416.8 million. The House Appropriations Committee stated that the budget request was insufficient to fund overseas ongoing operations and provided an additional $3 million above the request to cover the costs of ongoing operations in overseas field offices. The Committee also recommended an additional $2 million for increased exports of environmental technologies. The Senate Appropriations Committee recommended a net appropriation of $413.8 million for ITA, $5 million above the budget request, but $3 million below the House recommendation. The MSU carries out certain industry analysis functions of the former Trade Development Unit (TD), but it is also tasked with promoting the competitiveness and expansion of the U.S. manufacturing sector under the President's Manufacturing Initiative of March 2003. Congress transferred the trade promotion activities of TD—the Advocacy Center, the Trade Information Center, and Office of Export Assistance—to the new Trade Promotion Unit. The FY2006 appropriation provided $47 million for the MSU (before rescissions). The President requested $47.3 million in direct obligations for FY2007. The Senate recommendation for MSU for FY2007 was the same as the budget request. The MAC monitors foreign country compliance with trade agreements, identifies compliance problems and market access obstacles, and informs U.S. firms of foreign business practices and opportunities. The FY2006 appropriation provided $43 million for MAC (before rescissions). The President requested $39.3 million in FY2007. The House recommendation for MAC was $40.8 million. The Senate recommendation for MAC was the same as the budget request. IA administers the trade remedy laws of the United States, including antidumping, countervailing duty, and safeguard actions. In FY2006, IA received an appropriation of $59 million (before rescissions). The Administration has requested $59.4 million for IA in FY2007. The House recommendation for IA was $61.4 million. The Senate recommendation for IA in FY2007 was $59.4 million, the same as the budget request. The TP/FCS program conducts trade promotion programs intended to broaden and deepen the base of U.S. exports; provides U.S. companies with export assistance services; and leads interagency advocacy efforts for major overseas projects. In FY2006, the TP/FCS received an appropriation of $227 million (before rescissions). For FY2007, the Administration requested $237.3 million for this unit. The House recommendation for TP/FCS was $249.8 million. The Senate recommendation for TP/FCS was $242.3 million, $5 million above the budget request. USTR, located in the Executive Office of the President (EOP), is responsible for developing and coordinating U.S. international trade and direct investment policies. The President's FY2007 request was $42.2 million, about $2 million less than the FY2006 amount of $44.2 million appropriated by Congress (including rescissions). The House approved $46.2 million for FY2007, $4 million (9%) more than requested by the President. The House recommended that $2 million of this amount was to be for negotiating, implementing, monitoring, and enforcing trade agreements with China. The Senate Appropriations Committee recommendation provided $42.2 million for USTR, the same as the Administration's request. The Revised Continuing Appropriations Resolution enacted funding level for USTR for FY2007 was reported to be $44.2 million, which is the same as the agency's budget in FY2006. The USTR is responsible for advancing U.S. interests at the WTO and negotiating bilateral and regional free trade agreements (FTAs). In 2006 and 2007, the Administration concluded FTAs with Oman, Peru, Colombia, Panama, and South Korea. The Administration has ongoing negotiations with Thailand, Malaysia, and the United Arab Emirates. In addition, the Administration is participating in the ongoing multilateral negotiations known as the Doha Development Agenda. In 2006, USTR obtained congressional approval of FTAs with Bahrain, the Dominican Republic and Central American countries (DR-CAFTA), and Oman. The Office had 229 full-time employees in FY2006. ITC is an independent, quasi-judicial agency that advises the President and Congress on the impact of U.S. foreign economic policies on U.S. industries and, along with the Import Administration Unit of ITA, is charged with administering various U.S. trade remedy laws. Its six commissioners are appointed by the President for nine-year terms. As a matter of policy, its budget request is submitted to Congress by the President without revision. In FY2006, ITC had 365 employees. For FY2007, ITC requested $64.2 million, about a $2 million increase over the $62.0 million appropriated by Congress in FY2006 (after rescissions). The House approved $62.6 million for FY2007, 1% more than the FY2006 level but 3% less than the budget request. The Senate Appropriations Committee recommendation provided $64.2 million for ITC, the same as the President's budget request. The Revised Continuing Appropriations Resolution enacted funding level for ITC for FY2007 was reported to be $62.0 million, which is the same as the agency's budget in FY2006. The President's FY2007 request for the Bureau of Industry and Security (BIS) was $78.6 million, a 3.4% increase from the funding level of $75 million (after rescissions) adopted by the FY2006 conference report ( H.Rept. 109-272 ). Under the Revised Continuing Appropriations Resolution ( P.L. 110-5 ), the FY2006 funding level was adopted for FY2007. BIS administers export controls on dual-use goods and technology through its licensing and enforcement functions. It cooperates with other nations on export control policy and provides assistance to the U.S. business community to comply with U.S. and multilateral export controls. It also administers U.S. anti-boycott statutes, and it is charged with monitoring the U.S. defense industrial base. The agency had 415 full-time employees in FY2006. Authorization for the activities of BIS, the Export Administration Act (50 U.S.C. 2401, et seq), last expired in August 2001. On August 17, 2001, President Bush invoked the authorities granted by the International Economic Emergency Powers Act (50 U.S.C. 1703(b)) to continue in effect the system of controls contained in the act and by the Export Administration Regulations (15 C.F.R., Parts 730-799). BIS divided its FY2007 funding request between licensing activity ($38.9 million), enforcement activities ($33.2 million), and management and policy coordination ($6.5 million). Of these amounts, $14.8 million was requested for Chemical Weapons Convention (CWC) enforcement. The House recommended $76.8 million, a level $1.8 billion above the current year, but the same amount below the administration request. Of the $76.8 million, the House recommended $62.0 million for operations and administration and $14.8 million for CWC compliance activities. The Senate Appropriations Committee recommended $78.6 million, the same as the President's request, and mirrored the division of funding above. For the second consecutive year, the Administration included in its budget request a proposal that would eliminate a number of federal economic and community development programs and dramatically reshape programs administered by the Commerce Department's Economic Development Administration (EDA). The Administration requested a total of $327.2 million for EDA activities for FY2007, including $257 million for the new Regional Development Account (RDA) program, $27 million for planning grants awarded to Economic Development Districts, $13 million for trade adjustment assistance, and $29 million for salaries and expenses. This was approximately $47 million more than the $280.4 million appropriated in FY2006, which included $29 million for salaries and expenses, $158 million for public works, $44 million for economic adjustment, $27 million for planning, $13 million for trade adjustment, $8 million for technical assistance, and $483,000 for research. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for the Economic Development Administration for FY2007 was $280 million, which is the same as the agency's budget for FY2006. The Administration's FY2006 budget recommendations included a proposal that would have consolidated the activities of at least 18 existing community and economic development programs, including those of the EDA, into a two-part grant proposal called the Strengthening America's Communities Initiative (SACI). Responsibility for the18 programs now being carried out by five federal agencies (the Departments of Housing and Urban Development, Commerce, Treasury, Health and Human Services, and Agriculture) would have been transferred to the Commerce Department. Congress eventually rejected the proposal and funded all 18 programs for FY2006. The Administration's FY2007 budget request outlined a revamped SACI proposal. Under the FY2007 version, two of the 18 programs would be funded—the Department of Housing and Urban Development's (HUD) Community Development Block Grant (CDBG) program and a new Regional Development Account (RDA) within EDA. The FY2007 budget proposed a SACI funding level of $3.360 billion—nearly $2 billion less than the aggregate appropriation for the 18 programs in FY2006. The Administration's FY2007 budget also identified some general elements of the new SACI proposal including development of a common set of goals and performance measures for the CDBG and RDA programs. In addition, the Administration plan called for a new CDBG allocation formula targeted to the neediest communities, a bonus fund component, and reforms that addressed the CDBG program's shortcomings outlined in the Program Assessment Rating Tool. On May 25, 2006, HUD posted its legislative reform on its website. The proposal did not have a House or Senate sponsor. The FY2007 version of the President's SACI proposal recommended consolidating four existing EDA programs (public works, economic adjustment assistance, research and evaluation, and technical assistance) into a single account, the RDA. RDA funds would be awarded on a competitive basis to entities that support multi-jurisdictional regional development activities. The Administration did not release a formal legislative proposal creating the RDA. H.R. 5672 , as passed by the House on June 29, 2006, recommended an FY2007 appropriation of $260.4 million for EDA activities, including $139.6 million for public works, $44.2 million for economic adjustment assistance, $8 million for technical assistance, $12.8 million for trade adjustment assistance, $26 million for planning grants and $29.7 million for salary and expenses. The proposed funding level was $20 million less than appropriated for FY2006 and recommended by the Senate, and $66.8 million less than the $327.1 million requested by the Administration. Under the House version of H.R. 5672 , funding for public works projects would fall $19 million below the $159 million appropriated in FY2006, accounting for the bulk of the reduction, accompanied by modest reductions in economic adjustment assistance ($600,000), trade adjustment assistance ($200,00) and technical assistance ($320,000). The committee report accompanying the bill included several directives to the EDA. The bill directed the EDA "to continue operations and funding of the planning grant program for existing and designated economic districts in a manner that is consistent with the current and ongoing practices, policies and existing rules and regulations." This was a reference to questions generated by draft regulations released during August of last year. The report accompanying the bill also directed EDA to continue to direct funds to the most distressed communities, including providing funds to local economies affected by the economic downturn in the coal industry at no less than the same of level of assistance received in 2006, and it directed EDA to maintain the operation of all six of its regional offices. This last directive was in response to concerns that EDA was considering closing three of its six regional offices. On July 13, 2006, the Senate Appropriations Committee reported its version of H.R. 5672 ( S.Rept. 109-280 ). The bill recommended an appropriation of $280.4 million for program activities and salaries and expenses. This is $47 million less than requested by the Administration, $20 million more than recommended by the House, and approximately the same amount as appropriated for FY2006. The bill included $155 million for pubic works, which is $15 million less than recommended by the House; $45 million for economic adjustment grants; $8.2 million for technical assistance; $15 million for trade adjustment assistance, which is $2.2 million more than recommended by the House; $26.7 million for planning grants; $870,000 for research grants; and $29.7 million for salaries and expenses. The report accompanying the Senate version of the bill included language that specifically rejected the Administration's request that program activities be consolidated into a single Regional Development Account. Like its House counterpart, the report accompanying the Senate version of the bill included language voicing concern about the distribution of EDA program funds among the agency's six regional offices. It directed EDA to allocate funds to the six regional offices within 30 days after enactment of the act using the EDA formula and to notify the Senate Appropriations Committee when all grant funds have been distributed. The Minority Business Development Agency (MBDA) is charged with the lead role in coordinating all the federal government's minority business programs. For FY2007 the President's budget requests $29.6 million for the MBDA, which is unchanged from the enacted FY2006 appropriation. The Senate Appropriations Committee and the House approved the full $29.6 million. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for the Minority Business Development Agency for FY2007 is $30 million, which is the same as the agency's budget for FY2006. For FY2006, the Administration requested $30.7 million for the agency, and Congress approved $30.0 million. The FY2006 rescission reduced this by approximately $380,000, to $29.6 million. The National Telecommunications and Information Administration (NTIA) is the executive branch's principal advisory office on domestic and international telecommunications and information technology issues and policies. Its mandate is to provide greater access for all Americans to telecommunications services; to support U.S. attempts to open foreign markets; to advise on international telecommunications negotiations; to fund research grants for new technologies and their applications; and to assist nonprofit organizations converting to digital transmission in the 21 st century. The NTIA also manages federal use of radio frequency spectrum domestically and internationally. For FY2007, the continuing resolution (CR) provided FY2006 funding levels for NTIA, like most other federal agencies. For FY2006, that total amount for NTIA was $39.6 million. There are two major components to the NTIA budget (the Bush Administration has sought to create a third program in its FY2008 budget request, created out of the Deficit Reduction Act of 2005, discussed below). The first is Salaries and Expenses. For FY2006, and through the CR of FY2007, this program received $17.8 million. In the past, a large part of this program has been for the management of various information and telecommunications policies both domestically and internationally. Currently, a large part of this program ($7 million) is for the management of the federal government's use of the radio spectrum. For the FY2008 budget, the Bush Administration requested $18.5 million for Salaries and Expenses. For the second component, the Public Telecommunications and Facilities Program (PTFPC), Congress continued to fund this program at FY2006 levels through FY2007, at $21.7 million. The Bush Administration sought to end funding for this program in its FY2008 budget request. The third NTIA program that the Bush Administration requested in both its FY2007 and FY2008 budget requests came out of the 2005 Deficit Reduction Act. That law—and the creation of the new NTIA program—called for the creation of a Digital Transition and Safety Public Fund, which would offset receipts from the auction of licenses to use electromagnetic spectrum recovered from discontinued analog signals. The Bush Administration set those reimbursable funds at $45 million in FY2007. These receipts would fund the following programmatic functions at NTIA: a digital-analog converter box program to assist consumers in meeting the 2009 deadline for receiving television broadcasts in digital format; public safety interoperable communications grants (which would be made to ensure that public safety agencies have a standardized format for sharing voice and data signals on the radio spectrum); New York City's 9/11 digital transition funding (until the planned Freedom Tower is built); assistance to low-power television stations for converting from analog to digital transmission; a national alert and tsunami warning program; and funding to enhance a national alert system as stated in the ENHANCE 911 Act of 2004. However, complete funding for all of these functions under the FY2007 CR has not been completely determined as of this date. In accordance with the National Technical Information Act ( P.L. 100-519 ), as amended in 1992 by the American Technology Preeminence Act ( P.L. 102-245 ), the President's budget submission did not request any funding for the National Technical Information Service (NTIS) for FY2007. Similarly, the House of Representatives did not appropriate any funding for NTIS when it passed H.R. 5672 on June 29, 2006. Likewise, the Senate Committee on Appropriations did not appropriate any funding for NTIS when it passed H.R. 5672 on July 13, 2006. The continuing resolution used to fund the remaining portion of FY2007 ( P.L. 110-5 ) also did not include any funding for NTIS. Instead, funding for NTIS will continue to be drawn from NTIS' Revolving Fund, established by the Commerce, Justice, State Appropriations Act for FY1993 ( P.L. 102-395 ). In part, due to NTIS's efforts to develop new products and limit spending, NTIS achieved a positive net income of $1.92 million for FY2006. This compares with a positive net income of $508,000 for FY2004, $10,000 for FY2003, $1.346 million for FY2002, and $2.290 million for FY2001. The NTIS is part of the Technology Administration at the Department of Commerce. The NTIS was established within the Department of Commerce in 1970, although its origins can be traced back to World War II with the creation of the Publications Board in 1945. The Publications Board collected classified scientific and technical information related to the war effort to be considered for release to the general public. These functions were formalized in 1950 with the establishment of the Clearinghouse for Federal Scientific and Technical Information within the Bureau of Standards, which were later transferred to the newly created NTIS in 1970. According to its website, http://www.ntis.gov/ , NTIS serves as "the federal government's central source for the sale of scientific, technical, engineering, and related business information by or for the U.S. government and complementary materials from international sources." Its mission is to support "the nation's economic growth and job creation by providing access to information that stimulates innovation and discovery." The NTIS claims to hold approximately 3 million government information products, with 600,000 of these documents available through its online searchable database. In addition, NTIS offers a variety of fee-based services to federal agencies. These services include, but are not limited to, distribution of information products, support services, web development, multimedia production, and custom research services. The advent and rapid growth of electronic and multimedia publishing both challenges and affirms the role of NTIS. On the one hand, the growth of the Internet and electronic documents contributed, in part, to a decline in NTIS sales as more documents become available online at no charge from other sources. In addition, the emergence of a range of new information brokers raises the question of whether or not the services NTIS provides are redundant and/or directly compete with those provided by private sector companies. On the other hand, the dynamic nature of online content means that websites and their content can move location or disappear without notice. Moreover, even in the case of websites that are well established and relatively consistent in maintaining content, there is no guarantee that online materials will be archived or remain available indefinitely. In contrast, part of NTIS's responsibilities include maintaining a "permanent repository" of information. For discretionary domestic spending by the Bureau of the Census in FY2007, the Administration requested budget authority totaling $878.2 million: $184.1 million for salaries and expenses and $694.1 million for periodic programs, including the decennial census. The total request was $66 million greater than the FY2006 enacted amount of $812.2 million (and exceeded by $76.3 million the FY2006 level of $801.9 million, after rescissions). Much of the increase was due to preparations for the 2010 census, the Bureau's highest-priority program, which will involve a mail-out, mail-back short-form questionnaire to be answered by all U.S. households. The Bureau plans to replace the census long form with the American Community Survey (ACS), which provides yearly tabulations of data from monthly household samples. For the whole 2010 census program, the FY2007 request of $511.6 million was intended to go toward planning, testing, and developing the re-engineered census; improved mapping; and maintaining the full, nationwide ACS implementation level. To help fund the 2010 census, the Bureau proposed eliminating the Vehicle Inventory and Use Survey from the economic census. Also, the Bureau proposed phasing out and replacing the Survey of Income and Program Participation (SIPP), in the salaries and expenses account, as explained below. For the past two decades, the SIPP has been the leading source of [data on] the economic well-being of Americans. Its longitudinal household design provides many advantages; however, it also makes data processing and analysis difficult, leading to long delays before the data can be analyzed and understood. While the American Community Survey ... and a growing body of administrative records now provide important sources of information, they cannot by themselves meet all the information needs of policy makers. The FY2007 request includes $9.2 million to design a new data collection system on income and wealth dynamics to meet the policy and operational needs of the country, which will replace the SIPP. Of the $9.2 million, the Bureau was to use $5.6 million to design the new data collection system and the remaining $3.6 million "to facilitate the collection of another wave (i.e., a ninth wave) of 2004 SIPP panel data during FY2007," thus providing a full 2006 calendar year of SIPP data. The ninth wave, however, would have depended on the Bureau's "success in getting partner agencies (such as the U.S. Department of Health and Human Services and the U.S. Social Security Administration) that rely on SIPP data to also make combined investments of roughly another $6.4 [million], allowing for a ninth wave investment of $10 [million]." The House Appropriations Committee recommended that the SIPP survey receive $10 million more than the requested amount in discretionary funds "to continue SIPP data collection while a new survey is designed" and that an additional $10 million "from mandatory funds ... be available to disseminate data collected from the SIPP in support of measuring the impact of welfare provisions." During consideration of H.R. 5672 , the House approved three amendments to shift $58.3 million from FY2007 Census Bureau funding to crime-fighting endeavors. Representative Mark Kennedy proposed moving $50 million from the Bureau to the Edward Byrne Memorial Justice Assistance Grant Program under the Department of Justice to combat, in particular, crimes associated with methamphetamine. The House agreed to the amendment by a 291-129 vote (Roll No. 330). Representative Ginny Brown-Waite offered an amendment, approved by voice vote, to take $5 million from the Department of Justice's general administration and another $5 million from the Census Bureau and increase funding for the Violence Against Women Act by $10 million. Also approved on a voice vote was Representative Nancy Johnson's amendment to decrease Bureau funding by $3.3 million and increase, by the same amount, funding for the Federal Bureau of Investigation's Innocent Images Program, which seeks to protect children from online sexual predators. The House agreed to $825.9 million for the Census Bureau in FY2007, $24 million more than the FY2006 enacted amount, after rescissions. The amount approved for salaries and expenses was $190.1 million; that for periodic programs was $635.8 million. The $58.3 million funding shift discussed above would have had, according to the Bureau, effects such as eliminating group quarters data collection for the ACS. Without these data, "the ACS cannot fully represent the total population of the U.S.," including prisoners and the elderly in nursing homes, and "cannot fully be the replacement for the long form in 2010." The Senate Appropriations Committee's recommended $828.2 million for the Bureau in FY2007 exceeded the House amount by $2.3 million and the FY2006 enacted amount, after rescissions, by $26.3 million, but was $50 million less than the budget request. The shortfall was entirely in the periodic programs account, which was to receive $644.1 million instead of the requested $694.1 million. Salaries and expenses would have received $184.1 million, as requested. The committee report included language encouraging the Bureau "to continue its hard work to minimize the number of personal visits for non-response follow-up for all census surveys." Increasing initial response rates would "provide substantial cost savings in the ongoing American Community Survey, other periodic surveys, and the 2010 census." In P.L. 110-5 , Congress agreed to $696.4 million for periodic programs, including $511.6 million for the 2010 census, and $196.6 million for salaries and expenses, totaling $893 million for the Bureau in FY2007. The U.S. Patent and Trademark Office (USPTO) examines and approves applications for patents on claimed inventions and administers the registration of trademarks. It also assists other federal departments and agencies protect American intellectual property in the international marketplace. The USPTO is funded by user fees paid by customers that are designated as "offsetting collections" and subject to spending limits established by the Appropriations Committee. The President's FY2007 budget requested $1.843 billion in budget authority for the USPTO, an increase of 9.5% over the FY2006 figure. In addition, the budget document stated that the Office is to have "full access" to all fees collected in FY2007. The Administration also requested an extension of current law that temporarily increased patent fees for FY2005 and FY2006 and indicated that it will propose additional legislation to permanently extend this fee increase past FY2007. H.R. 5672 , the FY2007 Science, State, Justice, Commerce, and Related Agencies Appropriations Act as passed by the House during the 109 th Congress, would have provided the USPTO with the budget authority to spend $1.771 billion in FY2007, 5% above the previous fiscal year. This was the same figure included in the bill reported from the Senate Committee on Appropriations in the 109 th Congress. The Senate committee report stated that The Congressional Budget Office [CBO] re-estimated the amount of fees the USPTO will collect in fiscal year 2007 downward from the administration's [sic] estimation of $1,842,966,000 to $1,771,000,000. The Committee is therefore required to treat the CBO re-estimation as the actual budget request. No final FY2007 appropriations bill was enacted during the 109 th Congress. The USPTO was funded through February 15, 2007, by a series of continuing resolutions. Passed by the 110 th Congress, P.L. 110-5 provided the Patent and Trademark Office with the budget authority to spend $1.771 billion in FY2007. The Administration's FY2006 budget proposal included $1.703 billion in budget authority for the USPTO. H.R. 2862 , as originally passed by both the House and the Senate, also provided $1.703 billion for the Office. The final FY2006 appropriations, P.L. 109-108 , gave the USPTO the budget authority to spend $1.683 billion, a lesser amount due to a revision of estimated fee collections by the USPTO itself. Beginning in 1990, appropriation measures have limited the ability of the U.S. Patent and Trademark Office to utilize the full amount of fees collected in each fiscal year. This is an area of controversy. Opponents of this approach argue that agency operations are supported by payments for services that must be financed in the year the expenses are incurred. Proponents of methods to limit USPTO fee usage maintain that the fees are necessary to help balance the budget and the fees appropriated back to the Office are sufficient to cover operating costs. The Technology Administration and the Office of the Under Secretary of Technology in the Department of Commerce advocate national policies that foster technology development to stimulate economic growth, conduct technology development and deployment programs, and disseminate technological information. The Office of the Under Secretary for Technology also manages and supervises the activities of the National Institute of Standards and Technology and the National Technical Information Service. For FY2007, the President's budget proposed spending $1.5 million for the Technology Administration, a decrease of 75% over the previous fiscal year. H.R. 5672 , as passed by the House in the 109 th Congress, provided $2.0 million for the Office of the Under Secretary of Technology, 66% below FY2006 funding. The version of H.R. 5672 reported from the Senate Committee on Appropriations during the 109 th Congress recommended financing of $2.5 million for the Office, 58% below the previous year's figure. No final FY2007 appropriations bill was enacted during the 109 th Congress. The Technology Administration was funded at FY2006 levels through February 15, 2007, by a series of continuing resolutions. The 110 th Congress passed P.L. 110-5 , which provided FY2007 appropriations of $2 million for the Office, a 66% decrease in support from FY2006. The Administration's FY2006 budget included $4.2 million for the Office of the Under Secretary for Technology. H.R. 2862 , as originally passed by the House, would have provided $6.5 million. The initial Senate-passed version of the bill included funding (but no specific amount) under the Departmental Management account. The final FY2006 appropriations, P.L. 109-108 , financed the Office at $5.9 million (after mandated rescissions). The National Institute of Standards and Technology (NIST) is a laboratory of the Department of Commerce. The organization's mandate is to increase the competitiveness of U.S. companies through appropriate support for industrial development of pre-competitive generic technologies and the diffusion of government-developed technological advances to users in all segments of the American economy. NIST research also provides the measurement, calibration, and quality assurance techniques that underpin U.S. commerce, technological progress, improved product reliability, manufacturing processes, and public safety. The Administration's FY2007 budget included $581.3 million for NIST, a decrease of almost 22.7% from the previous fiscal year. Support for the laboratory's internal R&D activities under the Scientific and Technology Research and Services (STRS) account would have increased 18.3% to $467 million (including $8 million for the Baldrige National Quality Program). No funding was requested for the Advanced Technology Program (ATP), and support for the Manufacturing Extension Partnership (MEP) would decline 55.7% to $46.3 million. Construction financing would have totaled $68 million, a 60.8% decrease from FY2006. H.R. 5672 , the Science, State, Justice, Commerce, and Related Agencies Appropriations Act as passed by the House during the 109 th Congress, provided $627 million in FY2007 funding for NIST, almost 16.6% below the FY2006 figure due primarily to the absence of support for ATP. Financing for laboratory R&D in the STRS account would have increased 18.3% to $467 million. MEP funding totaled $92 million, 12% below the previous fiscal year. For the construction budget, $68 million was provided. The version of H.R. 5672 reported from the Senate Committee on Appropriations in the 109 th Congress would have funded NIST at $764 million, 1.6% above FY2006. Although there was no financing for ATP, there was increased support for internal laboratory R&D, the Manufacturing Extension Partnership program, and construction activities. The STRS account was to receive $467 million, the same amount included in both the Administration's request and the House-passed bill. Funding for MEP would have increased 1.3% from FY2006 to $106 million. Construction was to be financed at $191 million, 10% above the previous level and almost three times the amount provided by both the Administration's budget proposal and H.R. 5672 as passed by the House. No final FY2007 appropriations bill was enacted during the 109 th Congress; however, a series of continuing resolutions funded NIST at FY2006 levels through February 15, 2007. The 110 th Congress passed P.L. 110-5 , which appropriates $675 million for NIST in FY2007. Funding for the STRS account increases 9.6% to $432.8 million, construction support decreases 66% to $58.6 million, while other programs remain at FY2006 levels including $79 million for ATP and $104.6 million for MEP. The President's FY2006 budget requested $532 million in funding for NIST. Included in this figure was $426.3 million for the STRS account (with $5.7 million for the Quality Program). No support was provided for ATP, while MEP would have been funded at $46.8 million. The construction budget was to be $58.9 million. H.R. 2862 , as originally passed by the House, would have provided $548.7 million for NIST. The STRS account was to receive $397.7 million. Financing for MEP would total $106 million; no funding was provided for ATP. Construction activities would have received $45 million. The version of H.R. 2862 initially passed by the Senate funded NIST at $844.5 million. Included in this amount was $399.9 million for the STRS account (incorporating $7.2 million for the Quality Program), $106 million for MEP, and $140 million for ATP. The construction budget would total $198.6 million. Subsequently, the final FY2006 appropriations, P.L. 109-108 , provided $752 million for NIST (after the mandated rescissions but not including a $7 million rescission from unobligated balances in the MEP account). Support for the STRS account totaled $394.8 million and included $7.3 million for the Quality Program. The Manufacturing Extension Partnership received $104.6 million and the Advanced Technology Program was financed at $79 million. The construction budget totaled $173.6 million. Continued support for the Advanced Technology Program has been a major funding issue. ATP provides "seed financing," matched by private sector investment, to businesses or consortia (including universities and government laboratories) for development of generic technologies that have broad applications across industries. Opponents of the program cite it as a prime example of "corporate welfare," whereby the federal government invests in applied research activities that, they emphasize, should be conducted by the private sector. Others defend ATP, arguing that it assists businesses (and small manufacturers) in developing technologies that, while crucial to industrial competitiveness, would not or could not be developed by the private sector alone. Although Congress has maintained (often decreasing) funding for the Advanced Technology Program, the initial appropriation bills passed by the House since FY2002 failed to include financing for ATP. During the 109 th Congress, the version of the measure reported from the Senate Committee on Appropriations also did not fund ATP. For FY2006, support again was provided for the program, but the amount was 41% below that included in the FY2005 appropriations; FY2007 funding remained the same as the previous fiscal year. The budget for the Manufacturing Extension Partnership, another extramural program administered by NIST, was an issue during the FY2004 appropriations deliberations. Although in the recent past congressional support for MEP remained constant, the Administration's FY2004 budget request, the initial House-passed bill, and the FY2004 Consolidated Appropriations Act substantially decreased federal funding for this initiative, reflecting the President's recommendation that manufacturing extension centers " ... with more than six years experience operate without federal contribution." However, P.L. 108-447 restored financing for MEP in FY2005 to the level that existed prior to the 63% reduction taken in FY2004. While the level of support decreased in FY2006, it remained significantly above the FY2004 figure; FY2007 funding remained at the same level. As part of the "American Competitiveness Initiative," announced by the President in the 2006 State of the Union, the Administration has indicated that it intends to double over 10 years funding for "innovation-enabling research" performed at NIST. This is to be accomplished through increased support of NIST's "core" programs, defined as internal research in the STRS account and the construction budget. To this end, the President's FY2007 budget requested an 18.3% increase in funding for intramural R&D at the laboratory. P.L. 110-5 provided for approximately half this increase (9.6%) in support research performed within the NIST facilities. NOAA is the largest agency of the Department of Commerce (DOC) in terms of funding. For FY2007, NOAA's budget request was 58% of DOC's total request. President Bush requested almost $3.68 billion for NOAA for FY2007 (See Table 4 ), including $2.59 billion for the Operations, Research, and Facilities (ORF) account and $1.02 billion for the Procurement, Acquisition, and Construction (PAC) account. For NOAA's Other Accounts, which include the Pacific Coastal Salmon Recovery Fund (PCSRF), the Coastal Zone Management Fund (CZMF), and NOAA's fisheries financing programs, $60.8 million was requested. Also requested was a transfer of $77 million from the Department of Agriculture for the Promote and Develop American Fisheries Fund (PDAFF), which provided additional spending authority. For FY2006, Congress had appropriated NOAA a total of $4.1 billion. About $3.94 billion of that was funded by the FY2006 Science, State, Justice and Commerce Appropriations Act ( P.L. 109-108 ). The act included an across-the-board rescission of 0.28% for DOC (Title VI, Sect. 638), or about $40 million for NOAA. In February 2006, the Office of Management and Budget proposed a 1% across-the-board discretionary spending cut for most federal agencies. Section 3801 of the FY2006 Department of Defense Appropriations Act ( P.L. 109-148 ) implemented the rescission resulting in a net appropriation for NOAA of $3.91 billion ( Table 4 .) P.L. 109-148 also provided NOAA $54 million in emergency appropriations for Hurricane Katrina recovery ( H.Rept. 109-359 , December 18, 2005, pp. 97-98), which increasing NOAA's FY2006 appropriations to almost $3.95 billion. On February 16, 2006, the President requested further emergency appropriations of $33 million for NOAA. Instead, Congress approved $150 million in P.L. 109-234 , resulting in a grand total of $4.1 billion in appropriations for FY2006. President Bush's FY2007 budget request for NOAA of $3.68 billion was $420 million, or 10.2%, less than the $4.1 billion appropriated for FY2006. Increases were proposed for the National Weather Service (NWS) and for NOAA Satellite programs. This would have included $104.0 million for the Geostationary Orbiting Environmental Satellite (GOES) program to develop next generation GOES-R satellites. Also, $20.3 million (to be matched by DOD) was requested for the National Polar Orbiting Environmental Satellite System (NPOESS) because of launch and deployment scheduling slippages. The President requested $12.4 million for NWS for FY2007 to procure the last 19 tsunami detection buoys deployed as part of a "strengthened" National Tsunami Warning Program that included technology upgrades and warning system expansion. NOAA's Administrator noted that the request would culminate a $40 million commitment. The President also requested that $25 million of unobligated FY2005 funds that were rescinded by Congress in FY2006 be restored. He also proposed savings of $590 million for FY2007 by terminating funding for certain NOAA programs, including $573 million from funding added by Congress in FY2006 not requested by the Administration, and $16.3 million from one-year-only construction projects completed. Among the more vocal critics of the President's FY2007 budget, Joint Oceans Commission (JOC) leaders objected to funding cuts proposed for ocean and coastal research-related budgets. Issues debated during deliberations on NOAA's FY2007 appropriation included NOAA's satellite budget and the dissatisfaction of some Members of Congress with management of the polar satellite program and associated ground-based satellite data management components. Some constituents asserted that NOAA funding requested by the President and appropriated by the House for FY2007 was not sufficient to implement recommendations of the Joint Ocean Commissions Initiative (JOCI) in support of ocean research and exploration activities. The House Committee on Science reported H.R. 5450 (amended by H.Rept. 109-545 , Part I), legislation to fund all of NOAA programs under a single authorizing law, and on September 20, 2006, the House passed the measure by voice vote. The Senate received H.R. 5450 on September 21, 2006, and referred it to the Senate Committee on Commerce, Science, and Transportation. No further legislative action occurred. On February 15, 2007, President Bush signed H.J.Res. 20 into law as P.L. 110-5 , the Revised Continuing Appropriations Resolution, 2007. The act provided almost $3.98 billion for NOAA for FY2007 ( Table 4 ). Chapter 9 of P.L. 110-5 , Science, State, Justice, Commerce, and Related Agencies, provided additional budget authority for NOAA, but also required funding cuts. This had the net effect of increasing NOAA appropriations by about $26 million above FY2006 levels. Budget authority for certain loan guarantees under the Fisheries Financing account were reduced by $21 million. The FY2007 appropriation was $298 million, or about 8%, more than the FY2007 request of $3.68 billion. (For more information on NOAA's budget, see CRS Report RS22614, The National Oceanic and Atmospheric Administration (NOAA): A Review of the FY2008 Budget and Congressional Appropriations , by [author name scrubbed].) H.J.Res. 53 (Miller-MI) Proposes to amend the U.S. Constitution to provide for apportioning the House of Representatives on the basis of the number of U.S. citizens, not persons, in each state. If the amendment went into effect, the decennial census short form would have to include a question about citizenship. Introduced June 9, 2005, and referred to the House Committee on the Judiciary. H.R. 5450 (Ehlers) This legislation was introduced on May 22, 2006, and was referred to the House Committees on Science and Resources. The House Science Committee reported it on June 29, 2006 ( H.Rept. 109-545 , Part 1). It establishes the NOAA within the Department of Commerce, maintaining the current leadership structure at NOAA, but creates a new Deputy Assistant Secretary for Science and Education. It requires the Secretary of Commerce to maintain the National Weather Service within NOAA. It describes programs to support the operations and services, and the research and education functions of NOAA and authorizes the NOAA Science Advisory Board. It requires NOAA to contract with the National Academy of Sciences to perform three tasks, including an assessment of the adequacy of the environmental data and information systems of NOAA and to flesh out two strategic plans dealing with information system adequacy and extramural research to support the mission of NOAA. It also requires NOAA to submit a reorganization plan to Congress 18 months after enactment of the legislation. It repeals the executive order that established NOAA in 1970 and preserves the status of all current NOAA rules, regulations, and other legal matters. It requires NOAA to notify Congress and the public before closing or transferring a NOAA facility. Finally, the legislation establishes conditions for development of major program cost baselines and requires notification to Congress when certain cost increases or schedule delays occur in major programs. H.R. 337 (Maloney) Would amend present law to make the term of office of the Director of the Census five years and require that he or she report directly to the Secretary of Commerce. Introduced January 25, 2005, and referred to the House Committee on Government Reform. CRS Report 95-36, The Advanced Technology Program , by [author name scrubbed]. CRS Report RL31832, The Export Administration Act: Evolution, Provisions, and Debate , by [author name scrubbed]. CRS Report RL33528, Industrial Competitiveness and Technological Advancement: Debate Over Government Policy , by [author name scrubbed]. CRS Report 97-104, Manufacturing Extension Partnership Program: An Overview , by [author name scrubbed]. CRS Report 95-30, The National Institute of Standards and Technology: An Appropriations Overview , by [author name scrubbed]. CRS Report RS22410, The National Oceanic and Atmospheric Administration (NOAA) Budget for FY2007: President ' s Request, Congressional Appropriations, and Related Issues , by [author name scrubbed]. CRS Report RS21469, The National Telecommunications and Information Administration (NTIA): Budget, Programs, and Issues , by [author name scrubbed]. CRS Report RL33603, Ocean Commissions: Ocean Policy Review and Outlook , by [author name scrubbed] and [author name scrubbed]. CRS Report RL32823, An Overview of the Administration ' s Strengthening America ' s Communities Initiative , by [author name scrubbed] et al. CRS Report RL32739, Tsunamis: Monitoring, Detection, and Early Warning Systems , by [author name scrubbed]. CRS Report RS20906, U.S. Patent and Trademark Office Appropriations Process: A Brief Explanation , by [author name scrubbed] (pdf). The National Aeronautics and Space Administration (NASA) was created by the 1958 National Aeronautics and Space Act (P.L. 85-568) to conduct civilian space and aeronautics activities. The agency is managed from headquarters in Washington, DC. It has nine major field centers around the country, plus the Jet Propulsion Laboratory, which is operated under contract by the California Institute of Technology. Dr. Michael Griffin became NASA Administrator in April 2005. NASA requested $16.792 billion for FY2007, a 1% increase over its FY2006 appropriation of $16.631 billion. If $385 million in supplemental funding for Hurricane Katrina response and recovery was excluded from the FY2006 figure, the requested increase for FY2007 was 3%. For FY2007 the House provided $16.709 billion in H.R. 5672 . The Senate Appropriations Committee recommended $16.757 billion plus an additional $1.040 billion in emergency funding. The final continuing resolution ( P.L. 110-5 ) provided $16.247 billion, plus an unspecified amount for statutory increases in civil servant pay (Sec. 111). In September 2006, NASA announced a change in how it accounts for overhead expenses. The new system is known as "full cost simplification." The change increases the stated cost of some programs and decreases the stated cost of others, without affecting actual program content. The increases and decreases exactly balance, so that NASA's total budget was unchanged. For any particular program, however, amounts expressed in the new accounting system were not directly comparable with amounts expressed in the previous system. In particular, amounts in the final FY2007 appropriation may not be directly comparable with amounts in the FY2007 request. NASA's initial operating plan for FY2007 would likely have clarified such comparisons, but it had not yet been made public. For more details, see CRS Report RS22381, cited at the end of this section. Budget priorities throughout NASA are being driven by the Vision for Space Exploration, announced by President Bush in January 2004 and endorsed by Congress in the NASA Authorization Act of 2005 ( P.L. 109-155 ). The Vision includes returning the space shuttle to flight status, then retiring it by 2010; completing the space station, but discontinuing its use by the United States by 2017; returning humans to the moon by 2020; and then sending humans to Mars and "worlds beyond." The President did not propose significantly increased funding for NASA to accomplish the Vision. Instead, most of the funding was to come from redirecting funds from other NASA activities. (Dr. Griffin has described this approach as "go as you can afford to pay.") The funding requirements of the Vision thus constrain other NASA priorities. In the Science, Aeronautics, and Exploration (SA&E) account, funding for Constellation Systems, the program responsible for developing vehicles to return humans to the moon, would have increased from $1.7 billion in FY2006 to $3.1 billion in the FY2007 request. The House provided $150 million less than the request for Exploration Systems, which consists of Constellation Systems and two smaller programs. The Senate committee also recommended less than the request for Exploration Systems. The final appropriation for Exploration Systems was $578 million less than the request, but the act was silent on how reductions should be allocated among Constellation Systems and the other programs. Meanwhile, also in SA&E, reduced growth in Science funding would have added up to a proposed reduction of $3.1 billion through FY2010 relative to projections in the previous year's request. Most of that reduction would have been to offset higher than expected costs for returning the space shuttle to flight status following the February 2003 Columbia accident. The request for Science included full funding for a Hubble Space Telescope servicing mission, but funding for several robotic missions to Mars were cancelled or deferred. No funding was requested for the SOFIA airborne infrared telescope or the Europa mission to one of Jupiter's moons. The request for Research and Analysis, which provides grant funding to individual researchers, was down 15% from FY2006 in most programs. The House provided $75 million more than the request for Science, including $50 million for Research and Analysis. The Senate committee recommended increases totaling $31.5 million for two Science programs and directed NASA to proceed with SOFIA "from within available funds." The final appropriation, however, was $5.251 billion, less than the request by $79 million. The request for Aeronautics Research in SA&E was about the same as was projected the previous year, but its content had changed significantly. The largest program, Vehicle Systems, has been renamed Fundamental Aeronautics and now focuses on "core competencies" in subsonic, supersonic, and hypersonic flight regimes, including work on rotorcraft. In the FY2006 budget cycle, proposals to eliminate several of these areas met with strong congressional opposition. An amendment to the Senate FY2007 budget resolution ( S.Amdt. 3033 to S.Con.Res. 83 ) increased the recommended funding for NASA aeronautics by $179 million. The House provided $100 million more than the request for Aeronautics Research. The Senate Appropriations Committee recommended $35 million more than the request. The final appropriation provided $890 million for aeronautics, more than the request by $166 million. In the Exploration Capabilities account, NASA's current human space flight programs, the space shuttle and the International Space Station (ISS), are also being significantly affected by the Vision. The President's speech directed that the space shuttle be retired in 2010 after ISS construction is completed. The Crew Exploration Vehicle (CEV) being developed by the Constellation Systems program, whose primary purpose is to take astronauts to the moon, would also be able to visit the ISS. However, because it is planned for "no later than 2014" there is likely to be a multi-year gap when the United States will be unable to launch its own astronauts into space. As for the ISS, the President's speech directed NASA to restructure the broad-based research program it had planned to conduct aboard ISS to support only research needed to accomplish the Vision. (Congress responded in the NASA Authorization Act of 2005 by directing that at least 15% of ISS research funding be used for research not related to the Vision.) It is unclear what will happen to the ISS after its use by NASA is completed in 2017. The House provided the requested amount for the space shuttle but less than the request for the ISS and other Exploration Capabilities activities. The Senate committee recommended the requested amount for Exploration Capabilities. The final appropriation for Exploration Capabilities was $6.140 billion, less than the request by $94 million. A Mikulski amendment in the full Senate Appropriations Committee markup created two new appropriations accounts for NASA: $1 billion for space shuttle Return to Flight expenses and $40 million for additional Hurricane Katrina recovery expenses. Both were designated as emergency funding. Neither was included in the request, the House bill, or the final appropriation. For more on NASA's FY2007 budget request, see CRS Report RS22381, National Aeronautics and Space Administration: Overview, FY2007 Budget in Brief, and Key Issues for Congress , by [author name scrubbed] and [author name scrubbed]. The National Science Foundation (NSF) was created by the National Science Foundation Act of 1950, as amended (P.L. 81-507). The NSF has the broad mission of supporting science and engineering in general and funding basic research across many disciplines. The majority of the research supported by the NSF is conducted at U.S. colleges and universities. In addition to helping to ensure the nation's supply of scientific and engineering personnel, the NSF promotes academic basic research and science and engineering education across many disciplines. Other federal agencies, in contrast, support mission-specific research. The NSF provides support for investigator-initiated, merit-reviewed, competitively selected awards, state-of-the-art tools, and instrumentation and facilities. Also, NSF provides almost 30% of the total federal support for science and mathematics education. Support is provided to academic institutions, industrial laboratories, private research firms, and major research facilities and centers. Although the NSF does not operate any laboratories, it does support Antarctic research stations, selected oceanographic vessels, and national research centers. In addition, the NSF supports university-industry relationships and U.S. participation in international scientific ventures. The NSF is an independent agency in the executive branch and under the leadership of a presidentially appointed Director and a National Science Board (NSB) composed of 24 scientists, engineers, and university and industry officials involved in research and education. The NSB and the Director make policy for the NSF. The Office of the Inspector General (OIG) of the NSF has the responsibility of, among other things, conducting audits and investigations of NSF programs, and promoting efficiency and effectiveness in NSF programs and operations. The OIG reports directly to the NSB and Congress. The FY2007 appropriation for the National Science Foundation (NSF) was included in P.L. 110-5 , H.J.Res. 20 , Revised Continuing Appropriations Resolution, 2007. NSF is funded at $5.92 billion in FY2007, approximately $336 million (6%) above the FY2006 level of $5.58 billion. (The continuing resolution provided increased funding for the Research and Related Account (R&RA) for FY2007. All other accounts in NSF were maintained at approximately the same level as FY2006). The President's American Competitiveness Initiative proposes to double the NSF budget over the next 10 years. The FY2007 appropriation was to be the first installment toward that doubling effort. The FY2007 appropriation for NSF provided support for several interdependent priority areas: broadening participation in the science and engineering enterprise, providing world-class facilities and infrastructure, advancing research at the frontier, and bolstering K-12 education. NSF will invest more than $600 million in programs targeted at those groups underrepresented in the science and engineering workforce. Funding has been provided for the construction of world-class facilities and for activities at advancing research at the frontiers of science. NSF asserts that international research partnerships are critical to the nation in maintaining a competitive edge, addressing global issues, and capitalizing on global economic opportunities. To address these particular needs, the FY2007 appropriation provided increased funding for the Office of International Science and Engineering. Also, in FY2007, NSF will continue in its leadership role in planning U.S. participation in observance of the International Polar Year, which spans 2007 and 2008. A first-year investment was provided to address major challenges in polar research. Other FY2007 highlights include funding for the National Nanotechnology Initiative, investments in Climate Change Science Program, continued support for homeland security, and funding for Networking and Information Technology Research and Development. Also, a new effort in the FY2007 appropriation was support for a program of fundamental research on new technologies for sensor systems that detect explosives. The FY2007 appropriation included $4.67 billion for Research and Related Activities (R&RA), a 7.7% increase ($334.5million) over the FY2006 level of $4.33 billion. R&RA funds research projects, research facilities, and education and training activities. Partly in response to concerns in the scientific community about the imbalance between support for the life sciences and the physical sciences, the FY2007 appropriation provided increased funding for the physical sciences. Research in the physical sciences often leads to advances in other disciplines. R&RA includes Integrative Activities (IA) and is a source of funding for the acquisition and development of research instrumentation at U.S. colleges and universities. It also funds Partnerships for Innovation, disaster research teams, and the Science and Technology Policy Institute. The Office of Polar Programs (OPP) is funded in the R&RA. In FY2006, responsibility for funding the costs of icebreakers that support scientific research in polar regions was transferred from the U.S. Coast Guard to NSF. The NSF will continue to operate and maintain the three icebreakers. The OPP is funded at $485 million in the FY2007 appropriation, 24.2% above the FY2006 level. Significant increases in OPP for FY2007 are directed at the programs for Arctic and Antarctic sciences. Funding levels for other programs and activities in the R&RA resulting from the CR are not yet available. Research project support in the FY2007 appropriation totals approximately $2.40 billion. Support is provided to individuals and small groups conducting disciplinary and cross-disciplinary research. NSF supports a variety of individual centers and center programs. The FY2007 appropriation provided funding for Science and Technology Centers, Materials Centers, Engineering Research Centers, Nanoscale Science and Engineering Centers, and Centers for Analysis and Synthesis. The Major Research Equipment and Facilities Construction (MREFC) account was funded at the CR level of $190.9 million in FY2007, the same as FY2006. The MREFC supports the acquisition and construction of major research facilities and equipment that extend the boundaries of science, engineering, and technology. Of all federal agencies, NSF is the primary supporter of "forefront instrumentation and facilities for the academic research and education communities." First priority for funding is directed at ongoing projects. Second priority is given to projects that have been approved by the National Science Board (NSB) for new starts. NSF requires that for a project to receive support, it must have "the potential to shift the paradigm in scientific understanding and/or infrastructure technology." NSF states that the projects receiving support in the FY2007 appropriation meet that qualification. Six ongoing projects and two new starts are funded in FY2007. Projects receiving support are the Atacama Large Millimeter Array Construction ($64.3 million), EarthScope ($27.4 million), IceCube Neutrino Observatory ($28.7 million), National Ecological Observatory Network ($4 million), Scientific Ocean Drilling Vessel ($42.9 million), Alaskan Region Research Vessel ($9.4 million), and Ocean Observatories Initiative ($5.1 million). An additional $9.1 million was provided for the South Pole Station Modernization project. The FY2007 appropriation provided support for several NSF-wide investments: biocomplexity in the environment, human and social dynamics, and mathematical sciences. Additional priority areas include those of strengthening core disciplinary research, continuing as lead federal agency in networking and information technology R&D, and sustaining organizational excellence in NSF management practices. The NSF maintains that researchers need not only access to cutting-edge tools to pursue the increasing complexity of research, but funding to develop and design the tools critical to 21 st century research and education. A proposed investment of $596.8 million in cyberinfrastructure will allow for funding of modeling, simulation, visualization and data storage, and other communications breakthroughs. NSF anticipates that this level of funding will make cyberinfrastructure more powerful, stable, and accessible to researchers and educators through widely shared research facilities. Increasing grant size and duration has been a long-term priority for NSF. The funding rate for research grant applications has declined from approximately 30% in the late 1990s to an estimated 23% in FY2006. The FY2007 appropriation for the Education and Human Resources Directorate (EHR) was $796.7 million, the same level as FY2006. (Disaggregated data on funding of specific programs and activities in the EHR, as a result of the CR, are not yet available). The EHR portfolio is focused on, among other things, increasing the technological literacy of all citizens, preparing the next generation of science, engineering, and mathematics professionals, and closing the achievement gap in all scientific fields. Support is provided at the various educational levels: pre-college, undergraduate, and graduate. Priorities at the pre-college level include research and evaluation on education in science and engineering, informal science education, and a new program, Discovery Research K-12. Discovery Research will combine the strengths of three existing programs and encourage innovative thinking in K-12 science, technology, engineering, and mathematics education. At the undergraduate level, approximately 72% of the funding was in support of new awards and activities. Priorities at the undergraduate level include the Robert Noyce Scholarship Program; Course, Curriculum, and Laboratory Improvement; Science, Technology, Engineering, and Mathematics (STEM) Talent Expansion Program; the National STEM Education Digital Library; the Federal Cyber Service; and Advanced Technological Education. The Math and Science Partnership Program (MSP) has been transferred to the undergraduate level in FY2007. The MSP has made approximately 80 awards, with an overall funding rate of about 9%. No new partnerships have been proposed in FY2007. Funding in the FY2007 appropriation will provide support for ongoing awards, in addition to data collection, evaluation, knowledge management, and dissemination. At the graduate level, priorities are those of Integrative Graduate Education and Research Traineeship, Graduate Research Fellowships, and the Graduate Teaching Fellows in K-12 Education. Added support was given to several programs directed at increasing the number of underrepresented minorities in science, mathematics, and engineering. The FY2007 budget had requested the following amounts for theses programs: Historically Black Colleges and Universities Programs ($29.7 million), Tribal Colleges and Universities Program ($12.4 million), Louis Stokes Alliances for Minority Participation ($39.7 million), and Centers of Research Excellence in Science and Technology ($24.9 million). As previously stated, the CR maintained FY2007 funding for the EHR at the FY2006 level, ($19.3 million less than the request), and it has not been determined as yet what the "revised" funding levels are for any of the science education programs. There has been considerable debate in the academic and scientific community and in Congress about the management and oversight of major projects selected for construction and the need for prioritization of potential projects funded in the MREFC account. The NSF was directed to improve its oversight of large projects by developing an implementation plan that included comprehensive guidelines and project oversight review. One continuing question focused on the selection process for including major projects in the upcoming budget cycle. In February 2004, the National Academies released the congressionally mandated study of the process for prioritization and oversight of projects in the MREFC account. The report recommended a more open process for project selection, broadened participation from various disciplines, and well-defined criteria for the selection process. In September 2005, the NSB released its management report on the new guidelines for the development, review, and approval of major projects: Setting Priorities for Large Research Facility Projects Supported by the National Science Foundation . The report describes facilities under construction and those being considered for future funding. Because of the changing nature of science and technology, NSF deems it essential that it have the flexibility to reconsider facilities at the various stages in their development. Also, the NSF states that it must be able to respond effectively to possible changes in interagency participation, international and cooperative agreements, or co-funding for major research facilities. The NSF encourages project planning from disciplines and fields in which scientists and engineers have not traditionally partnered or collaborated. The report notes that although some "concepts" may evolve into MREFC candidates, others may prove infeasible for major project support. The NSF has stated that the facility plan will be updated as needed. In September 2006, the NSF released the report, Investing in America ' s Future—Strategic Plan FY2006-2011 . NSF states that the report addresses the accelerating pace of scientific discoveries that are occurring in a more competitive international environment. The Strategic Plan lists several investment priorities that are targeted for increased emphasis of funding over the next five years. The investments include furthering U.S. economic competitiveness; promoting transformational, multidisciplinary research; improving k-12 teaching and learning in science and mathematics; developing a comprehensive, integrated cyberinfrastructure; and strengthening the nation's collaborative advantage through unique networks and innovative partnerships. In addition, NSF will continue to improve management excellence, with a focus on joining such areas as resource allocation, communication strategies, award management and oversight, and the core processes of merit review. CRS Report RS21767, Hubble Space Telescope: NASA ' s Plans for a Servicing Mission , by [author name scrubbed]. CRS Report RS22381, National Aeronautics and Space Administration: Overview, FY2007 Budget in Brief, and Key Issues for Congress , by [author name scrubbed] and [author name scrubbed]. CRS Report RS21267, U.S. National Science Foundation: Major Research Equipment and Facility Construction , by [author name scrubbed]. CRS Report 95-307, U.S. National Science Foundation: An Overview , by [author name scrubbed]. The State Department, established on July 27, 1789 (1 Stat.28; 22 U.S.C. 2651), has a mission to advance and protect the worldwide interests of the United States and its citizens. The State Department supports the activities of more than 50 U.S. agencies and organizations operating at 260 posts in 180 countries. Currently, the State Department employs approximately 30,000 people, about 60% of whom work overseas. As covered in Title IV of the House Science, State, Justice, and Commerce (SSJC) appropriations measure, State Department funding categories include administration of foreign affairs, international operations, international commissions, and related appropriations, such as international broadcasting. The enacted FY2006 appropriation for Title IV was $9.56 billion (after adjusting for two rescissions), 9.4% higher than the previous year's regular appropriation, but 11% lower than the previous appropriations when including the FY2005 supplemental funds within P.L. 109-13 for Title IV. Typically, about three-fourths of State's budget is for Administration of Foreign Affairs (about 69% in FY2006), which consists of salaries and expenses, diplomatic security, diplomatic and consular programs, technology, and security/maintenance of overseas buildings. The Administration's FY2007 request for State's Administration of Foreign Affairs (including mandatory funding of $125 million for Foreign Service Retirement) was $6.93 billion, 5.5% above the FY2006 estimated level of $6.57 billion (including rescissions). The House-passed level in H.R. 5672 was $6.66 billion. The Senate Appropriations Committee funding level in H.R. 5522 was $6.58 billion. The Revised Continuing Appropriations Resolution, 2007 ( P.L. 110-5 ) provided $6.50 billion for Administration of Foreign Affairs for FY2007. D&CP covers primarily salaries and expenses, hiring, diplomatic expenditures, cost of living and foreign inflation, as well as exchange rate changes. The FY2007 request of $4.65 billion represented an increase of 7.7%, compared with the $4.32 billion funding level enacted for FY2006. The FY2007 funding level request included $795.2 million for worldwide security upgrades, compared with $680.7 million in the FY2006 appropriation. The D&CP funding request also included $351 million, compared with $329.7 million in the FY2006 budget, designated only for public diplomacy. The House-passed funding for D&CP was $4.46 billion, including $351 million for public diplomacy and $795.2 million for worldwide security upgrades. The Senate Appropriations Committee set funding at $4.50 billion, including $795.2 million for worldwide security upgrades. The enacted level for FY2007 was $4.31 billion, including $766 million for worldwide security upgrades. ESCM provides funding for embassy construction, repairs, and leasing of property for embassies and housing facilities at overseas posts. The FY2007 request of $640.1 million was 12.1% above the FY2006 enacted level of $571.1 million (including rescissions). The House agreed to a total of $1.51 billion for ESCM, including $605.7 million for regular funding and $899.4 million for worldwide security upgrades. The Senate committee recommended funding for ESCM to be a total of $1.38 billion and did not designate how much the Department should spend on regular versus worldwide security upgrades overall. The continuing resolution provided $595.0 million for regular ESCM funding and $897.0 million for worldwide security upgrades for a total of $1.49 billion in FY2007. Ever since the bombings of two U.S. embassies in eastern Africa in August 1998, Congress has appropriated additional money within both D&CP and ESCM for increasing security. The funds in D&CP for worldwide security upgrades are primarily for ongoing expenses due to the upgrades that took place after 1998, such as maintaining computer security and bullet-proof vehicles, and ongoing salaries for perimeter guards. Worldwide security upgrades in ESCM are more on the order of bricks-and-mortar-type expenses. The FY2007 request for upgrades within D&CP totaled $795.2 million—$114.5 million (16.8%) above the enacted level of $680.7 million (reflecting rescissions) for FY2006. The FY2007 request for worldwide security funding within ESCM totaled $899.4 million, virtually the same as the FY2006 level (after rescissions). The combined total FY2007 request for State's worldwide security upgrades was $1.69 billion. The combined enacted funding for worldwide security upgrades totaled $1.66 billion for FY2007. This line item includes programs such as the Fulbright, Muskie, and Humphrey academic exchanges, as well as the international visitor exchanges and some Freedom Support Act and SEED programs. The Administration's FY2007 request was for $474.3 million, 11.3% more than the FY2006 estimated level of $426.3 million. The Administration request included $200.3 million for the Fulbright program and $351 million within the D&CP account for public diplomacy expenses. The House-passed funding level was $436.3 million, while the Senate committee level was $445.5 million. The continuing resolution ( P.L. 110-5 ) provided $445.3 million for exchanges in FY2007. CIF was established by the Foreign Relations Authorization Act of FY1994/95 ( P.L. 103-236 ) to provide for purchasing information technology and capital equipment that would ensure the efficient management, coordination, operation, and utilization of State's resources. The FY2007 request was for $68.3 million, a 17.6% increase over the $58.1 million enacted for FY2006 (after rescissions). In addition, the FY2006 appropriation included $68.5 million for the Centralized Information Technology Modernization Program. The Administration did not request any funding for that account for either FY2006 or FY2007. The House agreed to $58.1 million for CIF, and the Senate committee recommended the same amount. The enacted FY2007 level was $58.1 million for CIF. The International Organizations and Conferences account consists of two line items: U.S. Contributions to International Organizations (CIO) and U.S. Contributions for International Peacekeeping Activities (CIPA). The FY2007 request totaled $2.40 billion for the overall account, up nearly 11% over the FY2006 level of $2.17 billion, including rescissions. The CIO supports U.S. membership in numerous international and multilateral organizations that transcends bilateral relationships and covers issues such as human rights, environment, trade, and security. The FY2007 request level for this line item was $1.27 billion, 10.2% above the $1.15 billion enacted level for FY2006. The request represented full funding of U.S. assessed contributions to the U.N. and other international organizations. It did not include funding for prior-year funding shortfalls. The House-passed bill provided $1.12 billion, while the Senate committee recommendation was $1.15 billion for CIO in FY2007. The continuing resolution enacted the FY2006 level of funding ($1.15 billion) for FY2007. The United States supports multilateral peacekeeping efforts around the world through payment of its share of the U.N. assessed peacekeeping budget. The President's FY2007 request of $1.14 billion represented an increase of 11.1% over the FY2006 estimated level of $1.02 billion (including rescissions). In addition, the Administration requested an additional $69.8 million for this account to support U.N. peacekeeping efforts in the southern Sudan. The House-passed bill set funding at $1.14 billion, as did the Senate Appropriations Committee. The enacted FY2007 estimate was $1.14 billion. The International Commissions account includes the U.S.-Mexico Boundary and Water Commission (IBWC), the International Fisheries Commissions (IFC), the International Joint Commission (IJC), the International Boundary Commission (IBC), and the Border Environment Cooperation Commission (BECC). The IBWC's mission is to apply rights and obligations assumed by the United States and Mexico under numerous treaties and agreements, improve water quality of border rivers, and resolve border sanitation problems. The mission of the IFC is to recommend to member governments conservation and management measures for protecting marine resources. The IJC's mission is to develop and administer programs to help the United States and Canada with water quality and air pollution issues along their common border. The IBC is obligated by the Treaty of 1925 to maintain an effective boundary line between the United States and Canada. Established by the North American Free Trade Agreement, the BECC helps local states and communities to develop solutions to environmental problems along the U.S.-Mexico border. The FY2007 funding request of $63.9 million represented a decrease of 3.9% over the $66.5 million enacted in FY2006. The FY2007 requested decrease was due largely to a decrease in funds for the Great Lakes Fishery Commission. The House funding level for international commissions was $67.9 million, while the Senate committee level was $67.4 million. The final FY2007 enacted level was $67.0 million. Related appropriations include those for the Asia Foundation, the National Endowment for Democracy (NED), and the East-West and North-South Centers. The Administration's FY2007 request for related appropriations totaled $103.6 million—8.7% less than the FY2006 enacted level of $113.6 million, after rescissions. The House-passed level of $68.1 million was close to half of the current level, largely because of the significant increase in funding for democracy promotion through the National Endowment for Democracy (NED) in FY2006. The Senate committee-recommended level was even lower—$43.5 million—because the committee recommended a much lower funding level for NED, as more funding was recommended in the Democracy Fund account, elsewhere in the bill. The total funding for related agencies in FY2007 was $108.6 million. The Asia Foundation (TAF) is a private, nonprofit organization that supports efforts to strengthen democratic processes and institutions in Asia, open markets, and improve U.S.-Asian cooperation. It receives government and private sector contributions. Government funds for the Foundation are appropriated and pass through the Department of State. The FY2007 request of $10 million reflected a 27.5% reduction over the FY2006 enacted funding level of $13.8 million. The organization stated that the $10 million would support programs that promote tolerance within Muslim minority/majority countries such as Pakistan, Afghanistan, Nepal, and Cambodia; promote free and fair elections in Asia; and develop democratic institutions for legal reform in China, Vietnam, Indonesia, and Thailand. The Asia Foundation had said it would continue to seek private funds and expected to raise $4 million in private funds for FY2007. The House bill set funding at $13.8 million, and the Senate committee recommended $14.0 million for the Asia Foundation in FY2007. The enacted level for the Asia Foundation for FY2007 was the same as the FY2006 level of $13.8 million. The National Endowment for Democracy is a private, nonprofit organization established during the Reagan Administration that supports programs to strengthen democratic institutions in more than 80 countries around the world. NED proponents assert that many of its accomplishments are possible because it is not a U.S. government agency. NED's critics claim that it duplicates government democracy promotion programs and could be eliminated or could be operated entirely through private sector funding. The FY2007 request was for $80 million, the same level as was requested for FY2005 and FY2006, and 8% higher than the final enacted level for FY2006 of $74.1 million, including rescissions. The House-passed NED funding level was $50 million for FY2007. The Senate Appropriations Committee recommended $8.8 million, as the Committee recommended more than $1 billion for the Democracy Fund elsewhere in the bill. The enacted FY2007 level was $74 million. The Center for Cultural and Technical Interchange between East and West (East-West Center), located in Honolulu, Hawaii, was established in 1960 by Congress to promote understanding and cooperation among the governments and peoples of the Asia/Pacific region and the United States. The FY2007 request for the East-West Center was $12 million, a 36.8% decline from the FY2006 enacted level of $19 million, after rescissions. The House level was $3 million, while the Senate committee recommended significantly more—$19 million. The FY2007 enacted funding level was $19 million. The Center for Cultural and Technical interchange between North and South (North-South Center) is a national educational institution in Miami, Florida, closely affiliated with the University of Miami. It promotes better relations, commerce, and understanding among the nations of North America, South America and the Caribbean. The North-South Center began receiving a direct subsidy from the federal government in 1991; however, it has not received a direct appropriation since FY2000. The conferees added language in the FY2004 conference agreement for the Consolidated Appropriations Act, FY2004, to establish a permanent trust fund for the International Center for Middle Eastern-Western Dialogue. The act provided $6.9 million for perpetual operations of the Center which is to be located in Istanbul, Turkey. Even though the Administration did not request any FY2005 funding for this Center, Congress provided $7.3 million for it in FY2005. The Administration requested spending $.8 million of interest and earnings from the Trust Fund for program funding in FY2006. Congress appropriated $4.9 million for this account in FY2006 and $0.9 million for the Trust. The Administration requested $0.7 million of interest and earnings from the Trust Fund program for FY2007. The House set spending of interest and earnings at $0.4 million, while the Senate committee set it at $0.75 million. The final legislation ( P.L. 110-5 ) set spending for the program at $.9 million. International Broadcasting, which had been a primary function of the U.S. Information Agency (USIA) prior to 1999, now falls under an independent agency referred to as the Broadcasting Board of Governors (BBG). The BBG includes the Voice of America (VOA), Radio Free Europe/Radio Liberty (RFE/RL), Cuba Broadcasting, Radio Sawa, Radio Farda, and Radio Free Asia (RFA). In addition to the ongoing international broadcasting activities, the Administration initiated a new U.S. Middle East Television Network—Alhurra. The BBG's FY2007 funding request totaled $671.9 million, 4.3% above the FY2006 level of $644 million, after rescissions. The FY2007 broadcasting request included $653.6 million for broadcasting operations, $18.3 million for capital improvements, and $36.3 million for Broadcasting to Cuba. The House passed funding at $651.3 million for broadcasting operations (including $36.1 million for Cuba Broadcasting) and $7.6 million for capital improvements for a total of $658.9 million for international broadcasting. The Senate Appropriations Committee recommended $653.6 million (including $36.3 million for Cuba Broadcasting) for broadcasting operations and $7.6 million for capital improvements for a total of $661.2 million. The enacted FY2007 funding for international broadcasting in FY2007 totals $644 million—$636 million for broadcasting operations and $8 million for capital improvements. S. 600 (Lugar)/ H.R. 2601 (Smith, C.). A bill to authorize appropriations for the Department of State and international broadcasting activities. In addition, the Senate bill contains provisions on the Peace Corps and foreign assistance programs for fiscal years 2006 and 2007. The Senate bill was introduced March 10, 2005; referred to the Senate Foreign Relations Committee; and reported by the committee the same day. ( S.Rept. 109-35 ). The Senate bill received floor action April 6, 2005. The House bill was introduced May 24, 2005; committee markup was held June 8, 2005. House floor action occurred on July 19 and 20. The measure was passed by the House July 20, 2005 (351-78). No further action occurred. CRS Report RL33420, Foreign Operations (House)/State, Foreign Operations, and Related Programs (Senate): FY2007 Appropriations , by [author name scrubbed]. CRS Report RL33000, Foreign Relations Authorization, FY2006 and FY2007: An Overview , by [author name scrubbed] et al. CRS Report RL31370, State Department and Related Agencies: FY2006 and FY2007 Appropriations and FY2008 Request , by [author name scrubbed]. CRS Report RL33611, United Nations System Funding: Congressional Issues , by [author name scrubbed] and [author name scrubbed]. The EEOC enforces laws banning employment discrimination based on race, color, national origin, sex, age, or disability. In the past few years, appropriators have been particularly concerned about the agency's implementation of a restructuring plan. The three-phase restructuring plan includes the National Contact Center, a two-year pilot project, that began in March 2005; the January 2006 commencement of field structure and staff realignment that the Commission approved in mid-2005; and the examination of headquarters' structure and operations to streamline functions and clarify roles and responsibilities. The 110 th Congress passed the Revised Continuing Appropriations Resolution, 2007, and it was signed into law ( P.L. 110-5 ) on February 15, 2007. The enacted funding level for the EEOC for FY2007 was reported to be $327.0 million, which is the same as the agency's budget in FY2006. The Administration had proposed a budget of $322.8 million for the EEOC, or $4.2 million less than the FY2006 appropriation. (The FY2006 figure of $327.0 million includes rescissions of $0.9 million and $3.3 million from the $331.2 million contained in the Science, State, Justice, Commerce, and Related Agencies Appropriations Act, 2006 [ P.L. 109-108 ]). The budget request would have reduced staffing by 19 full-time equivalents and provided up to $28 million for payments to state and local entities with which the agency has work-sharing agreements to address workplace discrimination within their jurisdictions (i.e., Fair Employment Practices Agencies, FEPAs, and Tribal Employment Rights Organizations, TEROs). Last year, the Administration requested up to $33 million for FEPAs and TEROs; this is the amount to which Congress had, in prior years, raised the EEOC's request. (The agency estimated it would spend $30.5 million on these work-sharing arrangements in FY2006.) In addition to the proposed reduction in the state and local contract maximum, the Commission anticipated offsetting its request for an additional $4.4 million to cover the staff's total compensation with cutbacks in general operating expenses and information technology (IT) expenditures. H.R. 5672 , which the House passed in June 2006, included funding for the EEOC at the level requested by the Administration ($322.8 million). The bill further concurred in the Administration's request that agency payments to FEPAs and TEROs not exceed $28 million. As in the past, the House would have prohibited the Commission from implementing any workforce repositioning, restructuring, or reorganization until it notified the Committees on Appropriations of such proposals. This also was stated in H.Rept. 109-520 , which further directed the EEOC to submit to the committee a comprehensive analysis of current staffing levels by department and the full impact the headquarters repositioning, restructuring , or reorganization will have on all core services, including the number of staff to be redeployed to the field. In addition, H.Rept. 109-520 instructed the agency to continue submitting quarterly status reports on projected and actual spending levels, by function, and highlighting any changes that result from repositioning activities. The House Appropriations Committee also expected the EEOC to use findings from the Inspector General's evaluation of the National Contact Center to improve the project's operation. The Senate Appropriations Committee reported its bill in July 2006. S.Rept. 109-280 provided a larger appropriation of $327.0 million to the EEOC. Most of the additional funding would have gone toward agency payments to FEPAs and TEROS—up to $33 million rather than $28 million. The Committee would have prohibited any sums to be used to fund the position of "chief operating officer" and to operate the National Contact Center. The Chair of the EEOC was further directed to assign at least 57 full-time permanent positions to the Commission's Baltimore office, among them a district director and regional attorney. S.Rept. 109-280 instructed the agency not to implement any workforce repositioning, restructuring, or reorganization until it notified the Senate Committee on Appropriations of such proposals. The Administration requested an FY2006 appropriation of $331.2 million for the EEOC, an increase of $4.4 million from the $326.8 million (including rescissions) provided by the Consolidated Appropriations Act, 2005 ( P.L. 108-447 ). Following the Appropriations Committees' recommendations, the House and Senate endorsed the Administration's budget proposal for the Commission. In November 2005, President Bush signed the FY2006 appropriations bill ( H.R. 2862 ), which included a rescission of 0.28%. In December 2005, the President signed the Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and the Pandemic Influenza Act, 2006 ( H.R. 2863 , P.L. 109-148 ), which contained an additional rescission of 1.0%. The conference agreement adopted, by reference, language in H.Rept. 109-118 that requires the Commission to continue submitting quarterly reports on projected and actual spending levels by function and to highlight any changes due to repositioning activities. The conference agreement also adopted, by reference, language in S.Rept. 109-88 that (1) prohibits the agency from implementing a repositioning plan that reduces the salary of EEOC employees or reduces the number of officers or employees serving as mediators, investigators, or attorneys at any Commission office and that (2) directs the Commission to submit to Congress, before implementation of any repositioning, restructuring or reorganization plan, a comprehensive analysis (conducted for each district, field, area, and local office) of current investigations and enforcement levels and the full impact of such plan on all core services. The conference agreement further provided that the EEOC should not undertake any workforce repositioning, restructuring, or reorganizing without advance notification of the Committees on Appropriations. In addition, the conferees directed the Commission to continue working toward resolution of concerns regarding the pending repositioning plan. The Federal Communications Commission, created in 1934, is an independent agency charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. The FCC is also charged with promoting the safety of life and property through wire and radio communications. The mandate of the FCC under the Communications Act is to make available to all people of the United States a rapid, efficient, nationwide, and worldwide wire and radio communication service. The FCC performs five major functions to fulfill this charge: spectrum allocation, creating rules to promote fair competition and protect consumers where required by market conditions, authorization of service, enhancement of public safety and homeland security, and enforcement. The FCC obtains the majority of its funding through the collection of regulatory fees pursuant to Title I, Section 9, of the Communications Act of 1934; therefore, its direct appropriation is considerably less than its overall budget. For FY2007, the Senate recommended an overall budget of $301.500 million for the salaries and expenses of the FCC, all of which is to be collected through regulatory fees (no direct appropriation). The Senate FY2007 recommendation was $1.042 million less than the Bush Administration request of $302.542 million and $11.742 million more than the FY2006 enacted appropriation of $289.758 million. The Senate expressed its continued concern about the declining standards of broadcast television and the impact that decline is having on America's children and also strongly urged the FCC to act expeditiously upon the complaint filed under Section 616 of the Communications Act regarding Washington Nationals baseball. For FY2007, the House of Representatives recommended an overall appropriation of $294.261 million for the salaries and expenses of the FCC. Of that figure, $293.261 million was to be collected through regulatory fees, with a direct appropriation of $1.0 million. The House FY2007 recommendation was $8.281 million less than the Bush Administration request of $302.542 million and $4.503 million more than the FY2006 enacted appropriation of $289.758 million. The recommended FY2007 funding level would cover efforts to promote the deployment of broadband services, deregulate where competition exists, enhance public safety and homeland security, ensure the viability of the Universal Service Fund, promote the efficient use of spectrum, and review media regulation to foster competition and diversity. The Revised Continuing Appropriations Resolution 2007 ( P.L. 110-5 ) enacted funding level for the FCC for FY2007 was reported to be a direct appropriation of $1.0 million, which is the same as the agency's budget in FY2006. The Federal Trade Commission (Commission or FTC) is an independent agency. It seeks to protect consumers and enhance competition by eliminating unfair or deceptive acts or practices in the marketing of goods and services and by ensuring that consumer markets function competitively. For FY2007, the Administration had requested a program level of $223 million for the FTC, an increase of slightly more than $13 million, or 6.2%, over FY2006 funding. The House-passed bill provided the FTC with $213 million for FY2007, which was $3 million above the previous-year funding. For its part, the Senate followed the recommendation of the Appropriations Committee, which set funding for the agency for FY2007 at the $223 million level. Of the amounts provided, $129 was to be derived from Hart-Scott-Rodino pre-merger filing fees and $18 million from so-called Do-Not-Call fees (more formally known as the Telemarketing Sales Rule, promulgated under the Telephone Consumer Fraud and Abuse Prevention Act). The total amount of direct appropriations for FY2007 was therefore $76 million. In recent years, the FTC has mostly funded its operations by means of its pre-merger filing fees collections and, to a lesser extent, from Do-Not-Call fees. By way of an historical footnote, for FY2000 through FY2002, zero ($0) direct appropriations were required, because the entire program level was covered by a combination of fees and prior-year collections. The LSC is a private, non-profit, federally funded corporation that provides grants to local offices that, in turn, provide legal assistance to low-income people in civil (non-criminal) cases. The LSC has been controversial since its incorporation in the early 1970s and has been operating without authorizing legislation since 1980. There have been ongoing debates over the adequacy of funding for the agency and the extent to which certain types of activities are appropriate for federally funded legal aid attorneys to undertake. In annual appropriations bills, Congress traditionally has included legislative provisions restricting the activities of LSC-funded grantees, such as prohibiting any lobbying activities or prohibiting representation in certain types of cases. P.L. 109-108 (enacted on November 22, 2005) included $330.8 million for the LSC for FY2006, the same amount that was originally passed by the House, instead of $358.5 million as passed by the Senate. The LSC FY2006 appropriation included $312.4 million for basic field programs and required independent audits, $12.8 million for management and administration; $1.3 million for client self-help and information technology, $2.5 million for the Office of the Inspector General, and $1.8 million in grants to offset losses stemming from the 2000 census-based reallocations. In addition, P.L. 109-108 included language that advised the LSC to reduce its rent for its office space (by eliminating some office space and negotiating a more competitive cost per square foot) and included existing provisions restricting the activities of LSC grantees. P.L. 109-108 also included a general rescission equal to 0.28% of funding for the Science, State, Justice, Commerce, and Related Agencies appropriation (which includes the LSC). Moreover, P.L. 109-148 (enacted on December 30, 2005) included a 1% government-wide rescission on discretionary programs. Thus, the LSC appropriation for FY2006 was lowered to $326.6 million. For FY2007, the Bush Administration requested $310.9 million for the LSC. This amount is almost $16 million below the FY2006 funding level for the LSC. The budget request included existing provisions restricting the activities of LSC grantees. The LSC would receive $288.6 million for basic field programs and required independent audits; $14.4 million for management and administration; $3.0 million for client self-help and information technology; $3.0 million for the Office of the Inspector General; and $2.0 million in grants to offset losses stemming from the 2000 census-based reallocations. The House Appropriations Committee recommended a total of $313.860 million for the LSC ( H.R. 5672 ; H.Rept. 109-520 ) and included existing provisions restricting the activities of LSC grantees. This is $3 million above the FY2007 budget request and $12.7 million below the FY2006 final appropriation. Since the LSC is a private, nonprofit corporation, it is not required to comply with federal laws related to employment, travel, and other administrative procedures, but the committee bill requires that the LSC submit a report to the committee no later than February 1, 2007, describing whether, in fact, LSC procedures adhere to federal law and, if discrepancies exist, proposals to modify LSC procedures so that they will comply with federal law. On June 27, 2006, the House passed a floor amendment (by Representative Obey, 337 yeas to 185 noes) that increased the LSC funding level by $25 million, from $313.9 million ( H.R. 5672 ; H.Rept. 109-520 ) to $338.9 million. Under the House-passed bill, the LSC would receive $321.9 million for basic field programs and required independent audits; $12.7 million for management and administration; $1.2 million for client self-help and information technology; and $3.0 million for the Office of the Inspector General. The Senate Appropriations Committee recommended a total of $358.527 million for the LSC ( H.R. 5672 ; S.Rept. 109-280 ) and included existing provisions restricting the activities of LSC grantees. This is $47.7 million above the FY2007 budget request, $31.9 million above the FY2006 final appropriation, and $19.7 million above the House-passed version of the bill. The LSC would receive $337.8 million for basic field programs and required independent audits; $12.8 million for management and administration; $3.0 million for client self-help and information technology; $3.0 million for the Office of the Inspector General; and $2.0 million in grants to offset losses stemming from the 2000 census-based reallocations. Congress passed a fourth continuing resolution ( H.J.Res. 20 ), which included provisions to fund most of the government agencies, including the LSC, through FY2007. H.J.Res. 20 passed the House on January 31, 2007, and passed the Senate on February 14, 2007. The final version ( P.L. 110-5 ) included language that specified that the LSC would be funded at $348.6 million for FY2007. The LSC FY2007 appropriation included $330.8 million for basic field programs and required independent audits, $12.7 million for management and administration; $2.1 million for client self-help and information technology, and $3.0 million for the Office of the Inspector General. The SEC administers and enforces federal securities laws to protect investors from fraud and to maintain fair and orderly markets. The SEC's budget is set through the normal appropriations process, but funds for the agency come from fees on sales of stock, new issues of stocks and bonds, corporate mergers, and other securities market transactions. The SEC is required to adjust the fee rates periodically to make the amount collected approximately equal to the agency's budget. When the fees are collected, they go to a special offsetting account available to appropriators, not to the Treasury's general fund. The Administration's request for FY2006 was $888.1 million, a decrease of 2.7% from FY2005. Of that total, $25.0 million was to be from prior-year unobligated balances, and the remaining $863.1 would be from offsetting fee collections. The House, the Senate, and the conference all approved an amount equal to the request: $888.1 million, of which $25.0 million came from prior-year unobligated balances, and the remainder ($863.1 million) from current-year fee collections. There was no direct appropriation from the general fund. For FY2007, the Administration requested $890.8 million, an increase of 0.3% over FY2006. The House approved $900.5 million for the SEC, 1.4% above the FY2006 appropriation and 1.1% above the Administration's request. Of that total, $20.0 million was to come from prior-year unobligated balances, and the remainder from current-year fee collections. The Senate committee recommended $890.8 million for the SEC in FY2007, the amount of the Administration's request. Finally, enacted budget authority under the continuing resolution was $892.6 million, of which $25.0 million was prior-year unobligated balances. There was no direct appropriation from the general fund. The SBA is an independent federal agency created by the Small Business Act of 1953. Although the agency administers a number of programs intended to assist small firms, arguably its three most important functions are to guarantee—principally through the agency's Section 7(a) general business loan program—business loans made by banks and other financial institutions; to make long-term, low-interest loans to small businesses, nonprofits, and households that are victims of hurricanes, earthquakes, other physical disasters, and acts of terrorism; and to serve as an advocate for small business within the federal government. The SBA's total budget for FY2007 increased to $572 million from FY2006's $456 million. The increase of $116 million was to fund the disaster loan program. In addition, $13.4 million of unobligated balances from previous years was rescinded. Lending authority would stay the same for all loan programs. The State Justice Institute (SJI) is a private, nonprofit corporation that makes grants to state courts and funds research, technical assistance, and informational projects aimed at improving the quality of judicial administration in state courts across the United States. Under the terms of its enabling legislation, SJI is authorized to present its budget request directly to Congress, apart from the President's budget. With enactment of P.L. 110-5 , Congress determined that SJI would receive the same appropriation amount for FY2007, $3.46 million, as it received for FY2006. SJI had requested an appropriation of $4.5 million for FY2007, a 30.2% increase. By contrast, the Bush Administration, as in its budgets for the previous four years, proposed the complete elimination of federal funding for the institute in FY2007. In its passage, on June 29, 2006, of H.R. 5672 , the SSJC appropriations bill for FY2007, the House (following the recommendation of its Appropriations Committee) provided $2 million for SJI, $1.46 million less than the FY2006 funding amount. In its amended version of H.R. 5672 , reported on July 13, 2006, the Senate Appropriations Committee recommended, as SJI had requested, $4.5 million, $1.05 million above FY2006 funding. For the five fiscal years prior to FY2007, appropriations conferees in Congress had encouraged SJI to obtain funds, at least in part, from sources other than Congress. In response to a directive from House-Senate conferees for the FY2006 appropriations act, SJI, in its FY2007 request, noted that it has adopted a 50% "cash match requirement" from its grantees. Also in its request, the institute stated that it continues to pursue grant-making partnerships with the Department of Justice's Office of Justice Programs (OJP), the Legal Services Corporation (LSC), and other public and private entities, looking to "pool its resources with OJP, LSC, and others to fund innovations in areas of mutual concern." In the FY2006 appropriations process, the House Appropriations Committee endorsed an approach of providing some directly appropriated funds to SJI, but with the institute as well seeking additional funding from Department of Justice grant programs. The House committee (in H.Rept. 109-118 , p.154) stated that it understood that SJI had "been unable to generate stable sources of non-Federal funding" and that the SJI had contacted bar associations and court organizations as possible alternative sources of funding. However, the committee noted, these groups were "not inclined to contribute to operations of the SJI beyond providing matching grant funds for individual projects." For this reason, the committee said, it continued to recommend funding for SJI even though the President's FY2006 request did not. The committee commended SJI for beginning to work with OJP on issues involving state courts and encouraged SJI to continue seeking funds from OJP grant programs. The $3.5 million approved by Congress for SJI in FY2006 marked the second fiscal year in a row in which funding for the institute had been increased—following a number of years during which appropriators in Congress considered whether to provide any funding for SJI. For FY2007, the House Appropriations Committee recommended $2 million for SJI in FY2007, $1.46 million less than the institute's FY2006 appropriation. The committee, in its report on the SSJC appropriation bill for FY2007, commended SJI for "continuing to work with the Office of Justice Program (OJP) on issues involving State courts," and it encouraged SJI "to continue to seek funding from OJP grant programs." The committee also "applauded" SJI for "recent successes in obtaining dollar-for-dollar matching funds for grants awarded," adding that it expected "this goal to remain in place during fiscal year 2007." For its part, the Senate Appropriations Committee recommended $4.5 million for SJI in FY2007, $1.05 million above the level enacted for FY2006. In its report, the committee's discussion of recommended funding for SJI simply noted that the institute had been created in 1984 to further the development and adoption of improved judicial administration in state courts. After the House passed (but prior to Senate passage of) the FY2007 continuing appropriations resolution, SJI's newsletter characterized the $3.46 million approved by the House for FY2007 as a "'hard freeze' at our fiscal year (FY) 2006 funding level." It commented that although "the 'glass is half empty' crowd might lament that figure, we are very comfortable with it," adding. "We are grateful to Congress for their continued support and look forward to continuing to meet their high expectations of us." The U.S. Commission on Civil Rights (Commission), established by the Civil Rights Act of 1957, investigates allegations of citizens that they were denied the right to vote based on color, race, religion, or national origin; studies and gathers information on legal developments constituting a denial of the equal protection of the laws; assesses federal laws and policies in the area of civil rights; and submits reports on its findings to the President and Congress when the Commission or the President deems it appropriate. For FY2007, the Revised Continuing Appropriations Resolution provided $8.9 million for the Commission compared with President Bush's request of $9.31 million for the agency. FY2006 funding for the Commission was $8.9 million (including rescissions). The Commission on International Religious Freedom was created by the International Religious Freedom Act of 1998 ( P.L. 105-292 ) as a federal government commission to monitor religious freedom abroad and to advise the President, the Secretary of State, and Congress on promoting religious freedom and combating intolerance in other countries. For FY2007, the Administration requested $3 million, a 6.3% decline from the estimated FY2006 appropriation of $3.2 million, after rescissions. The House-passed bill and the Senate Appropriations Committee agreed with the $3 million funding level for FY2007. The final enacted funding for FY2007 was $3.0 million for the Commission on International Religious Freedom. For FY2006, the Administration requested $3.0 million for the commission (the same as the FY2005 request). Sec. 808 of S. 600 , the Foreign Relations Authorizations for FY2006 and 2007, as introduced, included $3.0 million for the commission for FY2006 and such sums as may be necessary for FY2007. The House measure, H.R. 2601 , as agreed to by the House Committee on International Relations, authorized $3.3 million for each of fiscal years 2006 through 2011. H.R. 2862 , as passed by the House, appropriated $3.2 million for the commission for FY2006. In its report ( H.Rept. 109-118 ), the Appropriations Committee urged the commission and the State Department to continue to work on developing an Index on Religious Freedom. The Senate recommended $1 million for this account in FY2006. The U.S. Institute of Peace (USIP) was established in 1984 by the U.S. Institute of Peace Act, Title XVII of the Defense Authorization Act of 1985 ( P.L. 98-525 ). USIP's mission is to promote international peace through activities such as educational programs, conferences and workshops, professional training, applied research, and dialogue facilitation in the United States and abroad. Prior to the FY2005 budget, USIP funding came from the Labor, HHS appropriation. In the FY2005 budget process, it was transferred to the Commerce, Justice, State and related agencies appropriation primarily for relevancy reasons. For the FY2007 request, the Administration request was $26.98 million, up nearly $5 million from the FY2006 estimated level of $22.07 million, after rescissions. The House-passed bill ( H.R. 5672 ) provided the requested amount, while the Senate Appropriations Committee recommended $22.1 million in H.R. 5522 . The Senate committee noted that USIP received $5 million for programs and activities on Iraq and Afghanistan in the FY2006 Emergency Supplemental Appropriation ( P.L. 109-234 ). The final enacted funding for FY2007 was $22.1 million for USIP. H.R. 6101 (Cannon) Legal Services Corporation Improvement Act. Amends the Legal Services Corporation Act to give the Board of Directors of the Legal Services Corporation (LSC) the power to appoint and remove an LSC Inspector General in accordance with the Inspector General Act of 1978. Allows the Inspector General to be removed at any time upon the written concurrence of at least nine members of the eleven-member Board. Introduced and referred to the House Committee on the Judiciary on September 19, 2006. The House Judiciary Subcommittee on Commercial and Administrative Law held a hearing on H.R. 6101 on September 26, 2006. H.R. 230 (Sweeney) Amends the Small Business Act to direct the Administrator of the Small Business Administration to establish a program to provide regulatory compliance assistance to small business concerns, and for other purposes. Reported by Small Business Committee ( H.Rept. 109-208 ). H.R. 527 (Brady)/ S. 139 (Kerry) Vocational and Technical Entrepreneurship Development Act of 2005. Amends the Small Business Act to direct the Administrator of the Small Business Administration to establish a program under which the Administrator shall make grants to, or enter into cooperative agreements with, state small business development centers to provide, on a statewide basis, technical assistance to secondary schools, or to post-secondary vocational or technical schools, for the development and implementation of curricula designed to promote vocational and technical entrepreneurship. H.R. 527 reported by the Small Business Committee on July 28, 2005 ( H.Rept. 108-207 ). H.R. 2982 (Wynn) To require the Federal Communications Commission to reorganize the bureaus of the Commission in order to better carry out their regulatory functions. Introduced and referred to House Committee on Energy and Commerce on June 17, 2005. CRS Report RL32589, The Federal Communications Commission: Current Structure and Its Role in the Changing Telecommunications Landscape , by [author name scrubbed]. CRS Report 95-178, Legal Services Corporation: Basic Facts and Current Status , by [author name scrubbed]. CRS Report RS20204, Securities Fees and SEC Pay Parity , by [author name scrubbed]. CRS Report RL33243, Small Business Administration: A Primer on Programs , by [author name scrubbed].
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This report monitors actions taken by the 109th Congress for the House's Science, State, Justice, Commerce, and Related Agencies (SSJC) and the Senate's Commerce, Justice, Science, and Related Agencies (CJS) FY2007 appropriations bill. Appropriations bills reflect the jurisdiction of the subcommittees of the House and Senate Appropriations Committees in which they are considered. Jurisdictions for the subcommittees of the House and Senate Appropriations Committees changed at the beginning of the 109th Congress. On September 29, 2006, Congress passed the Defense Department Appropriation (H.R. 5631/P.L. 109-289), which included a continuing resolution (CR) to fund the most other agencies, including SSJC agencies, through November 17, 2006. On November 15, 2006, Congress passed a second CR (H.J.Res. 100) which extended funding provided in the initial continuing resolution through December 8, 2006. On December 8, the House passed a third CR (H.J.Res. 102), which extended funding through February 15, 2007. The Senate passed the measure on December 9. On February, 15, 2007, the President signed into law H.J.Res. 20 (P.L. 110-5), which amended P.L. 109-289, the Revised Continuing Appropriations Resolution, extending continuing appropriations through FY2007. For the FY2007 SSJC/CJS appropriations, the Administration requested $62.5 billion/$52.3 billion in the budget that it sent to Congress on February 6, 2006. The Administration request for the major departments and their related agencies are Department of Justice (DOJ), $21.3 billion; Department of Commerce (DOC), $6.3 billion; Department of State, $10.2 billion; Science, $22.8 billion; and Related Agencies, $2.3 billion. (The numbers may not add to the total due to rounding.) The House passed its SSJC appropriation bill (H.R. 5672) on June 29, providing a total of $62.6 billion. The House funding level included $22.5 billion for DOJ, $5.9 billion for DOC and related agencies, $22.7 billion for the Science agencies, $9.7 billion for the Department of State and international broadcasting, and $2.3 billion for related agencies. The Senate committee reported its bill covering State Department funding (H.R. 5522) on July 10. The enacted FY2006 appropriation provided $62.1 billion ($63.1 billion, including FY2006 supplemental funds) for the agencies under the jurisdiction of the Science, State, Justice, Commerce Appropriations subcommittee of the House. The appropriations enacted for the major departments and their related agencies were DOJ, $21.7 billion; DOC, $6.6 billion; Department of State, $9.5 billion; Science, $22.2 billion; and Related Agencies, $2.5 billion. This report is the final update for the FY2007 SSJC report. Any future adjustments of the FY2007 numbers will be in the FY2008 appropriation report.
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A "Dear Colleague" letter is official correspondence that is sent by a Member, committee, or officer of the House of Representatives or Senate and that is widely distributed to other congressional offices. A "Dear Colleague" letter may be circulated in paper through internal mail, distributed on a chamber floor, or sent electronically. "Dear Colleague" letters are often used to encourage others to cosponsor, support, or oppose a bill. "Dear Colleague" letters concerning a bill or resolution generally include a description of the legislation or other subject matter along with a reason or reasons for support or opposition. Additionally, "Dear Colleague" letters are used to inform Members and their offices about events connected to congressional business or modifications to House or Senate operations. The Committee on House Administration and the Senate Committee on Rules and Administration, for example, routinely circulate "Dear Colleague" letters to Members concerning matters that affect House or Senate operations, such as House changes to computer password policies or a reminder about Senate restrictions on mass mailings prior to elections. These letters frequently begin with the salutation "Dear Colleague." The length of such correspondence varies, with a typical "Dear Colleague" running one to two pages. Member-to-Member correspondence has long been used in Congress. For example, since early House rules required measures to be introduced only in a manner involving the "explicit approval of the full chamber," Representatives needed permission from other Members to introduce legislation. A common communication medium for soliciting support for this action was a letter to colleagues. For example, Representative Abraham Lincoln, in 1849, formally notified his colleagues in writing that he intended to seek their authorization to introduce a bill to abolish slavery in the District of Columbia. The use of the phrase "Dear Colleague" has been used to refer to a widely distributed letter among Members at least since early in the 20 th century. In 1913, the New York Times included the text of a "Dear Colleague" letter written by Representative Finley H. Gray to Representative Robert N. Page in which Gray outlined his "conceptions of a fit and proper manner" in which Members of the House should "show their respect for the President" and "express their well wishes" to the first family. In 1916, the Washington Post included the text of a "Dear Colleague" letter written by Representative William P. Borland and distributed to colleagues on the House floor. The letter provided an explanation of an amendment he had offered to a House bill. Congress has since expanded its use of the Internet and electronic devices to facilitate distribution of legislative documents. Electronic "Dear Colleague" letters can be disseminated via internal networks in the House and Senate, supplementing or supplanting paper forms of the letters. Such electronic communication has increased the speed and facilitated the process of distributing "Dear Colleague" letters. In the contemporary Congress, Members use both printed copy distribution and electronic delivery for sending "Dear Colleague" letters. In the House, Members may choose to send "Dear Colleague" letters through internal mail, through the electronic e -"Dear Colleague" system, or both. Regardless of distribution method, House "Dear Colleague" letters are required to address official business and must be signed by a Member or officer of Congress. Members of the House often send out "Dear Colleague" letters to recruit cosponsors for their measures. The practice of recruiting cosponsors has become more important since the passage of H.Res. 42 in the 90 th Congress (1967-1968). H.Res. 42 amended House rules to permit bill cosponsors, but limited the number to 25. In 1978, the House agreed to H.Res. 86 , which further amended House rules to permit unlimited numbers of cosponsors. "Dear Colleague" letters sent through internal mail must be written on official letterhead, address official business, and be signed by a Member or officer of Congress. A cover letter must accompany the "Dear Colleague" letter, addressed to the director of the House customer solution center, with specific distribution instructions and authorization as to the number to be distributed. These materials must be submitted by 9:45 a.m. for morning distribution and 1:45 p.m. for afternoon mail delivery. The current number of paper copies needed for distribution of a "Dear Colleague" letter in the House is 475 for all Members only (including leadership); 525 for all Members (including leadership and full committees); 625 for Members, full committees, and subcommittees; 300 for Republican Members, leadership, and full Republican committees; 275 for all Republican Members and leadership only; 250 for Democratic Members, leadership, and full Democratic committees; 200 for all Democratic Members and leadership only; and 700 for all House mail stops. For distribution to the Senate, House "Dear Colleague" letters must have a separate cover letter addressed to the deputy chief administrative officer of the House for customer solutions, adhere to the same standards as House "Dear Colleague" letters, and follow the current distribution numbers of 110 for Senators only, and 135 for Senators and committees. When using the paper system, congressional offices create and photocopy their "Dear Colleague" letters and deliver them to either the First Call Customer Service Center or to the House Postal Operations Office. When the House Postal Operations Office is closed, letters may be deposited in a drop box located in the vending area of the Longworth cafeteria. A copy of the "Dear Colleague" letter is delivered to offices as requested. On August 12, 2008, the House introduced a web-based e -"Dear Colleague" distribution system. The e -"Dear Colleague" system replaced the email-based system. Under the e -"Dear Colleague" system, then-chair of the Committee on House Administration, Representative Robert Brady, wrote that Members and staff "will be able to compose e -Dear Colleagues online, and associate them with up to three issue areas. Members and staff will be able to independently manage their subscription to various issue areas and receive e -Dear Colleagues according to individual interest." Pursuant to the House Members' Congressional Handbook , the rules regulating a paper "Dear Colleague" letter sent via internal mail are also applicable to a letter sent electronically. House Members and staff who want to use the e -Dear Colleague system can subscribe and send letters at http://e-dearcolleague.house.gov . During the registration process, they may choose up to 32 issue areas for which they wish to receive "Dear Colleague" letters. The website also allows them to sign up for either the Republican or Democratic "Dear Colleague" distribution lists. Additionally, the website enables individuals "to search all e -Dear Colleagues by session, date, issue area, and keyword or bill number." The e -Dear Colleague system did not alter the process for the delivery of paper "Dear Colleague" letters. To send an e-"D ear Colleague" letter, an individual staff member views http://e-dearcolleague.house.gov and clicks on send. This action brings up the send screen, where the staff member takes the following actions: enters his or her email address, the type of office the staff member works in (i.e., Member, leadership, committee, or other), and the Member's, committee's, or office's name; types in a letter title, selects whether it is a letter to be sent to either the Republican or Democratic distribution lists, and chooses up to three issues to associate with the letter; types, or cuts and pastes, the letter into the text editor on the webpage, including uploading any graphics or attachments; associates the letter with a particular bill or resolution number (optional); and reviews the letter before sending. Following the completion of this process, staff members receive an email asking them to confirm that they are sending the "Dear Colleague" letter. A final opportunity to edit the letter is also provided. Once the letter is completed, it is sent to all individuals who have selected to receive "Dear Colleague" letters in issue areas associated with the letter. Electronic versions of "Dear Colleague" letters sent prior to August 12, 2008, are stored in a Microsoft Exchange public folder that is accessible to all House Members and staff. Electronic versions of "Dear Colleague" letters sent on or after August 12, 2008, are archived on the House e -"Dear Colleague" website. Similar to the House paper system, "Dear Colleague" letters in the Senate are written on official letterhead and address official business, but there is not a central distribution policy. In general, when using the paper system, Senators and chamber officers create their own "Dear Colleague" letters and have them reproduced at the Senate Printing Graphics and Direct Mail Division. Once reproduced, paper copies of the "Dear Colleague" letters are delivered to the Senate Mailroom by the sending office, accompanied by a distribution form or cover letter with specific distribution instructions. As prescribed by the Senate, current distribution numbers for "Dear Colleague" letters in the Senate are 100 for all Senators; 20 for standing, select, and special committees; 5 for the joint leadership; and 1 each for the officers of the Senate (total of 7). The choice to send "Dear Colleague" letters electronically is at the discretion of the individual Senate office. There is no central distribution system for electronic Senate "Dear Colleague" letters.
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"Dear Colleague" letters are correspondence signed by Members of Congress and distributed to their colleagues. Such correspondence is often used by one or more Members to persuade others to cosponsor, support, or oppose a bill. "Dear Colleague" letters also inform Members about new or modified congressional operations or about events connected to congressional business. A Member or group of Members might send a "Dear Colleague" letter to all of their colleagues in a chamber, to Members of the other chamber, or to a subset of Members, such as all Democrats or Republicans. The use of the phrase "Dear Colleague" to refer to a widely distributed letter among Members dates at least to the start of the 20th century, and refers to the generic salutation of these letters. New technologies and expanded use of the Internet have increased the speed and facilitated the process of distributing "Dear Colleague" letters.
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The Environmental Protection Agency (EPA) was established in 1970 to consolidate federal pollution control responsibilities that had been divided among several federal agencies. EPA's responsibilities grew significantly as Congress enacted an increasing number of environmental laws as well as major amendments to these statutes. Among the agency's primary responsibilities are the regulation of air quality, water quality, pesticides, and toxic substances; the management and disposal of solid and hazardous wastes; and the cleanup of environmental contamination. EPA also awards grants to assist states and local governments in complying with federal requirements to control pollution, to assist those states with the delegated authority to administer certain federal pollution control programs, and for research and other activities supporting the agency's mission. Since FY2006, Congress has funded EPA programs and activities within the Interior, Environment, and Related Agencies appropriations bill. No regular appropriations bill was enacted before October 1, 2011, the start of FY2012, for the Interior, Environment, and Related Agencies or the other 11 regular appropriations bills. Prior to the enactment of the Consolidated Appropriations Act, 2012 ( P.L. 112-74 , H.R. 2055 ), on December 23, 2011, EPA and other departments and agencies funded within the Interior, Environment, and Related Agencies Appropriations bill were operating under a series of continuing resolutions sequentially extending FY2012 funding. From July 25, 2011, to July 28, 2011, the House considered H.R. 2584 as reported July 19, 2011, by the House Appropriations Committee, recommending FY2012 appropriations for Interior, Environment, and Related Agencies, but the House floor debate was suspended. No bill to fund Interior, Environment, and Related Agencies for FY2012 was formally introduced in the Senate. However, on October 14, 2011, the bipartisan leadership of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies released a draft bill for FY2012 to serve as a starting point of discussions for markup. Title II under Division E of P.L. 112-74 ( H.Rept. 112-331 ) provided $8.46 billion for EPA for FY2012, not including a 0.16% across-the-board rescission. The total FY2012 appropriations for EPA was an 18.3% increase above the $7.15 billion proposed for FY2012 for EPA by the House Appropriations Committee in H.R. 2584 ( H.Rept. 112-151 ) as reported, but 1.8% less than the $8.62 billion proposed in the October 14, 2011, Senate subcommittee draft. The enacted EPA FY2012 appropriation was $219.1 million (2.6%) less than the FY2011 enacted appropriations of $8.68 billion, and $510.0 million (5.7%) below the $8.97 billion included in the President's FY2012 budget request. In addition to funding priorities among the various EPA programs and activities, several recent and pending EPA regulatory actions were central to the debate on the FY2012 appropriations. These EPA regulatory actions, which were also the focus of considerable attention during deliberations on EPA's FY2011 appropriations, cut across the various environmental pollution control statutes' programs and initiatives. Some Members expressed concerns related to these actions during hearings and markup of EPA's FY2012 appropriations, and authorizing committees have been addressing EPA regulatory actions through hearings and legislation. P.L. 112-74 included several administrative and general provisions affecting EPA actions and authorities (see " Selected Provisions Regarding EPA Actions " later in this report), but not nearly as many as the more than 25 provisions proposed in the Interior, Environment, and Related Agencies Appropriations bill, H.R. 2584 ( H.Rept. 112-151 ) as reported by the House Appropriations Committee. Several additional proposals to address EPA actions were also among the roughly 150 amendments considered and pending prior to suspension of House floor debate of H.R. 2584 on July 28, 2011. The Senate subcommittee draft did not include general provisions similar to the House committee-reported bill that would restrict or preclude EPA from using appropriated funds for implementing or proceeding with a number of regulatory actions. In response to congressional interest in several of the provisions affecting EPA program activities included in P.L. 112-74 and proposed in H.R. 2584 as reported by the House Appropriations Committee, this report highlights a number of these provisions. The information regarding the provisions presented throughout this report is primarily an extraction of language contained in P.L. 112-74 and proposed in H.R. 2584 for purposes of reference, and is not intended to provide a comprehensive analysis of all provisions related directly or indirectly to EPA programs. As all the terms and activities contained within the provisions were not always explicitly defined, the scope of the effects of many of the provisions is subject to interpretation, and therefore neither definitions nor potential impacts are inferred in this report. Only those provisions affecting EPA programs that are clearly identifiable by specific language or references are included in this report. This report also provides a brief summary of funding levels for EPA accounts and certain program activities enacted and proposed for FY2012, and enacted for FY2011. The following section of this report provides an overview of enacted appropriations for FY2012 as compared to amounts proposed in H.R. 2584 as reported, the Senate subcommittee draft, the President's FY2012 request, and the enacted amounts for FY2011 in P.L. 112-10 . For purposes of historical comparison, Table A-1 in the Appendix of this report shows EPA enacted appropriations by account for FY2008 through FY2012. The overview of funding levels is followed by highlights of provisions included in P.L. 112-74 and a series of tables that present a comparison of a compilation of excerpts of selected provisions in P.L. 112-74 with those proposed in H.R. 2584 as reported. These provisions are for selected EPA programs and activities that received prominent attention during deliberations on the FY2012 appropriations. Amendments that were agreed to or failed during House floor debate of H.R. 2584 , as well as submitted amendments pending action, are not included in the tables, as the House floor debate of H.R. 2584 was suspended and not completed. Concerns regarding EPA's FY2012 funding generally focused on federal financial assistance for wastewater and drinking water infrastructure projects, grants to assist states in implementing air pollution control requirements, climate change research and related activities, and environmental cleanup of Superfund sites. There also was interest in funding for geographic-specific water quality initiatives, particularly the Great Lakes Restoration Initiative, and efforts to restore the Chesapeake Bay and Puget Sound. Since FY1996, EPA's funding has been requested by the Administration and appropriated by Congress under eight statutory accounts. Table 1 presents the FY2012 enacted amounts for EPA compared to the amounts proposed by the House Appropriations Committee in H.R. 2584 as reported, the Senate subcommittee draft released October 14, 2011, the President's FY2012 budget request, and the FY2011 enacted appropriations for the eight accounts that fund the agency. The table includes a brief description of the programs and activities funded within each of the EPA accounts. Note that the former name of the "Oil Spill Response" account was changed by the conferees as proposed in the President's FY2012 request to "Inland Oil Spill Program." This modification was intended to more clearly reflect the agency's jurisdiction for oil spill response in the inland coastal zone. The FY2012 enacted appropriations reflect a decrease from the FY2011 enacted levels and the President's FY2012 request for each of the eight EPA accounts once the 0.16% across-the-board rescission is applied. With the exception of increases for the Hazardous Substance Superfund, the Leaking Underground Storage Tank Trust Fund, and the Buildings and Facilities accounts, the FY2012 appropriations were below the levels for each of the remaining accounts as recommended in the Title II of the Senate subcommittee draft. Accounting for the across-the-board rescission, FY2012 enacted appropriations for all of the accounts were above the levels proposed in the House Appropriations Committee-reported bill ( H.R. 2584 ), with the largest difference (38.6%) being the State and Tribal Assistance Grants (STAG) account. The House Committee had proposed roughly a 55% reduction below FY2011 enacted appropriations (to the FY2008 level) for grants to aid states to capitalize their Clean Water State Revolving Funds (SRFs). The Drinking Water SRF would also have been reduced to the FY2008 level, although the magnitude of the decreases below the FY2011 enacted and FY2012 requested levels would have been smaller than the decreases for the Clean Water SRF. There was variability among the FY2012 enacted amounts for program activities below the account level, compared to the FY2012 proposals and the FY2011 enacted amounts. In those cases where FY2012 enacted amounts were the same as proposed for FY2012 and FY2011 enacted, the FY2012 enacted levels would be a decrease once the 0.16% across-the-board rescission is taken into account. The tables contained in the conference report ( H.Rept. 112-331 ) provide a comparison of the FY2012 appropriations for certain individual programs and activities funded within each of the eight appropriations accounts with the FY2012 President's request and FY2011 levels. However, a comparison with FY2011 enacted is not possible across all program activities. The conferees accepted the reorganization of the budget presentation of certain program areas below the appropriations account level for FY2012 as proposed by the President, including consolidation and modifications of line items, making the FY2011 enacted funding levels not comparable to the reorganized activities. The table included in H.Rept. 112-151 (pp. 192-200) accompanying H.R. 2584 and those accompanying the Senate subcommittee draft reflect the reorganization, allowing for comparisons at the sub-account level. The $23.0 million transfer from the Hazardous Substance Superfund account to the Science and Technology (S&T) account included in P.L. 112-74 for FY2012 was the same as proposed for FY2012 in both the House and Senate versions and as requested, but is $3.8 million less than the $26.8 million transferred in FY2011. The FY2012 transfer of $10.0 million from the Superfund account to the Environmental Programs and Management (EPM) account was the same as proposed for FY2012 and enacted for FY2011. These transfer comparisons would reflect a decrease once the 0.16% across-the-board rescission is included for the FY2012 enacted amounts. In addition to the funding amounts presented by account in the table below, the "Administrative Provisions" for EPA in Title II of Division E under P.L. 112-74 , included a rescission of $50.0 million from unobligated balances funded through the Hazardous Substance Superfund ($5.0 million) and STAG ($45.0 million) accounts. Within the STAG account, the distribution of the rescission was specified in the provision as $20.0 million from categorical grants, $10.0 million from the Clean Water SRF, and $5.0 million each from Brownfields grants, Diesel Emission Reduction Act grants, and Mexico Border grants. H.R. 2584 as reported had proposed a rescission of $140.0 million, and the Senate subcommittee draft proposed a smaller rescission of $34.0 million from unobligated balances funded through the Superfund and STAG accounts, but the distribution of the rescissions was not specified. The FY2012 request proposed a $50.0 million rescission of prior years' unobligated balances, but did not specify from which account. Similar rescissions of unobligated balances have been included in EPA appropriations since FY2006. For FY2011, Section 1740 in Title VII of Division B in P.L. 112-10 included a rescission of $140.0 million from unobligated balances available within the STAG account only; for FY2010, P.L. 111-88 included a $40.0 million rescission of unobligated balances available from the STAG and the Hazardous Substance Superfund accounts. An additional EPA administrative provision in the FY2012 enacted appropriations authorized the Administrator to transfer up to $300.0 million of the funds appropriated for the Great Lakes Restoration Initiative (GLRI) within the EPM account to other federal departments or agencies to carry out projects supporting the GLRI and the Great Lakes Water Agreement programs, projects, or activities. Not including the 0.16% across-the-board rescission, the FY2012 enacted amount was generally the same as FY2011 enacted and the proposed amount for FY2012 in the Senate draft, more than the $250.0 million proposed in the House committee-reported H.R. 2584 , but less than the $350.0 million included in the FY2012 request. During the past two years, EPA has proposed and promulgated numerous regulations implementing provisions of many of the federal pollution control statutes enacted by Congress. During the first session of the 112 th Congress, many stakeholders and some Members expressed concerns that the agency was reaching beyond the authority given it by Congress and ignoring or underestimating the costs and economic impacts of proposed and promulgated rules. EPA and others countered that these actions were consistent with statutory mandates and in some cases compelled by court ruling, the pace in many ways is slower than a decade ago, and that cost and benefits are appropriately evaluated. Recently promulgated and pending actions under the Clean Air Act, in particular EPA controls on emissions of greenhouse gases and efforts to address conventional pollutants (e.g., mercury, particulate matter, sulfur dioxide) from a number of industries, received much of the attention. Several actions under the Clean Water Act, Safe Drinking Water Act, Resource Conservation and Recovery Act (RCRA), Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Toxics Substances Control Act (TSCA), also received some attention. A number of these issues were the focus of considerable debate which resulted in provisions in the enacted and House Appropriations Committee-proposed versions of the FY2012 Interior, Environment, and Related Agencies Appropriations bill. P.L. 112-74 included several administrative and general provisions affecting EPA actions and authorities (see tables that follow), but not nearly as many as those proposed in the Interior, Environment, and Related Agencies Appropriations bill, H.R. 2584 ( H.Rept. 112-151 ) as reported by the House Appropriations Committee on July 19, 2011, and among amendments considered and submitted prior to suspension of the House floor debate on July 28, 2011. Most of the administrative provisions in the FY2012 enacted appropriations were similar to those proposed in H.R. 2584 as reported and the Senate draft for FY2012, and the general provisions were similar to or a slightly revised subset of those contained in House committee-reported bill. Comparable general provisions were not proposed in the Senate draft. In addition to the rescission of unobligated balances and transfer of funds for the Great Lakes Restoration Initiative discussed in the previous section (" Comparison of EPA FY2012 Enacted and Proposed Appropriations ") and presented in Table 1 above, three other provisions were included in the EPA Administrative Provisions setting terms and conditions for the use of FY2012 appropriations, under Title II of Division E in P.L. 112-74 . These administrative provisions were similar to those included in both House committee-reported H.R. 2584 and the Senate subcommittee draft. One additional provision authorized EPA to transfer up to $10.0 million from any of its eight accounts to fund emergency response actions for oil spills in addition to amounts available in the Inland Oil Spill Program account if the Administrator determines that the account will be exhausted within 30 days. The funds transferred from other accounts would be reimbursed by payments administered by the U.S. Coast Guard from the Oil Spill Liability Trust Fund. This provision was similar to an administrative provision included in the Senate draft that allowed for the transfer of funds under these circumstances, but without placing a dollar limit on the amount of the transfer. H.R. 2584 as reported did not include such a transfer provision. Division E, Title IV "General Provisions" in P.L. 112-74 , included provisions specifying requirements and restrictions for the use of appropriations for certain air quality regulatory actions and greenhouse gas emission reporting requirements, and certain Clean Water Act permitting requirements associated with silvicultural activities: Section 425 of Division E of the FY2012 appropriations law required the President to submit a comprehensive report to the House and Senate Appropriations Committees detailing all federal (including EPA) obligations and expenditures, domestic and international, for climate change programs and activities by agency for FY2011. Section 426 prohibited the use of appropriations for promulgation or implementation of regulation requiring permits under Title V of the Clean Air Act for certain pollutants resulting from biological processes associated with livestock production, and Section 427 prohibited use of appropriations for implementing any provisions in a rule that requires mandatory reporting of greenhouse gas emissions from "manure management systems." Section 432 of the FY2012 law amended Section 328 of the Clean Air Act, effectively transferring authority to regulate air emissions from EPA to Department of the Interior (DOI) in the Outer Continental Shelf off Alaska's north coast. Section 429 in P.L. 112-74 prohibited EPA from requiring a permit under Section 402 of the Federal Water Pollution Control Act (33 U.S.C. 1342; commonly referred to as the Clean Water Act), and further, prohibited the EPA administrator "…from directly or indirectly requiring any state to require a permit for discharges of stormwater runoff from roads, the construction of, use, or maintenance of which is associated with silvicultural activities, or from other silvicultural activities involving nursery operations, site preparation, reforestation and subsequent cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, or surface drainage." Each of the general provisions included in the FY2012 appropriations summarized above is similar to provisions proposed for FY2012 in the House Appropriations Committee-reported bill H.R. 2584 as noted in the tables which follow. Section 425 in the enacted FY2012 appropriations was also similar to a reporting requirement for FY2009 and FY2010 contained in Section 426 of the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2010 ( P.L. 111-88 ). A similar recurring reporting requirement had been in existence for nearly a decade through FY2007, under provisions in the annual appropriations bills for Foreign Operations. Section 426 and Section 427 of P.L. 112-74 are the same as Section 424 and Section 425 of P.L. 111-88 for FY2010, and retained in the FY2011 Full-Year Continuing Appropriations law ( P.L. 112-10 ). Additionally, in lieu of certain provisions proposed for FY2012 in the House Appropriations Committee-reported bill ( H.R. 2584 ), the FY2012 appropriations conference report, H.Rept. 112-331 , included extensive language with regard to specific actions by EPA. For example, under the Science and Technology account in H.Rept. 112-331 (p. 1,072), the conferees required specific refinements and modifications to EPA's policies and practices for conducting assessments under the agency's Integrated Risk Information System (IRIS). This report language reflects some of the concerns that resulted in a general provision, Section 444, contained in the House committee-reported bill. As reported, H.R. 2584 contained more than 25 provisions that would have restricted or precluded the use of FY2012 funds by EPA for implementing or proceeding with a number of regulatory actions. These provisions included more than 20 provisions proposed by the subcommittee, and eight amendments added during full committee markup. The more controversial provisions regarding several EPA programs and regulations were contained in the "General Provisions" in Title IV of H.R. 2584 . Further, Title V of the House Appropriations Committee-reported bill H.R. 2584 , the Reducing Regulatory Burdens Act of 2011, included amendments to the Clean Water Act and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) in response to EPA's consideration of requiring permits under the Clean Water Act for point source discharges of pesticides in or near U.S. waters. From July 25, 2011, to July 28, 2011, the House considered H.R. 2584 but did not complete debate on the bill. Concerns regarding these EPA actions continued to be raised during House floor debate and were among roughly 150 amendments considered and submitted prior to suspension of floor debate on July 28, 2011. The provisions and amendments central to the House debate would have impacted ongoing and anticipated EPA activities, including those addressing greenhouse gas emissions, hazardous air pollutants, particulate matter emissions, permitting of new source air emissions, water quality impacts of mountaintop mining operations, management of coal ash, lead-based paint removal, environmental impacts associated with livestock operations, financial responsibility with respect to Superfund cleanup, and stormwater discharge. Table 2 through Table 8 , which follow, highlight directive provisions included in P.L. 112-74 and proposed in H.R. 2584 as reported, including those that would restrict or preclude EPA from using appropriations for implementing or proceeding with a number of regulatory actions. Comparable provisions were not proposed in the Senate subcommittee draft. The provisions presented in the following tables are categorized in this report by general program areas, that is, air quality and climate change, water quality, and waste management. Related provisions that are under the jurisdiction of agencies other than EPA, but may impact EPA, are listed separately in Table 8 . The tables contain information about the provisions, including the associated sections of the bill (or relevant conference report citation with regard to EPA's ISIS program). H.R. 1 , the FY2011 Full-Year Continuing resolution passed by the House February 19, 2011, included roughly 20 provisions that would have similarly restricted and prohibited the use of FY2011 funds to implement EPA regulatory activities. These provisions were not included in the final FY2011 appropriations law ( P.L. 112-10 ) enacted April 15, 2011. Those provisions contained in P.L. 112-74 and H.R. 2584 as reported that are similar or the same as provisions proposed in H.R. 1 as passed by the House February 19, 2011, are denoted in the first column of each of the following tables. Since FY1996, EPA's appropriations have been requested by the Administration and appropriated by Congress within eight statutory appropriations accounts. Table A-1 identifies the amounts for the appropriations enacted by Congress for FY2008 through FY2012 for these accounts. The table identifies transfers of funds between these accounts, and funding levels for several grant program areas within the State and Tribal Assistance Grants (STAG) account that have received more prominent attention during these fiscal years. The enacted amounts presented in Table A-1 are based on most recent information available from House, Senate, or conference committee reports accompanying the annual appropriations bills that fund EPA.
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Enacted December 23, 2011, the Consolidated Appropriations Act, 2012 (P.L. 112-74, H.R. 2055), finalized appropriations for FY2012 for those agencies typically funded under nine of the 12 regular appropriations bills. Not including a 0.16% across-the-board rescission, Title II of Division E under P.L. 112-74 provided $8.46 billion for the Environmental Protection Agency (EPA) for FY2012. The total was an increase above the $7.15 billion proposed by the House Appropriations Committee (H.R. 2584 as reported), but less than the $8.62 billion proposed in a draft released by the bipartisan leadership of the Senate Appropriations Subcommittee and the $8.97 billion included in the President's FY2012 budget request. The EPA FY2012 appropriations were $219.1 million (2.6%) less than the FY2011 enacted appropriations of $8.68 billion. Prior to the enactment of P.L. 112-74, EPA and agencies included in the Interior, Environment, and Related Agencies appropriations bill had been funded sequentially under a series of FY2012 continuing resolutions. In addition to FY2012 appropriations for the various EPA programs and activities, P.L. 112-74 included directive provisions regarding certain EPA authorities and program activities, including some that restricted the use of appropriated funds for implementing or proceeding with several recent and pending EPA regulatory actions. Division E, Title IV "General Provisions" P.L. 112-74, included provisions specifying requirements and restrictions for the use of appropriations for certain air Clean Air Act regulatory actions and greenhouse gas emission reporting requirements (see sections 425, 426, 427 and 432), and certain Clean Water Act permitting requirements associated with silvicultural activities (section 429). Additionally, the Conference Report H.Rept. 112-331 included extensive language with regard to specific actions by EPA. For example, under the Science and Technology account in H.Rept. 112-331 (p. 1072), the Conferees required specific refinements and modifications to EPA's policies and practices for conducting assessments under the agency's Integrated Risk Information System (IRIS). EPA regulatory actions received considerable attention during House and Senate oversight committee hearings, appropriations committee hearings, and House floor debate on the FY2012 appropriations during the first session of the 112th Congress. Several of the provisions included in P.L. 112-74 were the same or similar to a subset of more than 25 provisions included in H.R. 2584, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2012 (H.Rept. 112-151), as reported on July 19, 2011, and additional proposed provisions regarding EPA among roughly 150 amendments considered or submitted during floor debate of H.R. 2584, which was suspended on July 28, 2011. These proposed directives cut across many of the various environmental pollution control statutes' programs and initiatives. An October 14, 2011, draft released by the bipartisan leadership of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies did not include comparable general provisions that would restrict or preclude the use of appropriations for certain EPA actions. This report summarizes funding levels for EPA accounts and certain sub-account program activities as enacted in P.L. 112-74, and as proposed in H.R. 2584 as reported by the House Appropriations Committee, in the Senate subcommittee draft, and in the President's FY2012 request, compared to the FY2011 enacted appropriations. Selected provisions regarding EPA program activities extracted from P.L. 112-74, the conference report, and the House committee-reported bill are also presented. Only those provisions affecting EPA that are clearly identifiable by specific language or references contained in the bill are included. Amendments that were considered or pending during initial House floor debate at the end of July 2011 are not included.
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The number of foreign-born people residing in the United States (42.4 million) is at the highest level in our history and, as a portion of the U.S. population, has reached a percentage (13%) not seen since the early 20 th century. Of the foreign-born residents in the United States, approximately 11 million are speculated to be unauthorized residents (often characterized as illegal aliens). The degree to which unauthorized resident aliens should be accorded certain rights and privileges as a result of their residence in the United States, along with the duties owed by such aliens given their presence, remains the subject of debate in Congress. Included among the specific policy areas that spark controversy are due process rights, tax liabilities, military service, eligibility for federal assistance, educational opportunities, and pathways to citizenship. This report focuses on the policy and legislative debate surrounding unauthorized aliens' access to federal benefits. Researchers at Pew Research Center estimate that there were 11.1 million unauthorized immigrants living in the United States in March 2014. The three main components of the unauthorized resident alien population are foreign nationals who overstay their nonimmigrant visas, foreign nationals who enter the country surreptitiously, and foreign nationals who are admitted on the basis of fraudulent documents. In all three instances, these aliens are in violation of the Immigration and Nationality Act (INA) and subject to removal. Nonetheless, the actual number of unauthorized aliens in the United States is not known, as locating and enumerating people who are residing in the United States without permission poses many methodological problems. Not all unauthorized aliens lack legal documents, leading many observers to characterize these documented aliens as "quasi-legal" migrants. Specifically, there are certain circumstances in which DHS issues temporary employment authorization documents (EADs) to aliens who are not otherwise considered authorized to reside in the United States. Aliens with EADs, in turn, may legally obtain Social Security cards. These "quasi-legal" unauthorized aliens fall in several categories: Those who received from the Government temporary humanitarian relief from removal, such as Temporary Protected Status (TPS). Those eligible for deferred action for childhood arrivals (DACA). Those who sought asylum in the United States and their cases have been pending for at least 180 days. Those who are immediate family or fiancées of legal permanent residents (LPRs) who are awaiting in the United States their legal permanent residency cases to be processed. Those who have overstayed their nonimmigrant visas and have petitions pending to adjust status as employment-based LPRs. None of the aliens described above have been formally approved to remain in the United States permanently, and many with pending cases may ultimately be denied LPR status. Only about 25% of asylum seekers, for example, ultimately gain asylum. Approximately 80% to 85% of LPR petitions reportedly are approved. Abused, neglected, or abandoned children who also lack authorization under immigration law to reside in the United States (i.e., unauthorized aliens) raise complex immigration and child welfare concerns. In 1990, Congress created an avenue for unauthorized alien children who become dependents of the state juvenile courts to remain in the United States legally and permanently. Any child or youth under the age of 21 who was born in a foreign country; lives without legal authorization in the United States; has experienced abuse, neglect, or abandonment; and meets other specified eligibility criteria may be eligible for special immigrant juvenile (SIJ) status. Otherwise, unauthorized residents who are minors are subject to removal proceedings and deportation, as are all other unauthorized foreign nationals. The SIJ classification enables unauthorized juveniles who become dependents of the state juvenile court to become LPRs under the INA. A noteworthy portion of the households headed by unauthorized aliens is likely to have U.S. citizen children, as well as spouses who may be legal permanent residents. Children born in the United States to parents who are unlawfully present in the United States are U.S. citizens, consistent with the British common law principle known as jus soli . This principle is codified in the Fourteenth Amendment of the U.S. Constitution and by Section 301(a) of the INA, which provides that a person who is born in the United States, subject to its jurisdiction, is a citizen of the United States regardless of the race, ethnicity, or alienage of the parents. As Figure 1 illustrates, an estimated 27% of unauthorized adults (3.1 million) are living with U.S. citizen children who are minors (i.e., under 18 years of age), and another 6% (0.7 million) are living with U.S. citizen children who are 18 years of age or older. Just over half (52%) of the unauthorized aliens are not living with U.S. citizen children. An estimated 775,000 unauthorized aliens are children under the age of 18 years. As Figure 2 illustrates, the number of citizen children (i.e., under 18 years of age) in households headed by an unauthorized alien has grown from 2.7 million in 2003 to 4.5 million in 2010. The number of unauthorized children, however, has declined from 1.5 million in 2003 to 1.0 million in 2010. As mentioned before, most persons lacking legal authority to reside in the United States are not eligible for federally provided assistance. However, it is not unexpected that many persons residing illegally would be on the margins socioeconomically and thus, would pose particular dilemmas for service providers. The policies discussed below reflect a balancing of the integrity of entitlement programs with humanitarian provision of emergency services and assistance. In 1996, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA, P.L. 104-193 ), which, among other things, created a general set of rules for noncitizen eligibility for public benefits. For some federal public benefits the eligibility rules were similar to those that were already in existence. With the single exception of emergency Medicaid, unauthorized (illegally present) aliens were barred prior to 1996 from participation in all the major federal assistance programs that had statutory provisions for noncitizens, as were aliens here legally in a temporary status (i.e., nonimmigrants such as persons admitted for tourism, education, or employment). Since 1986, for example, a Medicaid recipient was required to declare under penalty of perjury whether he or she is a citizen or national of the United States or—if not a citizen or national—that he or she is an alien in a "satisfactory immigration status." However, many health, education, nutrition, income support, and social service programs did not include specific provisions regarding alien eligibility, and unauthorized aliens were potential participants. These programs included, for example, the Special Supplemental Nutrition Program for Women, Infants, and Children (the WIC program); child nutrition programs; initiatives funded through the Elementary and Secondary Education Act; the Earned Income Tax Credit (EITC); community and migrant health centers; and the Social Services Block Grant (SSBG) program. PRUCOL, an acronym for "permanently residing under color of law," is an eligibility standard that is not defined in statute; historically, it has been used to provide a benefit to certain foreign nationals who the government knows are present in the United States, but whom it has no plans to deport or remove. Considered by many to be an obsolete construct, PRUCOL recently began re-emerging in the context of "quasi-legal" aliens. Prior to 1996, eligibility for federal benefits depended on how the PRUCOL standards were interpreted. Many service providers had construed PRUCOL narrowly to include only those aliens here under certain specific statutory authorizations during the 1970s. A federal court, however, disagreed with these narrow interpretations. In Holley v. Lavine , the United States Court of Appeals for the Second Circuit held that "[w]hen ... a legislative body uses the term 'under color of law' it deliberately sanctions the inclusion of cases that are, in strict terms, outside the law but are near the border." At that time, the court concluded that the PRUCOL standard for Aid for Families with Dependent Children (AFDC, the precursor to Temporary Assistance for Needy Families), for example, could cover aliens known by the government to be undocumented or deportable, but whom the government nevertheless allowed to remain here indefinitely. The court decisions, however, did n ot offer a uniform definition of PRUCOL, resulting in differing applications according to the benefit and the class of alien. Enacted more than 20 years ago, Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 ( P.L. 104-193 ) established comprehensive restrictions on the eligibility of all noncitizens for federal public benefits, with limited exceptions including LPRs with a substantial U.S. work history or military connection. Regarding unauthorized aliens, Section 401 of PRWORA sought to end the PRUCOL eligibility standard by barring them from any federal public benefit except the emergency services and programs expressly listed in Section 401(b) of PRWORA. This overarching bar to unauthorized aliens hinges on how broadly the phrase "federal public benefit" is implemented. The law defines a federal public benefit as (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. So defined, this bar covers many programs whose enabling statutes do not individually make citizenship or immigration status a criterion for participation. Thus, unauthorized aliens are statutorily barred from receiving benefits that previously were not individually restricted—Social Services Block Grants and migrant health center services, for example—unless they fall within the 1996 welfare act's limited exceptions. These statutory exceptions include the following: treatment under Medicaid for emergency medical conditions (other than those related to an organ transplant); short-term, in-kind emergency disaster relief; immunizations against immunizable diseases and testing for and treatment of symptoms of communicable diseases; services or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelters) designated by the Attorney General as (1) delivering in-kind services at the community level, (2) providing assistance without individual determinations of each recipient's needs, and (3) being necessary for the protection of life and safety; and to the extent that an alien was receiving assistance on the date of enactment, programs administered by the Secretary of Housing and Urban Development, programs under title V of the Housing Act of 1949, and assistance under Section 306C of the Consolidated Farm and Rural Development Act. Beyond the statutory exceptions noted above, PRWORA also includes special rules governing the EITC. These provisions are aimed at preventing unauthorized aliens from receiving an EITC by requiring that Social Security Numbers (SSNs) for recipients (and spouses) be valid for employment in the United States. PRWORA separately has language on certain federally supported nutrition programs that directly bears on unauthorized aliens. More precisely, Title VII includes provisions that (1) stipulate that students eligible to receive free public education may receive federally subsidized school meals (e.g., free school lunches/breakfasts) without regard to their citizenship status and (2) leave to state discretion whether the state will deny benefits to unauthorized aliens under the WIC program, the Child and Adult Care Food Program (CACFP), the Summer Food Service program, the Special Milk program, the Commodity Supplemental Food Program (CSFP), the Emergency Food Assistance Program (TEFAP), and the Food Distribution Program on Indian Reservations (FDPIR). PRWORA also mandated that unauthorized alien women be ineligible for prenatal care under Medicaid. Congress also enacted a provision that automatically provides Medicaid coverage at birth to children born of Medicaid-eligible mothers, but imposes a waiting period on covering children born of mothers who are not Medicaid-eligible. When the question of whether citizen children of unauthorized alien mothers were Medicaid-eligible at birth arose, a court dismissed the argument that children of all Medicaid-ineligible mothers rather than alienage was the relevant classification. In Lewis v. Thompson , the court found that citizen children of unauthorized alien mothers must be accorded automatic eligibility on terms as favorable as those available to the children of citizen mothers. Enacted in 1997, the year after PRWORA, the State Children's Health Insurance Program (CHIP), is considered a federal public benefit (barring unauthorized aliens). However, the U.S. Department of Health and Human Services (HHS) promulgated regulations in 2002 permitting states to provide CHIP coverage to fetuses. States reportedly are using this option of CHIP coverage for fetuses to provide prenatal care services to pregnant women who are unauthorized aliens. The Higher Education Amendments (HEA) of 1986 ( P.L. 99-498 ) codified regulations that limited the eligibility for many federal student aid programs to U.S. citizens and LPRs. The U.S. Department of Education has kept in place the bar on unauthorized aliens and temporary foreign residents, including international students. Notably, since enactment of the Immigration Reform and Control Act of 1986 (IRCA), the Department of Education has verified the immigration status of applicants for federal financial aid through the Systematic Alien Verification for Entitlements (SAVE) system (discussed in " Immigrant Verification "). Unlike earlier federal law, PRWORA expressly bars unauthorized aliens from most state and locally funded benefits. The restrictions on these benefits parallel the restrictions on federal benefits. Unauthorized aliens are generally barred from state and local government contracts, licenses, grants, loans, and assistance. The following exceptions are made: treatment for emergency conditions (other than those related to an organ transplant); short-term, in-kind emergency disaster relief; immunization against immunizable diseases and testing for and treatment of symptoms of communicable diseases; and services or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelters) designated by the attorney general as (1) delivering in-kind services at the community level, (2) providing assistance without individual determinations of each recipient's needs, and (3) being necessary for the protection of life and safety. Also, the restrictions on state and local benefits do not apply to activities that are funded in part by federal funds; these activities are regulated under PRWORA as federal benefits. Furthermore, the law states that nothing in it is to be construed as addressing eligibility for basic public education. Finally, the 1996 law allows the states, through enactment of new state laws, to provide unauthorized aliens with state and local benefits that otherwise are restricted. Despite the federally imposed bar and the state flexibility provided by PRWORA, states still may expend a significant amount of state funds for unauthorized aliens. Public elementary and secondary education coupled with school lunches for unauthorized aliens remain compelled by judicial decision, and payment for emergency medical services for unauthorized aliens remains compelled by federal law. Meanwhile, certain other costs attributable to unauthorized aliens, such as criminal justice costs, remain compelled by the continued presence of unauthorized aliens. Although the bars on unauthorized aliens obtaining federal benefits are emphatic, determining a person's immigration and citizenship status is not always easy. The laws governing the eligibility of LPRs for means-tested federal assistance are based on a complex set of factors (e.g., work history, category of admission, and petitioning sponsorship), and states have options to provide benefits to LPRs that they may not opt to provide to unauthorized aliens. The Systematic Alien Verification for Entitlements (SAVE) system provides federal, state, and local government agencies access to data on immigration status that are necessary to determine noncitizen eligibility for public benefits. The U.S. Citizenship and Immigration Service (USCIS) does not determine benefit eligibility; rather, SAVE enables the specific program administrators to ensure that only those noncitizens who meet their program's eligibility rules actually receive public benefits. According to USCIS, SAVE draws on the Verification Information System (VIS) database, which is a nationally accessible database of selected immigration status information that contains over 100 million records. SAVE's statutory authority dates back to the Immigration Reform and Control Act of 1986 (IRCA). The IRCA, as amended, mandates the following programs and agencies to participate in the verification of an applicant's immigration status: the Temporary Assistance for Needy Families (TANF) Program, the Medicaid Program, and certain Territorial Assistance Programs (U.S. Department of Health and Human Services); the Unemployment Compensation Program (U.S. Department of Labor); Title IV Educational Assistance Programs (U.S. Department of Education); and certain Housing Assistance Programs (U.S. Department of Housing and Urban Development). Subsequently, PRWORA required the Attorney General to establish procedures for a person applying for a federal public benefit to provide citizenship information in a fair, nondiscriminatory manner. According to USCIS, state and local agencies may access SAVE through two methods to verify an applicant's status: an electronic verification process through the online SAVE system; or, a paper-based verification process through the Form G-845, Document Verification Request. USCIS charges the benefit-granting agencies fees to use SAVE through web-based access according to the number and type of transactions. Agencies must have a Memorandum of Understanding (MOU) and a purchase order with the SAVE program contractor to pay the transaction fees for web-based Internet access. Those agencies submitting paper forms (G-845s) are charged $2.00 per case by USCIS. In addition to establishing the SAVE system, there has been a consensus for well over a decade that immigration documents issued to aliens should include biometric identifiers. In designing these documents, the priorities have centered on document integrity as well as personal identification. The official document issued to LPRs is the permanent resident card, commonly called a "green card" because it had been printed on green stock. Now it is a plastic card that is similar in size to a credit card. Since April 1998, the card has incorporated security features, including digital images, holograms, micro-printing, and an optical memory stripe. The USCIS also issues an employment authorization document that has incorporated security features, including digital images, holograms, and micro-printing, since 1998. Given that approximately 11.1 million foreign nationals were estimated to be residing in the United States without legal authorization in 2014, it is reasonable to presume that some of these unauthorized aliens are committing document fraud. However, the extent to which unauthorized aliens enter with fraudulently obtained documents or acquire bogus documents after entry is not known. As discussed above, the technology to verify legal immigration status has advanced considerably over the years. The United States, however, does not require its citizens to have legal documents that verify their citizenship and identity (i.e., national identification cards). Although some assert that the United States has de facto identification cards in the form of Social Security cards and driver's licenses or state identification cards, none of these documents establishes citizenship. The U.S. passport is one of the few documents that certify the individual is a U.S. citizen; indeed, for most U.S. citizens, it is the only document they possess that verifies both their citizenship and identity. Until recently, self-attestation of citizenship was generally accepted for most government purposes. False claims of citizenship have long been an illicit avenue for benefit fraud and, as a result, are considered a crime. In general, Section 1015 of the United States Criminal Code (Title 18) criminalizes acts of fraud relating to naturalization, citizenship, or alien registry. Specifically, it is a criminal offense for a person to "knowingly ... make any false statement or claim that he is, or at any time has been, a citizen or national of the United States, with the intent to obtain, for himself or another, any federal or state benefit or service, or to engage unlawfully in employment in the United States." The INA also makes "misrepresentation" (e.g., falsely claiming U.S. citizenship) a ground for inadmissibility. Congress enacted in recent years several specific laws aimed directly at these perceived loopholes of citizenship self-attestation and identity document integrity. In terms of document integrity, for example, the REAL ID Act ( P.L. 109-13 , Division B) contained provisions to enhance the security of state-issued drivers' licenses and personal identification (ID) cards. If state-issued drivers' licenses and ID cards are to be accepted for federal purposes, the act requires states to establish minimum issuance standards and adopt certain procedures to verify documents used to obtain drivers' licenses and ID cards. In terms of obtaining Medicaid, Section 6036 of the Deficit Reduction Act of 2005 ( P.L. 109-171 ), as amended by the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ), requires that states obtain satisfactory documentation of citizenship and identity to determine eligibility. This requirement is codified as Section 1903(x) of the Social Security Act (SSA). Section 211 of CHIPRA 2009 (enacted as P.L. 111-3 ) permits states to elect an alternative process for verifying citizenship for Medicaid, as required by Section 1903(x) of the SSA. Under the Section 211 option, the name and SSN of an applicant could be submitted to the Commissioner of SSA. The Commissioner would check the information received from the states against the SSA database and determine whether the name and SSN match and whether the SSA database shows that the applicant is a citizen. If the SSA cannot confirm the applicant's name, SSN, and citizenship, the applicant would have to either resolve the inconsistency or provide satisfactory documentary evidence of citizenship as defined in Section 1903(x)(3), or else be disenrolled. Section 211(c) of CHIPRA 2009 would provide that the Medicaid citizenship documentation requirements currently required under Section 1903(x), and as amended by the provisions of Section 211 of CHIPRA 2009, would apply to CHIP. The use of the Social Security card for personal identification has been controversial for many years. The Social Security Administration (SSA) has emphasized that the SSN identifies a particular record only and the Social Security card indicates the person whose record is identified by that number. Thus, the Social Security card was not meant to identify the bearer. The Social Security Amendments of 1972 (P.L. 92-603) required the SSA to obtain evidence to establish age, citizenship, or alien status, and identity of the applicant for a Social Security card/number. As of November 2008, the SSA requires applicants to present for identification a document that shows name, identifying information, and preferably a recent photograph. The SSA also requires that all documents be either originals or copies certified by the issuing agency. There is a widely held perception that many unauthorized migrants obtain federal benefits—despite the restrictions and verification procedures. Given that data on unauthorized aliens are estimates at best and that these aliens are expressly barred from most federal programs, reliable data on the extent that they actually receive benefits are not available. That said, there are a few program evaluations and investigations, as well as demographic projections, that attempt to address this thorny issue. The Inspector General for Tax Administration at the U.S. Department of the Treasury found that the Internal Revenue Service (IRS) paid $4.2 billion in refundable tax credits in 2010 to individuals who were not authorized to work in the United States. This audit was based upon analysis of tax returns filed by persons with Individual Taxpayer Identification Numbers (ITINs). The IRS issues ITINs to individuals who are required to have a taxpayer identification number for tax purposes but are not eligible to obtain an SSN because they are not authorized to work in the United States. Both resident and nonresident aliens have income reporting requirements under the Internal Revenue Code, and even income illegally obtained is subject to taxation. The number of tax forms filed with ITINs has increased from 1.55 million in 2005 to 3.02 million in 2010. It is unclear how many of these individuals who filed with ITINs were part of mixed-status families. A dated (2004) U.S. Department of Labor (DOL) study had estimated that $38.0 million in Unemployment Compensation (UC) was paid to unauthorized aliens in FY2002. In total, the UC program expended $53.8 billion that same year. In determining eligibility for UC, the state agency requires that any individual applying for UC, under penalty of perjury, declare in writing whether or not he or she is a citizen or a national of the United States. If the individual is not a citizen or a national, the individual must present documentation from the USCIS containing the individual's alien admission number or alien file number or such other documents as the state determines constitute reasonable evidence indicating a satisfactory immigration status. Immigration status is supposed to be verified through the SAVE Program. The DOL concluded, "[T]he largest reason for making the error ... involved the state's failure to use information it had in hand to determine that this information definitely pointed to an eligibility issue." This DOL study did not provide sufficient detail to determine the extent that these unauthorized alien beneficiaries were "quasi-legal" migrants who had EADs and SSNs. Analysis of the latest data from DOL's Benefit Accuracy Measurement (BAM) Survey revealed that payments to ineligible aliens made up 0.02% of all UC payments from July 2013 through June 2016. These UC payments to ineligible aliens comprised 0.17% of all UC overpayments during this three-year period. Mixed-immigration status families are another factor that confounds research on benefit receipt. A report on the Supplemental Nutrition Assistance Program (SNAP) estimated that 4.1 million U.S. citizen children who were living with noncitizen parents received food stamps in FY2014, or 9.0% of all participants. Although many of these noncitizen parents are likely to be LPRs, some parents may be unauthorized migrants. Similarly, FY2015 data on characteristics of TANF recipients indicate that 25.4% of the "child-only" cases are U.S. citizen children of foreign born parents who do not meet the definition of "qualified alien." Steven Camarota, director of research at the Center for Immigration Studies, used the March CPS and the decennial census as the basis for his widely cited estimations on federal benefits that may have gone to households headed by unauthorized migrants in 2002. Camarota estimated that the largest costs were Medicaid ($2.5 billion), treatment for the uninsured ($2.2 billion), and food assistance programs ($1.9 billion). Camarota's cost calculations additionally included programs that unauthorized aliens are eligible for, such as emergency Medicaid and school lunch. He concluded, "[M]any of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth ... greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them." Although the law appears straightforward, the policy on unauthorized aliens' access to federal benefits is peppered with ongoing controversies and debates. Some center on demographics issues, such as how to treat mixed-immigration-status families. Others explore unintended consequences, most notably when tightening up the identification requirements results in denying benefits to U.S. citizens. Still others are debates about how broadly the clause "federal public benefit" should be implemented. The concluding section of this report offers an illustrative sampling of these issues. Whether an unauthorized alien who is head of household is permitted to be the payee of a federal benefit for U.S. citizen children varies across programs. Most federal statutes are silent on the matter because the benefit is given to the eligible individual. In the case of the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps), the "assistance unit" is a household, typically those living together who also purchase and prepare food together. SNAP eligibility and benefits depend on the number of eligible household members and household financial resources. When determining a household's eligibility status and benefit level, unauthorized aliens living with eligible members are not counted as household members; but their income, typically less their pro-rata share, is counted (deemed to the rest of the household). SNAP rules allow an unauthorized alien household member to apply for and obtain benefits on behalf of eligible members, and eligibility/benefit determinations are carried out as described above. The Supplemental Security Income (SSI) program, while not expressly barring them, sets a barrier for unauthorized alien parents to be the payees of SSI benefits for their U.S. citizen children. More precisely, the Social Security Act requires an investigation into a potential representative payee to determine his or her suitability and as part of this investigation: "verify the social security account number (or employer identification number) of such person." This provision is somewhat analogous to the requirement that taxpayers claiming the EITC provide their SSN and the SSN of any qualifying child. Foreign nationals who are LPRs, as discussed more fully above, have biometric identification documents, and their eligibility for federal benefits may be confirmed through the SAVE system. Congress has already enacted strong incentives for states to issue enhanced drivers licenses (EDLs) that indicate country of citizenship. Requiring that the Social Security Administration issue SSNs that may be used to verify immigration status and citizenship is another option. Proponents of expanding the documentary requirements to include proof of U.S. citizenship assert that it is the most effective way to stop ineligible aliens from making false claims of U.S. citizenship. A secondary argument is one of equal treatment; that is, it levels the playing field by holding U.S. citizens to the same documentary requirements as foreign nationals. Medicaid provides an excellent example because, as noted earlier, a citizenship documentation requirement was added in 2006 to supersede the self-declaration of citizenship status. Medicaid now requires that a state obtain satisfactory documentation of citizenship and identity to determine eligibility. When the U.S. Government Accountability Office (GAO) evaluated the new requirement in 2007, it found only limited information about the extent to which the requirement deterred aliens who were not qualified from applying for Medicaid. These findings were consistent with the 2005 U.S. Department of Health and Human Services (HHS) Office of Inspector General report on state self-attestation policies, which did not find problems regarding false allegations of citizenship. Rather, the GAO found evidence of inadvertent denials of persons who appeared to be U.S. citizens. "Twenty-two of the 44 states reported declines in Medicaid enrollment due to the requirement, and a majority of these states attributed the declines to delays in or losses of Medicaid coverage for individuals who appeared to be eligible citizens." Also at issue is whether expanded documentary requirements are cost effective. The HHS Centers for Medicare & Medicaid Services (CMS) had estimated the citizenship documentation requirement would result in savings for the federal government and states of $90 million for FY2008. When GAO investigated this cost savings, it concluded that the potential fiscal benefits for the federal government and states were uncertain. "Specifically, CMS did not account for the increased administrative expenditures reported by states, and the agency's estimated savings from ineligible, noncitizens no longer receiving benefits may be less than anticipated." The language of Section 401 of PRWORA appears to be quite broad (see the " Current Federal Law " section, above), yet its implementation across federal public benefits is not uniform. An example of this ambiguity centers on tax refunds. As noted earlier, the Internal Revenue Code generally does not distinguish between resident aliens who are lawfully present in the United States and those who are not (with the exception of the EITC). It appears that the Internal Revenue Service (IRS) permits unauthorized resident aliens to claim the additional child tax credit. There is no indication, moreover, that the IRS generally considers refundable tax credits to be federal public benefits that unauthorized migrants are barred from receiving. It is possible that refundable tax credits could fall within the types of benefits described by Section 401. Under this interpretation, the refundable nature of a credit makes it equivalent to a "grant" or "payment or assistance" provided by a federal agency or appropriated funds. Refundable tax credits, as some elaborate, are being "provided to an individual, family, or eligibility unit" and thus could be classified as a federal public benefit under Section 401 of PRWORA. Government officials sometimes face competing priorities when dealing with unauthorized aliens, and such dilemmas are especially evident during major disasters. When a major disaster occurs, two competing priorities come into play: access to emergency disaster relief and immigration enforcement. According to Section 401 of PRWORA, unauthorized aliens are eligible for short-term, in-kind emergency disaster relief and services or assistance that deliver in-kind services at the community level, provide assistance without individual determinations of each recipient's needs, and are necessary for the protection of life and safety. The Robert T. Stafford Disaster Relief and Emergency Assistance Act, the authority under which the Federal Emergency Management Agency (FEMA) conducts disaster assistance efforts, requires nondiscrimination and equitable treatment in disaster assistance. FEMA assistance provided under the Stafford Act includes (but is not limited to) grants for immediate temporary shelter, cash grants for uninsured emergency personal needs, temporary housing assistance, home repair grants, unemployment assistance due to the disaster, emergency food supplies, legal aid for low-income individuals, and crisis counseling. When a situation threatens human health and safety, and a disaster is imminent but not yet declared, the Secretary of DHS may pre-position employees and supplies and provide precautionary evacuation measures. As part of a mock evacuation in May 2008 in the Rio Grande Valley of Texas, DHS Border Patrol officials in that region announced that border patrol agents would pre-screen residents for citizenship documents before allowing them to board evacuation buses in the event of a hurricane. DHS Border Patrol spokesperson Dan Doty stated that the border patrol will assist other federal, state, and local authorities in a safe evacuation but at the same time uphold its job of "border security, protecting the border, and establishing alienage." DHS has reportedly acknowledged the importance of keeping families together during an evacuation; however, officials have not indicated how mixed-immigration status families would be treated, or what would happen (when asked) if everyone in the family except an elderly grandparent had proper documents. Notwithstanding the media reports, DHS Headquarters officials indicate that the department has not issued a formal policy on pre-screening during emergency evacuations. When the disaster relief moves from emergency assistance for the protection of life and safety to disaster aid based on determinations of each recipient's needs (e.g., funds to help repair a damaged home), the "federal public benefits" question arises. FEMA requires additional information from applicants at this point in the application process. That information may include proof of a rental agreement or property ownership, employment status, and other factors that may further identify an applicant's citizenship status as part of the eligibility determination. Regardless of their programmatic eligibility, when unauthorized aliens are receiving federal disaster aid, according to DHS officials, they have no immunity from deportation. In the aftermath of Hurricanes Katrina and Rita in 2005, there were reportedly many displaced aliens who feared that seeking government help might lead to their deportation. "The administration's priority is to provide needed assistance: water, food, medical care, shelter," DHS spokesperson Joanna Gonzalez explained at the time. "However, as we move forward with the response, we can't turn a blind eye to the law." DHS arrested, detained, and ordered deported an unspecified number of unauthorized aliens displaced by the 2005 hurricanes. In addition to the disaster-related emergency assistance, FEMA also funds the Emergency Food and Shelter National Board (EFS) Program, which provides funding to service providers assisting homeless individuals and families. When there was an influx of unaccompanied alien children and families from Central America in the spring and summer of 2014, the EFS program was one of the few potential sources of supplemental funding for the homeless service providers that provided them shelter. As awareness of and confusion over "quasi-legal" migrants grows, the policies embodied by PRUCOL have returned to the fore. This issue most frequently arises in the context of compensation or training for laid-off workers or in debates over tax refunds or rebates. Those aliens who have EADs and SSNs—but who are not otherwise authorized to reside in the United States—pose a particular dilemma to some because they are permitted to work and have likely paid into the system that finances the particular benefit. They also are difficult to distinguish from LPRs because they possess valid government-issued documents. A similar issue is whether states may provide in-state tuition to foreign nationals who have Temporary Protected Status (TPS), a subset of "quasi-legal" migrants. Some have asserted the bar on benefit receipt does not apply to foreign nationals with TPS because Section 244 of INA considers them lawfully present. However, others point out that Section 244(f)(4) limits that "lawfully present" designation to nonimmigrant adjustments or changes in immigration status. Aliens with TPS are not defined as qualified aliens under PRWORA. Given the bar on federally funded postsecondary education in Section 401 of PRWORA, the question of states providing in-state tuition to foreign nationals with TPS may ultimately hinge on whether federal funds are involved. Congress has grappled on numerous occasions with the question of whether to refine or revise the access rules for unauthorized aliens. These issues are sometimes centered in intricate and, some would say, secondary concerns (e.g., the citizenship documentation requirements in the CHIP reauthorization legislation in the 111 th Congress). Other times, the issue becomes embroiled in major "hot-button" controversy, such as the motion to re-commit H.R. 3161 in the 110 th Congress with instructions to amend it to bar use of funds to employ or provide housing for unauthorized aliens. Some argue that—if unauthorized aliens can end-run the system—federal benefit programs are a magnet for unauthorized migration. Others argue that—in the absence of congressional action on comprehensive immigration reform—the dilemma of unauthorized aliens, mixed-immigration status families, and "quasi-legal" migrants fosters a growing underclass of noncitizens who lack access to services. Whether additional restrictions and expenditures to further bar access to benefits, as well as fraudulent receipt of benefits, are cost-effective options in terms of the value of the benefits provided is yet another argument for Congress to weigh.
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Federal law bars aliens residing without authorization in the United States from most federal benefits; however, there is a widely held perception that many unauthorized aliens obtain such benefits. The degree to which unauthorized resident aliens should be accorded certain rights and privileges as a result of their residence in the United States, along with the duties owed by such aliens given their presence, remains the subject of debate in Congress. This report focuses on the policy and legislative debate surrounding unauthorized aliens' access to federal public benefits. Except for a narrow set of specified emergency services and programs, unauthorized aliens are not eligible for federal public benefits. The law (§401(c) of P.L. 104-193) defines federal public benefit as any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. The actual number of unauthorized aliens in the United States is unknown. Researchers at Pew Research Center estimate that there were 11.1 million unauthorized immigrants living in the United States in March 2014. A noteworthy portion of the households headed by unauthorized aliens are likely to have U.S. citizen children, as well as spouses who may be legal permanent residents (LPRs), and are referred to as "mixed status" families. The number of U.S. citizen children in "mixed status" families has grown from 2.7 million in 2003 to 4.5 million in 2010. (This is the latest figure available as of the date of the report.) Although the law appears straightforward, the policy on unauthorized aliens' access to federal public benefits is peppered with ongoing controversies and debates. Some center on demographic issues, such as how to treat mixed-immigration-status families. Others explore unintended consequences, most notably when tightening up the identification requirements results in denying benefits to U.S. citizens. Still others are debates about how broadly the clause "federal public benefit" should be implemented, particularly regarding tax credits and refunds.
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The Social Security program provides monthly cash benefits to retired and disabled workersand their dependents, and to the survivors of deceased workers. (2) To qualify for benefits,generally workers (whether citizens or noncitizens (3) ) must work in Social Security covered jobs for 10 years (4) (less time is needed fordisability and survivor benefits, depending on the worker's age). Noncitizens must also meet othereligibility requirements discussed below. The Social Security program is financed primarily by mandatory payroll taxes levied onwages and self-employment income, which are paid by the worker and the worker's employer. Noncitizens, or aliens, who work in Social Security-covered employment must pay Social Securitypayroll taxes, including those who are in the United States working temporarily and those who maybe working in the United States without authorization. (5) There are some exceptions. (6) Generally, the workof alienswho are citizens of a country with which the United States has a "totalization agreement" (see below)is not covered by Social Security if they are sent by a firm in their home country to work in theUnited States for fewer than five years. Most jobs in the United States are covered under SocialSecurity (about 96% of the work force is required to pay Social Security payroll taxes). (7) Benefit Formula. Social Security benefits arecomputed by applying a benefit formula to the worker's lifetime taxable earnings, indexed to reflectthe growth in average wages over time. An average monthly earnings amount (known as theworker's Average Indexed Monthly Earnings or AIME) is computed based on the 35 highest yearsof covered earnings. (8) The Social Security benefit computation formula is progressive, as it uses "bend points" toreturn higher percentages of a lower-wage worker's lifetime indexed earnings, computed on amonthly basis. For 2005, the bend points used in the benefit formula are $627 and $3,779 permonth. (9) If all or most ofa worker's indexed earnings fall under the first or second bend point, they will see a higherreplacement rate of average monthly earnings as compared to those whose earnings are above thebend points. This is often referred to as the "tilt" in the Social Security benefit formula. (10) Due to a recent change in the law, (11) a noncitizen who files an application for benefits based on aSocial Security Number (SSN) assigned on or after January 1, 2004, is required to have workauthorization at the time an SSN is assigned, or at some later time, to gain insured status under theSocial Security program. If the individual was authorized at some point to work in the United states,all of his/her Social Security-covered earnings will count toward insured status. If the individualwas never authorized to work in the United States, none of his/her earnings will count toward insuredstatus. (12) A noncitizenwho files an application for benefits based on an SSN assigned before January 1, 2004, is not subjectto the work authorization requirement. All of the individual's Social Security-covered earnings willcount toward insured status, regardless of his/her work authorization status. (13) Because Social Security is an earned entitlement program, there are few restrictions onbenefit payments once a worker becomes entitled to benefits. Nonetheless, noncitizens in the UnitedStates must be "lawfully present" to receive benefits in the United States. (14) If a noncitizen is entitledto benefits, but does not meet the lawful presence requirement, his/her benefits are suspended. Insuch cases, a noncitizen may receive benefits while residing outside the United States (includingbenefits based on work performed in the United States while the alien lacked authorization to work)if he/she meets one of the exceptions to the " alien nonpayment provision ." (15) Under the aliennonpayment provision, a noncitizen's benefits are suspended if he/she remains outside the UnitedStates (16) for more thansix consecutive months, unless one of several broad exceptions is met. For example, an alien'sbenefits are not suspended if he or she is a citizen or resident of a country with which the UnitedStates has a totalization agreement or a citizen of a country that has a social insurance or pensionsystem under which benefits are paid to eligible U.S. citizens who reside outside the country (i.e.,a "social insurance country"). Mexico is a social insurance country. To receive payments outside the United States, alien dependents and survivors must havelived in the United States for at least five years previously (lawfully or unlawfully), and the familyrelationship to the worker must have existed during that time. The law provides several broadexceptions to the five-year U.S. residency requirement. For example, the residency requirement fordependents and survivors does not apply if the alien is a citizen or resident of a country with whichthe United States has a totalization agreement. (17) The Social Security Act (18) authorizes the President to enter into a totalization agreementwith another country to coordinate the collection of payroll taxes and the payment of benefits undereach country's Social Security system for workers who split their careers between the two countries. Without a totalization agreement, an individual who is sent by a U.S. company to work in a foreigncountry (and his or her employer) must contribute to the Social Security systems of both countries,resulting in dual Social Security coverage and taxation based on the same earnings. In most cases,totalization agreements allow workers (and their employers) to contribute only to the foreign systemif the worker is employed abroad for five or more years, or only to the system in their home countryif the worker is employed abroad for fewer than five years. Totalization agreements also allow workers who divide their careers between two countriesto combine earnings credits under both Social Security systems. Thus, a worker who may lacksufficient coverage to qualify for benefits under either program may, under a totalization agreement,qualify for benefits under one or both systems. The benefits of workers who are allowed to combineearnings credits are prorated to reflect the number of years the worker paid into each system. Thesame treatment applies to foreign workers in the United States. Since 1978, the United States has entered into totalization agreements with 20 countries: Australia, Austria, Belgium, Canada, Chile, Finland,France, Germany, Greece, Ireland, Italy, South Korea, Luxembourg, Netherlands, Norway, Portugal,Spain, Sweden, Switzerland, and the United Kingdom. In addition, the United States has signed totalization agreements with Japan (February 19,2004) and Mexico (June 29, 2004). Once an agreement is signed it is sent to the Secretary of Stateand then to the President for review. The President may then transmit the agreement to Congressfor review. The Social Security Act requires the President to submit to Congress the text of theagreement and a report on (1) the estimated number of individuals who would be affected by theagreement and (2) the estimated financial impact of the agreement on programs established by theSocial Security Act. A totalization agreement automatically goes into effect unless the House ofRepresentatives or the Senate adopts a resolution of disapproval within 60 session days of theagreement's transmittal to Congress. (19) The agreement with Japan was transmitted to Congress onNovember 17, 2004, and according to Congressional Research Service (CRS) calculations, the 60session days for congressional action expired on April 26, 2005. The agreement with Mexico hasnot been transmitted to Congress and, reportedly, is still undergoing review at SSA. The remainder of this report uses different socio-economic characteristics to compare personsborn in Mexico and living in the United States with persons born in the current totalization countriesand living in the United States. Individuals born in Mexico and living in the United States includeboth naturalized U.S. citizens and noncitizens. The analysis begins with an overview of selectedpopulation and social characteristics and then focuses on various characteristics of persons in thelabor force. The data used in this study are from the March 2004 supplement of the Current PopulationSurvey (CPS), the main source of labor force data for the nation. The CPS is a household surveyconducted by the Census Bureau for the Bureau of Labor Statistics (BLS). (For a full discussion ofthe CPS and the methodology, see Appendix B .) For the purpose of this study, respondents fromthe current totalization countries are treated as one group. Luxembourg is not included in theanalysis because the CPS does not have a separate code for that country. Japan is not included inthe analysis because the totalization agreement with Japan has not yet gone into effect. Althoughthe analysis treats individuals from different totalization countries as one group, there may bedifferences in socio-economic characteristics among the countries. This variation is explored in Appendix A for the countries with large enough samples to be representative. The comparisons in this report are based on five groups residing in the United States: (1)U.S. citizens, (2) noncitizens from Mexico, (3) naturalized U.S. citizens from Mexico, (20) (4) noncitizens fromtotalization countries, and (5) naturalized U.S. citizens from the totalization countries. (21) The group of U.S. citizensexcludes naturalized U.S. citizens from Mexico and the current totalization countries. Although oneof the issues surrounding the totalization agreement with Mexico is the large number of unauthorizedMexicans living in the United States compared to the unauthorized alien population from thetotalization countries, it is not possible, using CPS data to differentiate between aliens who are inthe United States legally and those who are unauthorized. (22) Nor is it possible to differentiate between different categoriesof noncitizens (e.g., legal permanent residents, temporary workers, students, refugees, asylees, etc.). In addition, it is unknown how many of the Mexican noncitizens and naturalized U.S. citizens fromMexico in the sample would still qualify for Social Security benefits without a totalizationagreement. The population characteristics analyzed in this paper were chosen because they relate toaspects of the Social Security benefit formula (e.g., income and factors that affect income) oreligibility (e.g., age, number of dependents). The comparisons discussed in the text of this reportare statistically significant at the 95% confidence level, unless stated otherwise. (23) , (24) Table 1. Estimated Resident Population by Citizenship Statusand Gender, March 2004 (in 000s) Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Population. The number of Mexican-bornnoncitizens and naturalized citizens residing in the United States is much higher than thecomparative populations from totalization countries. Table 1 shows that the number of Mexicannationals living in the United States is five times larger than the number of citizens from alltotalization countries combined. In addition, there are approximately 185,000 more naturalized U.S.citizens from Mexico living in the United States than the number of naturalized U.S. citizens fromall totalization countries combined. Gender. Table 1 also shows that, more than anyother group, Mexican noncitizens are more likely to be male (56.3%). On the other hand,noncitizens and naturalized citizens from the totalization countries are more likely to be female(54.3% and 56.6%, respectively). A possible reason for the higher percentage of females amongnaturalized citizens from totalization countries is that over a third (37.6%) of the population is age65 and over, and the proportion of females is greater among those 65 and older for all populationgroups in the United States (see Figure 1 for the age distributions of the populations). Figure 1. Distribution of Population by Citizenship Status and Age, March 2004 Age. As Figure 1 illustrates, Mexicannoncitizens tend to be younger than noncitizens from the totalization countries: only 15.8% are 45or older, compared to 36.5% of noncitizens from the totalization countries. Mexican noncitizensalso tend to be younger than U.S. citizens and naturalized U.S. citizens from Mexico and thetotalization countries. Naturalized citizens, both from Mexico and totalization countries, tend to beolder than their noncitizen counterparts. In general, noncitizens must reside in the United States forfive years as legal permanent residents before applying for citizenship. U.S. citizens, more than any of the other groups, are the more likely to be under the age of16: 23.8% of the U.S. population is under the age of 16, compared to 11.2% of Mexican noncitizensand 8.9% of noncitizens from totalization countries. Very few of the naturalized U.S. citizens fromMexico (1.4%) or from the totalization countries (2.4%) are under the age of 16, (25) due to the fact that aliensmust have continuously resided in the United States as legal permanent residents (LPRs) for fiveyears before naturalizing, and that children born in the United States to noncitizen parents are, bybirth, U.S. citizens. (26) However, 19.5% of Mexican noncitizens are between the ages of 16 and 24, compared to 12.4% ofU.S. citizens, 10.6% of noncitizens from totalization countries, 5.4% of naturalized U.S. citizensfrom Mexico, and 3.9% of naturalized citizens from totalization countries. One-third ( 33.0%) of the Mexican noncitizens are between the ages of 25 and 34, and themajority of Mexican noncitizens are between the ages of 25 and 44 (56.3%). Comparatively, only21.4% of noncitizens from totalization countries, 12.4% of U.S. citizens, 17.9% of naturalizedMexicans, and 6.2% of naturalized citizens from totalization countries are between the ages of 25and 34. (27) In addition,unlike Mexican noncitizens, no other group has a majority of their members between the ages of 25and 44. The closest is the naturalized Mexicans of whom 49.2% are between the ages of 25 and 44. Conversely, the majority of naturalized U.S. citizens from totalization countries are over the age of54 (58.5%) while only 6.7% of Mexican noncitizens are over the age of 54. The percentages of U.S.citizens, naturalized U.S. citizens from Mexico, and noncitizens from totalization countries over theage of 54 are similar (22.8%, 22.3%, and 21.2%, respectively). Education. Figure 2 shows that, in general,noncitizens from totalization countries are substantially better educated than the other comparisonpopulations. Mexican noncitizens and naturalized citizens from Mexico tend to have the lowestlevels of educational attainment. Figure 2 shows that 65.1% of the Mexican noncitizens in theUnited States over the age of 18 have less than a high school diploma, while only 3.2% have aBachelor's or advanced degree. By comparison, 11.2% of noncitizens from totalization countrieshave less than a high school diploma, while 42.2% have a college or advanced degree. Similarly,31.6% of Mexican noncitizens have a high school degree or some college, while 46.6% ofnoncitizens from totalization countries have a high school degree or some college. Figure 2. Distribution of Population Ages 18 and Over by Citizenship Status and EducationalAttainment, March 2004 Naturalized U.S. citizens from Mexico are much more likely than naturalized U.S. citizensfrom totalization countries to have less than a high school diploma (51.6% compared to 18.3%) andmuch less likely to have a Bachelor's or advanced degree (8.8% versus 28.5%). In addition, 39.6%of naturalized U.S. citizens from Mexico have a high school degree or some college, compared to53.2% of naturalized U.S. citizens from totalization countries. Comparatively, for U.S. citizens13.0% have less than a high school diploma, 61.3% have a high school degree or some college, and25.8% have a college or advanced degree. (28) Labor Force Participation Rates. As shown in Figure 3 , the labor force participation rates of Mexican noncitizens (69.5%) is higher than that ofnoncitizens from the totalization countries (61.6%), U.S. citizens (65.5%), and naturalized U.S.citizens from the totalization countries (49.4%). In addition, the labor force participation rates ofnoncitizens from totalization countries is lower than that of U.S. citizens. The labor forceparticipation rates of Mexican noncitizens and naturalized U.S. citizens from Mexico are notstatistically different (69.5% versus 68.2%). One of the reasons for the differences in labor forceparticipation rates may be due to differences in the age distributions of the different citizenshipgroups: 86.1% of Mexican noncitizens and 87.4% of naturalized Mexicans are between the ages of16 and 64, compared to 63.9% of U.S. citizens. One reason for the low labor participation rateamong naturalized citizens from the totalization countries is that over a third of persons in this groupare 65 or older, and, in general, labor force participation is lower for older persons. (See Figure 1 .) Figure 3. Labor Force Participation Rate and Unemployment Rate by CitizenshipStatus, March 2004 Unemployment Rates. Figure 3 also shows thatfor persons 16 and over, the unemployment rate is higher for Mexican noncitizens (8.2%) than fornoncitizens from totalization countries (4.5%) and U.S. citizens (6.0%), as well as for naturalizedU.S. citizens from Mexico (5%). Naturalized U.S. citizens from totalization countries have thelowest unemployment rate (2.7%) of all the groups. (29) Labor Force Participation by Age. Labor forceparticipation rates vary by age. One of the reasons for the higher overall labor force participationrate of Mexican noncitizens is that participation rates are higher among the youngest (ages 16 to 24)and oldest groups of workers (age 65 and older). Figure 4 shows that, for persons 65 and over, thelabor force participation rate of Mexican noncitizens is higher than that of any other group. Thelabor force participation rate for persons 65 and older is twice as high for Mexican noncitizens asfor noncitizens from totalization countries (22.1% compared to 11.0%). In addition, the labor forceparticipation rate for Mexican noncitizens between the ages of 16 and 24 is much higher than thatof noncitizens from totalization countries (66.5% versus 37.3%). Mexican noncitizens between theages of 25 and 64 are less likely than U.S. citizens to be in the labor force. Figure 4. Labor Force Participation Rate by Age and Citizenship Status, March 2004 Unemployment Rates by Age. Theunemployment rate for noncitizens from totalization countries is lower than that of noncitizens fromMexico for those 25 to 34 years old, and 45 to 54 years old (see Figure 5 ). In addition, Mexicannoncitizens between the ages of 25 to 64 have higher unemployment rates than U.S. citizens of thesame ages. (30) Conversely, 16 to 24 year old Mexican noncitizens have lower unemployment rates than their U.S.citizen counterparts. Figure 5. Unemployment Rates by Age and Citizenship Status Gender of Persons in the Labor Force. For eachcitizenship group, men account for the largest share of persons in the labor force. Among Mexicannoncitizens, 72.4% of persons in the labor force are men (see Figure 6 ). This percentage comparesto 53.1% for noncitizens from totalization countries. Among naturalized citizens from Mexico,59.8% of persons in the labor force are men, compared to 53.6% of naturalized citizens fromtotalization countries. As is well documented, women tend to earn 76-79 cents for every dollarearned by men, and, on average, earn less than men over the life course. (31) In addition, due to thestructure of the Social Security benefit formula, lower earners receive a higher replacement rate ontheir contributions. Figure 6. Gender by Citizenship Status for Those in the Labor Force Disabled Workers. Table 2 shows thatnoncitizens from Mexico and noncitizens from totalization countries have similar proportions of thepopulation who are not in the labor force due to disability (2.1% and 1.6%, respectively). Thepercentage (4.8%) of U.S. citizens who are not working because a disability is greater than thepercentage of noncitizens from both Mexico and the totalization countries, and naturalized U.S.citizens from the totalization countries (2.8%). Naturalized U.S. citizens from Mexico have thehighest percentage (5.9%) of workers not in the labor force due to disability. (32) The lower percentage ofMexican noncitizens who are not in the labor force because of disabilities may be due to severalfactors. Mexican noncitizens tend to be younger (and, therefore, perhaps healthier) than workersfrom other citizenship groups. Persons with disabilities may not come to the United States to work. Persons who become disabled while in the United States may return to their native countries. (33) Table 2. Estimated Percent of Persons Not in the Labor ForceBecause of a Reported Disability, by Citizenship Status, March 2004 Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). Note: Estimates are for persons 16 and over and do not include retired persons. a. Estimates for totalization countries do not include Luxembourg. Earnings. Among the five citizenship groups,Mexican noncitizens tend to have lower annual earnings than workers in the other citizenship groups. Figure 7 shows that the median annual earnings for noncitizens from totalization countries are morethan twice the median earnings for noncitizens from Mexico ($15,600 compared to $32,000). Themedian annual earnings of naturalized citizens from totalization countries are $10,000 more than themedian earnings of naturalized U.S. citizens from Mexico ($32,000 compared to $22,000). Themedian earnings ($32,000) of citizens and noncitizens from the totalization countries are also higherthan the median earnings of U.S. citizens ($27,000). (34) As illustrated in Figure 7 , the majority (63.8%) of employed Mexican noncitizens in theUnited States earned under $20,000 in 2003, and were more likely than any other citizenship groupto earn less than $20,000. Forty-three percent of naturalized U.S. citizens from Mexico earned lessthan $20,000, compared to 36.4% of U.S. citizens and 30.5% of noncitizens from totalizationcountries. Conversely, noncitizens from the totalization countries had the highest concentration ofperson earning $80,000 or more. While 15.2% of noncitizens from totalization countries earned atleast $80,000, only 8% of U.S. citizens, 1.5% of naturalized U.S. citizens from Mexico, and 0.7%of Mexican noncitizens earned the same amount. (35) Figure 7. Distribution of Employed Persons and Median Earnings by CitizenshipStatus and Annual Earnings, 2003 As discussed above, under the Social Security benefit in 2005, Social Security-coveredworkers and their employers each pay 6.2% of earnings up to $90,000 (this amount is indexed toaverage wage growth). Thus, higher wage workers pay more into the system than lower wageworkers (unless both workers are earning over $90,000). Nonetheless, the Social Security benefitformula is "tilted" so that lower wage workers receive a higher replacement rate in Social Securitybenefits than workers with higher lifetime earnings. Occupations. Several factors may affect relativeearnings, including work experience, education, gender, industry and occupation, and hours worked. Figure 1 above showed that Mexican noncitizens tend to be younger and, therefore, have less workexperience than persons from other citizenship groups. Figure 3 showed that the educationalattainment of Mexican noncitizens tends to be lower than that for persons in other citizenship groups. Table 3 shows that the highest concentration of Mexican noncitizens (30.4%) and naturalizedU.S. citizens from Mexico (22.3%) work in service occupations, many of which pay lower wagesthan other occupations. Comparatively, 10.4% of noncitizens from totalization countries, 13.2% ofnaturalized U.S. citizens from totalization countries, and 15.1% of U.S. citizen workers are in serviceoccupations, and there is no statistical difference between the concentration of service workers inthe three groups. Noncitizens from totalization countries (23.1%) are more likely than noncitizensfrom Mexico (10.4%) to be in sales and office occupations, while U.S. citizens (26.8%) are morelikely than both groups to be in these occupations. By contrast, noncitizens from totalizationcountries have the highest concentration of workers in professional occupations (28.0%), while only2.2% of Mexican noncitizens and 9.3% of naturalized U.S. citizens from Mexico work inprofessional occupations. A similar percentage of U.S. citizens (21.4%) and naturalized U.S.citizens from totalization countries (22.3%) are in professional occupations. Furthermore, a higher percentage of noncitizens from totalization countries, U.S. workers,and naturalized U.S. citizen workers from totalization countries are in management, business, andfinancial occupations than noncitizens and naturalized U.S. citizens from Mexico: 21.3% ofnoncitizens from totalization countries and 21.2% naturalized U.S. citizens from totalizationcountries are in management, business, and financial occupations compared to 15.4% of U.S.citizens, 5.9% of naturalized U.S. citizens from Mexico, and 2.9% of noncitizens from Mexico. (36) The second highest occupational concentration of Mexican noncitizen workers occurs inconstruction and extraction occupations, with 21.3% of the workers in those occupations. Amongnaturalized U.S. citizens from Mexico, 10.2% are in construction occupations, while the percentageof U.S. citizen workers, noncitizens from totalization countries, and naturalized U.S. citizen workersfrom totalization countries is significantly less (5.0%, 6.1%, and 4.6%, respectively). Similarly, theconcentration of naturalized U.S. citizens from Mexico, and noncitizens from Mexico in productionoccupations (37) is morethan two times higher than the concentration of U.S. citizen workers, noncitizens from totalizationcountries, and naturalized U.S. citizen workers from totalization countries in production occupations. Table 3. Distribution of Employed Persons by Citizenship Statusand Occupation, March 2004 (persons ages 16 and over) Source: Calculated by CRS from the March 2004 Current Population Survey (CPS). Note: Details may not add to totals because of rounding. For a definition of the occupational groupssee U.S. Department of Labor, Bureau of Labor Statistics, Standard Occupational ClassificationSystem , available at http://www.bls.gov/soc/home.htm . a. Estimates for totalization countries do not include Luxembourg. Full-Time/Part-Time Status. Figure 8 shows that,in March 2004, the majority of employed persons for all citizenship groups usually work full-time. Although Mexican noncitizens earn less than workers in the other citizenship groups, they (as wellas naturalized citizens from Mexico) are more likely than workers in other groups to work full-time: 88.5% of Mexican noncitizens and 90.9% of naturalized Mexican citizens work full-time. Thepercentages of noncitizens and naturalized citizens from totalization countries who work full-timedo not differ significantly from each other (82.6% and 83.7%, respectively) or from the rate for U.S.citizens (80.9% usually work full-time). Figure 8. Distribution of Employed Persons by Citizenship Status and Full-Timeand Part-Time Employment, March 2004 Arrival Year. In general, naturalized U.S. citizensfrom Mexico and the totalization countries have been in the United States longer than theirnoncitizen counterparts (see Figure 9 ). Nonetheless, naturalized U.S. citizens from totalizationcountries were more likely to arrive prior to 1986 than naturalized U.S. citizens from Mexico (83.6%compared to 71.4%). In addition, naturalized U.S. citizens from Mexico (6.0%) were more thanthree times as likely to have arrived after 1995 than naturalized U.S. citizens from totalizationcountries (1.9%), although the percentages are small in both cases. Similarly, noncitizens fromtotalization countries were more likely than noncitizens from Mexico to have arrived prior to 1975(16.1% versus 5.8%); and they were slightly less likely than Mexican noncitizens to have arrivedafter 1995 (37.6% compared to 43.5%). Research has shown that the earning of noncitizens arecorrelated to the length of time an alien is in the United States, with those who have been in theUnited States longer having higher earnings. (38) Figure 9. Arrival Year for Those in the Labor Force Over Age 16 for Naturalized U.S.Citizens and Noncitizens from Mexico and Totalization Countries Dependents. Mexican noncitizens in the laborforce have a higher average number of dependents residing in the United States (1.7) thannoncitizens from totalization countries (1.4). U.S. citizens and naturalized U.S. citizens fromtotalization countries have an average of 1.2 and 1.3 dependents, respectively. Naturalized U.S.citizens from Mexico average 2.0 dependents, which is the highest average number of dependentsfor any of the citizenship groups. Among persons in the labor force who have at least one dependent(i.e., excluding persons living alone or with unrelated persons), Mexican noncitizens average 2.4dependents, which is similar to the average number of dependents for naturalized U.S. citizens fromMexico (2.3), and higher than the average number of dependents for noncitizens and naturalized U.S.citizens from totalization countries (1.9 and 1.6), and U.S. citizens (1.8). Table 4. Estimated Number of Dependents Residing in theUnited States Per Worker, by Citizenship Status, March 2004 Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Families consist of persons living together and related by birth, marriage, or adoption and, incolumn 1, include persons living alone or with unrelated individuals. In column 2, familiesare groups of two or more related persons. A household may include more than one family. Dependents include spouses, children under 18, full-time high school students under the ageof 19, and persons over 18 with disabilities. b. Estimates for totalization countries do not include Luxembourg. The average number of dependents for noncitizens from Mexico and the totalizationcountries may be higher than the figures shown in Table 4 . As shown above, 72.4% of Mexicannoncitizens in the labor force are male (compared to 53.1% of noncitizens from the totalizationcountries). Among these men, 8.0% report that they are married but that their spouse is not livingin their U.S. household. The spouse may be elsewhere in the United States or in Mexico (or inanother country). Only 1.3% of noncitizen men from the current totalization countries report thatthey are married but that their spouse is absent. Children may be living with the absent spouse. Thus, the average number of dependents may be higher than shown above for noncitizens fromMexico and the totalization countries, as dependents not residing in the United States are notcaptured in the CPS. As discussed above, under the Social Security Act, noncitizens who have notresided in the same relationship with the worker in the United States for five years are not eligiblefor dependents or survivors benefits while residing outside the United States. But the five-yearrequirement is waived for citizens from countries with totalization agreements, allowing dependentand survivor benefits to be paid to persons who have never lived in the United States. In addition to being much larger than the population of persons from the totalizationcountries in the United States, the Mexican population -- both noncitizens and naturalized citizens-- in the United States has a different socio-economic profile than U.S. citizens and persons in theUnited States from totalization countries. Individuals from totalization countries tend to have moreeducation and higher earnings than persons from Mexico and the United States. The populationfrom Mexico tends to be younger and more heavily male. A smaller proportion of the Mexicannoncitizen population is not in the labor force because of disability and their labor force participationrates are higher. Mexican persons in the U.S. labor force tend to have more dependents in their U.S.households. Because Mexican workers may have lower lifetime earnings, they may receive a higherreplacement rate in Social Security benefits than workers with higher lifetime earnings. The fact thatMexican noncitizens tend to spend more years in the labor force does not mean that they contributemore to the Social Security system than noncitizens from totalization countries who have, onaverage, higher incomes. The current totalization countries are not a homogenous group. This section of the reportexplores socio-economic variations among the totalization countries. The data used are from theMarch CPS (see Appendix B ). The sample size for noncitizens and naturalized U.S. citizens fromtotalization countries is not large enough to perform separate analyses for each country. (39) Thus, analyses arepresented for noncitizens from Canada, Chile, Italy, Germany, and South Korea, and for naturalizedU.S. citizens from Canada, Ireland, Italy, Germany, Greece, Portugal, and South Korea. Tests ofstatistical significance were performed for each of the separately analyzed totalization countrypopulations compared to the corresponding population from Mexico. Unless noted otherwise, thefindings discussed in this appendix are significant at the 95% confidence level. Population. As discussed earlier in this report(see Table 1 ) and illustrated in Table A1 , the number of Mexican noncitizens in the United Statesis much higher than the number of noncitizens from all totalization countries combined. In addition,the number of naturalized citizens from totalization countries is less than the number of naturalizedU.S. citizens from Mexico. Accordingly, the population in the United States from Mexico is muchlarger than that from any individual totalization country. Age. As shown in Table A2 , although there aredifferences between the age distributions of naturalized U.S. citizens from different totalizationcountries, none of the countries has an age distribution similar to that of naturalized U.S. citizensfrom Mexico. With the exception of South Korea, the naturalized populations from totalizationcountries tends to be older than the population of naturalized Mexicans. The population ofnaturalized U.S. citizens from South Korea is more heavily concentrated at the lower end of the agedistribution (i.e., below 35 years old) than the naturalized population from Mexico. Similarly, there are differences between the age distributions of noncitizens from totalizationcountries, but none of the countries has an age distribution equivalent to that of Mexican noncitizens. As with the naturalized populations, in general, noncitizens from totalization countries tend to beolder than noncitizens from Mexico. Nonetheless, the age distribution of Chilean noncitizens isstatistically equivalent to that of Mexican noncitizens except for those between the ages of 25 and34 (a higher concentration of Mexican noncitizens) and those 55 to 64 (a higher concentration ofChilean noncitizens). (40) Table A1. Estimated Population by Citizenship Status: UnitedStates, Mexico, and Totalization Countries, March 2004 Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). Table A2. Distribution of Population by Citizenship Status andAge for Select Totalization Countries, March 2004 Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Education. As shown in Table A3 , there aremajor differences in educational attainment among naturalized U.S. citizens from the differenttotalization countries. The educational attainment of naturalized U.S. citizens from Italy, Portugal,and Greece is more similar to the educational attainment of naturalized U.S. citizens from Mexicothan it is to the educational attainment of naturalized U.S. citizens from all totalization countriescombined. There is no statistical difference in educational attainment between naturalized U.S.citizens from Mexico and from Greece. Seventy-eight percent of naturalized citizens from Mexicohave no schooling past high school, compared to 75.9% of naturalized citizens from Portugal and68.6% of naturalized citizens from Italy. In general, 49.1% of naturalized citizens from totalizationcountries did not pursue post-secondary education. Nonetheless, with the exception of Greece,naturalized citizens from Mexico tend to be less educated than naturalized citizens from any of theseparately analyzed totalization countries. Table A3. Distribution of Population Ages 18 and Over byCitizenship Status and Educational Attainment for Select Totalization Countries, March2004 Source : Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Mexican noncitizens have lower educational attainment than noncitizens from each of theseparately analyzed totalization countries. Noncitizens from each of the separately analyzedtotalization countries have significantly higher rates of post-secondary education. (41) Of the separately analyzedtotalization countries, noncitizens from Italy are the least educated, with only 31.7% having morethan a high school diploma, but significantly more Italian noncitizens have a college degree thanthose from Mexico. As illustrated in Table A3 , 11.6% of Mexican noncitizens have more than ahigh school degree. Labor Force Participation. Table A4 shows that,with the exception of South Korea (65.4%), none of the naturalized U.S. citizens from any of theseparately analyzed totalization countries have labor force participation rates as high as naturalizedcitizens from Mexico (68.2%). Only noncitizens from Italy and South Korea (48.9% and 50.6%,respectively) have labor force participation rates statistically different from the rate for noncitizensfrom Mexico (69.5%). Table A4. Labor Force Participation Rate and UnemploymentRate by Citizenship Status for Select Totalization Countries, March 2004 (persons ages 16 and over) Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). Note: The labor force participation rate is the number of persons in the labor force divided by thesize of the corresponding population. a. Estimates for totalization countries do not include Luxembourg. The unemployment rates of naturalized citizens from totalization countries analyzedseparately are not significantly different from the unemployment rate for naturalized U.S. citizensfrom Mexico. Only German and Canadian noncitizens have statistically significant lowerunemployment rates than Mexican noncitizens. (42) Full-Time/Part-Time. Table A5 shows that ahigher percentage of naturalized U.S. citizen workers from Mexico work full-time than those fromGermany, Greece, and Italy. (43) A higher percentage of Mexican noncitizens work full-time thannoncitizens from Canada, Chile, and Germany. (44) Table A5. Distribution of Employed Persons by CitizenshipStatus and Full-Time and Part-Time Employment for Select Totalization Countries, March2004 (persons ages 16 and over) Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). Note: Estimates are based on whether a person usually works full-time or part-time. a. Estimates for totalization countries do not include Luxembourg. Arrival. Although naturalized Mexicans in thelabor force arrived more recently than those from totalization countries, naturalized citizens fromSouth Korea have been as likely as naturalized U.S. citizens from Mexico to have arrived after 1985(see Table A6 ): (45) Nonetheless, while 6.0% of naturalized Mexicans arrived in 1996 or later, only 3.0% of naturalizedSouth Koreans arrived during that period. Chilean noncitizens tend to have arrived more recently than noncitizen Mexicans: 61.2% ofChilean noncitizens arrived after 1995 compared to 43.5% of Mexican noncitizens. The differencebetween the percentages of South Korean and Mexican noncitizens who have arrived since 1996 isnot significant. Table A6. Arrival Year by Citizenship Status for Those in theLabor Force for Select Totalization Countries Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Gender. Table A7 shows that the population ofnaturalized citizens from Mexico is evenly split between men and women (50.5% and 49.5%,respectively), and is very similar to the gender distribution of naturalized U.S. citizens from Italy. A majority of Mexican noncitizens is male (56.3%). The gender distribution of noncitizens fromChile (65.2%) and Italy (50.8%) is similar to that of noncitizens from Mexico. Among noncitizens, 72.4% of Mexicans in the labor force are male, compared to 53.1% ofnoncitizens from totalization countries. The gender distribution of noncitizens from Chile and Italyin the labor force (72.% and 61.4% male, respectively) is similar to that of Mexico. Table A7. Gender by Citizenship Status for Total Population andThose in the Labor Force for Select Totalization Countries, March 2004 Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Earnings. Naturalized citizens from Mexico aswell as Mexican noncitizens have lower annual earnings than workers from the totalization countries(see Table A8 ). Among noncitizens, Mexican workers are more likely than workers from thetotalization countries to earn less than $20,000 annually and, except for workers from Chile, lesslikely to earn $100,000 or more annually. Table A8. Distribution of Employed Persons by CitizenshipStatus and Annual Earnings for Select Totalization Countries, 2003 (persons ages 16 and over) Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Occupations. As illustrated in Table A9 , theoccupational distributions for naturalized workers from some totalization countries are similar to theoccupational distribution of naturalized workers from Mexico. Naturalized U.S. citizens fromMexico, Greece, and Italy are similarly concentrated in service occupations, while naturalizedcitizens from each of the separately analyzed totalization countries are at least two times as likelyto be in management, business, and financial occupational group than naturalized U.S. citizens fromMexico. (46) Furthermore, naturalized U.S. citizens from Canada, Italy, and South Korea are more likely to be inprofessional occupations than those from Mexico, while naturalized U.S. citizens from Greece,Ireland, and Portugal are not significantly less likely to be in professional occupations than thosefrom Mexico. With the exception of naturalized citizens from Portugal and Greece, naturalized U.S.citizens from each of the separately analyzed totalization countries are less likely to be in productionoccupations than those from Mexico. The occupational distributions of noncitizens from each of the totalization countries are moresimilar to each other than to the occupational distribution of Mexican noncitizens (see Table A10 ). With the exception of Chile, noncitizens from each of the totalization countries are more than fivetimes as likely as noncitizens from Mexico to be in management and professional occupations. (47) In addition, noncitizensfrom each of the totalization countries are less likely to be in service and transportation occupationsthan Mexican noncitizens. Chilean noncitizens are as likely to be in construction occupations asMexican noncitizens. Moreover, the percent of Italian noncitizens in construction occupations issimilar to that of Mexicans in construction occupations. Finally, the concentration of South Koreannoncitizens in production occupations is similar to that of Mexican noncitizens. Table A9. Distribution of Naturalized Employed Persons by Occupation by Country for Select TotalizationCountries,March 2004 (persons ages 16 and over) Source: Calculated by CRS from the March 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. Table A10. Distribution of Noncitizens Employed Persons by Occupation by Country for Select TotalizationCountries,March 2004 (persons ages 16 and over) Source: Calculated by CRS from the Mar. 2004 Current Population Survey (CPS). a. Estimates for totalization countries do not include Luxembourg. The analysis in this report is based on data from the March 2004 CurrentPopulation Survey (CPS). The Current Population Survey (CPS) is a householdsurvey conducted by the U.S. Bureau of the Census for the Bureau of Labor Statistics(BLS) of the U.S. Department of Labor. The monthly CPS is the main source oflabor force data for the nation, including estimates of the monthly unemploymentrate. The CPS collects a wide range of demographic, social, and labor marketinformation. Currently, approximately 57,000 households are interviewed eachmonth. The monthly CPS sample is representative of the civilian noninstitutionalpopulation; it does not include persons on active military duty. (48) EachMarch, the CPS asks additional questions about earnings for the previous year. (49) The BLS defines the labor force as the sum of employed and unemployedpersons. Unemployed persons are individuals who are not working but who areavailable and looking for work. Employed persons are individuals who are workingfor a private or public employer, are self-employed, or who work 15 hours or morea week as unpaid workers on a family farm or business. Also counted as employedare persons who are temporarily absent from work because of illness, bad weather,vacation, job training, labor-management disputes, childcare problems, maternity orpaternity leave, or other family or personal reasons. (50) The CPS uses five categories to define citizenship: (1) born in the UnitedStates; (2) born in Puerto Rico or another outlying area of the United States; (3) bornabroad of U.S. citizen parents; (4) naturalized citizens; and (5) noncitizens. For theanalysis in this report, the first three categories were combined and defined as"citizens." The group of U.S. citizens excludes naturalized citizens from Mexico andthe current totalization countries. Naturalized U.S. citizens from Mexico and thetotalization countries were analyzed separately because it more likely that individualsin those groups would have credits to combine under a totalization agreement (i.e.,compared to naturalized U.S. citizens from other countries and natural-born U.S.citizens). Information on place of birth is collected for every household member in theCPS sample, and for the parents of every household member. Individuals born in theUnited States or its outlying areas, or whose parents were born in the United Statesor its outlying areas, are not asked questions about citizenship. Individuals bornoutside the United States or its outlying areas, and whose parents were born outsidethe United States or its outlying areas, are asked, "Are you a citizen of the UnitedStates?" Respondents who answer "Yes" are coded as naturalized citizens, whilerespondents who answer "No" are categorized as noncitizens. In the CPS,individuals for whom no birthplace is provided are assigned a citizenship statusduring the editing process. For example, the citizenship status of a child may beassigned based on the citizenship status of the child's mother. (51) The CPSdoes not attempt to verify the accuracy of responses to the questions aboutcitizenship. It is not possible using CPS data to differentiate between different categoriesof noncitizens (e.g., legal permanent residents, temporary workers, students, refugees,and asylees). Nor is it possible to differentiate between aliens who are in the UnitedStates legally and those who are unauthorized. Thus, some of the respondents in thenoncitizens category who have never had authorization to work in the United Stateswould be ineligible for Social Security benefits, barring future changes toimmigration or Social Security policy. The comparisons discussed in this report are statistically significant at the95% confidence level, unless stated otherwise. Estimates based on survey responsesfrom a sample of households have two kinds of error: nonsampling error andsampling error. Examples of nonsampling error include information that ismisreported and errors made in processing collected information. Sampling erroroccurs because a sample, and not the entire population, of households is surveyed. The difference between an estimate based on a sample of households and the actualpopulation value is known as sampling error. (52) Whenusing sample data, researchers typically construct confidence intervals aroundpopulation estimates. Confidence intervals provide information about the accuracyof estimated values. With a 95% confidence interval and repeated samples from apopulation, 95% of intervals will generally include the actual value of a populationcharacteristic. For this report, confidence intervals were calculated using amethodology suggested by the Census Bureau. (53)
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On June 29, 2004, the United States and Mexico signed a Social Security totalizationagreement, the effects of which depend on the yet to be disclosed language of the agreement. Atotalization agreement coordinates the payment of Social Security taxes and benefits for workers whodivide their careers between two countries. The agreement has not been transmitted to Congress forreview, which is required under law before the agreement can go into effect. This report does notattempt to estimate the potential cost of a totalization agreement with Mexico, or reach a conclusionon the effects of such an agreement on U.S. workers and employers. Instead this report explores oneof the issues concerning such an agreement. Using different socio-economic characteristics, thereport compares persons born in Mexico and living in the United States (both naturalized U.S.citizens and noncitizens) with persons born in the current totalization countries and living in theUnited States. The Social Security program provides monthly cash benefits to qualified retired and disabledworkers, their dependents, and survivors of deceased workers. Generally, a worker must have 10years of Social Security-covered employment to be eligible for retirement benefits (less time isrequired for disability and survivor benefits). Most jobs in the United States are covered underSocial Security. Noncitizens (aliens) who work in Social Security-covered employment must paySocial Security payroll taxes, including those who are in the United States working temporarily andthose who may be working in the United States without authorization. There are some exceptions. Generally, the work of aliens who are citizens of a country with which the United States has a"totalization agreement" is not covered by Social Security if they work in the United States for lessthan five years. In addition, by statute, the work of aliens under certain visa categories is not coveredby Social Security. Currently, since Mexico meets the definition of a "social insurance country," aMexican worker may receive U.S. Social Security benefits outside the United States. Familymembers of the Mexican worker must have lived in the United States for at least five years to receivebenefits outside the United States, but typically under a totalization agreement this requirement iswaived. This report concludes that the Mexican population in the United States has a differentsocio-economic profile than both U.S. citizens and persons (both naturalized U.S. citizens andnoncitizens) from current totalization countries. Workers from totalization countries tend to havemore education and higher earnings than workers born in the United States or in Mexico. Noncitizens from Mexico tend to be younger and have higher labor force participation rates thannaturalized U.S. citizens from Mexico, and other U.S. citizens. In addition, Mexican noncitizensand naturalized U.S. citizens from Mexico in the U.S. labor force tend to have more dependents intheir U.S. households. Because Mexican workers may have lower lifetime earnings, they mayreceive a higher replacement rate, relative to the payroll taxes they pay, than workers with higherlifetime earnings, such as U.S. citizens and noncitizens from the totalization countries. This reportwill not be updated.
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The executive branch of the U.S. federal government has mandated for decades that developers of border crossing energy facilities must first obtain a Presidential Permit. Until recently, this administrative oversight was undertaken with little fanfare. However, controversy over the proposed Keystone XL oil pipeline—a project that would transport oil sands crude from Alberta, Canada, into the United States—has focused attention on federal permitting of energy infrastructure border crossings. Generally, the construction, operation, and maintenance of facilities that cross the U.S.-Mexico or U.S.-Canada border must be authorized by the federal government through the issuance of a Presidential Permit in accordance with requirements set forth in a series of executive orders. This report discusses these executive orders, including the source of the executive branch authority to issue the orders, the standards set forth in the orders, and the projects approved pursuant to the orders. The report also discusses proposed changes to the Presidential Permitting framework in the Promoting Cross-Border Energy Infrastructure Act ( H.R. 2883 ), which passed in the House on July 19, 2017. 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 its delegation to the Secretary of State. 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: If 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 order to authorize those border crossing facilities that the Secretary has determined would "serve the national interest," although the text of the Executive Order provides no further guidance on what is considered to "serve the national interest." Agency documents for a specific permit have discussed the "national interest" determination stating, for example, that "determination of national interest involves consideration of many factors, including: energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant federal regulations." One example of a national interest determination is the one made for Enbridge Energy's Alberta Clipper crude oil pipeline, which was issued a Presidential Permit by the State Department in August 2009. The 36-inch-diameter pipeline provides crude oil transportation from the oil sands region of Alberta, Canada, to oil markets in the Midwestern United States, crossing the international border in North Dakota. The State Department's national interest determination concluded that, for this particular project, the addition of crude oil pipeline capacity between Canada and the United States would advance a number of U.S. "strategic interests." These included increasing the diversity of available supplies among the United States' worldwide crude oil sources in a time of considerable political tension in other major oil producing countries and regions; shortening the transportation pathway for crude oil supplies; and increasing crude oil supplies from a major non-Organization of Petroleum Exporting Countries producer. Canada is a stable and reliable ally and trading partner of the United States, with which we have free trade agreements which augment the security of this energy supply.... Approval of the permit sends a positive economic signal, in a difficult economic period, about the future reliability and availability of a portion of United States' energy imports, and in the immediate term, this shovel-ready project will provide construction jobs for workers in the United States.... The State Department also considered the greenhouse gas emissions associated with the project, concluding that "the reduction of greenhouse gas emissions are best addressed through each country's robust domestic policies and a strong international agreement." The State Department has considerable discretion with respect to making national interest determinations, so its conclusions for one project may not apply to another due to differences in project configuration, energy market conditions, technology, environmental conditions, and other important factors. Thus, Presidential Permit applications even for projects that appear similar are evaluated on a case-by-case basis by the agency and may realize different permit outcomes. Executive Orders 11423 and 13337 explicitly exclude cross-border natural gas pipelines and electric energy facilities (among others) from their reach. Instead, permitting for these facilities is addressed in the Federal Power Act, the Natural Gas Act, and Executive Order 10485. Executive Order 10485 designates and empowers the now-defunct Federal Power Commission: (1) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the transmission of electric energy between the United States and a foreign country. (2) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the exportation or importation of natural gas to or from a foreign country. (3) Upon finding the issuance of the permit to be consistent with the public interest, and, after obtaining the favorable recommendations of the Secretary of State and the Secretary of Defense thereon, to issue to the applicant, as appropriate, a permit for such construction, operation, maintenance, or connection. The Secretary of Energy shall have the power to attach to the issuance of the permit and to the exercise of the rights granted thereunder such conditions as the public interest may in its judgment require. In many ways this authority resembles the authority granted to the State Department in Executive Orders 11423 and 13337. However, as mentioned above, those orders do not describe the source of the executive branch permitting authority granted by the orders. Judicial opinions have found that this permitting authority is a legitimate exercise of the President's "inherent constitutional authority to conduct foreign affairs." By contrast, Executive Order 10485 cites federal statutes for the permitting authority granted to the Department of Energy. The order states: Section 202(e) of the Federal Power Act, as amended ... requires any person desiring to transmit any electric energy from the United States to a foreign country to obtain an order from the Federal Power Commission authorizing it to do so... Section 3 of the Natural Gas Act ... requires any person desiring to export any natural gas from the United States to a foreign country or to import any natural gas from a foreign country to the United States to obtain an order from the Federal Power Commission authorizing it to do so. Executive Order 10485 empowered the Federal Power Commission (FPC) to receive applications for and to issue Presidential Permits for cross-border electric facilities. The Department of Energy Organization Act of 1977 eliminated the Federal Power Commission, transferring its functions to either the newly created Department of Energy (DOE) or the Federal Energy Regulatory Commission (FERC), an independent federal agency that regulates the interstate transmission of electricity, natural gas, and oil. Section 402(f) of the act specifically reserved import/export permitting functions for DOE rather than FERC. As a result, DOE took over the FPC's Presidential Permit authority for border crossing facilities under Executive Order 10485 pursuant to the act. The authority to issue Presidential Permits for natural gas pipeline border crossings was subsequently transferred to FERC in 2006 via DOE Delegation Order No. 00-004.00A. As described above, Presidential Permits authorize specific border crossing facilities. Obviously a new facility requires a new Presidential Permit, and a significant overhaul of existing facilities would similarly require a new or amended Permit to authorize the changed facility. On the other hand, at some point a change to a facility is presumably small enough that no new permit would be required. Because every border crossing facility and proposed modification is different, there is no bright line rule about when a proposed modification is significant enough to require a new or amended Presidential Permit. For example, the Presidential Permit issued by the State Department in 2013 for the NOVA Chemicals natural gas liquids pipeline states "the permittee shall make no substantial change in the United States facilities, the location of the United States facilities, or in the operation authorized by this permit until such changes have been approved by the Secretary of State or the Secretary's delegate." Thus, whether a Presidential Permit must be amended ultimately will depend on both the nature of the modification and on the exact nature of the authorization found in the existing permit language. However, the relevant agencies have provided some helpful guidance on this subject. FERC regulations governing authorization of facilities to construct, operate, or modify natural gas import/export facilities are set forth at 18 C.F.R. Part 153. Applications for Presidential Permits are subject to these regulatory requirements. 18 C.F.R. § 153.5 articulates "who should apply" for such FERC authorizations. The regulation provides that any person proposing to site, construct, or operate natural gas import or export facilities or to "amend an existing Commission authorization, including the modification of existing authorized facilities," must apply for a permit. In February 2007, the State Department's Bureau of Western Hemisphere Affairs—Office of Canadian Affairs published Interpretive Guidance on Non-Pipeline Elements of E.O. 13337, A mending E.O. 11423 . As the title indicates, the document is not binding with respect to pipeline facilities, although dialogue with State Department staff indicated that the guidance found in the document would be applied in a similar manner to pipeline facility permitting decisions. It may also be informative as applied to how other agencies may view the need for new or amended Presidential Permits for the facilities under their purview. According to the Interpretive Guidance , any "substantial modifications of existing border crossings" would fall under Executive Order 13337 and thus require a new or amended Presidential Permit. The Interpretive Guidance defines "substantial modifications" as 1. An expansion beyond the existing footprint or land port-of-entry inspection facility, including its grounds, approaches, and appurtenances, at an existing border crossing in such a way that the modification effectively constitutes a new piercing of the border; 2. a change in ownership of a border crossing that is not encompassed within or provided for under an applicable Presidential permit; 3. a permanent change in authorized conveyance (e.g., commercial traffic, passenger vehicles, pedestrians, etc.) not consistent with (a) What is stated in an applicable Presidential permit, or (b) current operations if a Presidential permit or other operating authority has not been established for the facility; or 4. any other modification that would render inaccurate the definition of covered U.S. facilities set forth in an applicable Presidential permit. The Interpretive Guidance also provides that projects should be placed in one of three categories: Red (both notification to the State Department and a new or amended permit is required), Yellow (notification required and a new permit may be required), and Green (neither notification nor a permit required). The "Red" category is described in language similar to that found in the document's definition of a "substantial modification." The "Yellow" category includes capacity changes, temporary changes due to construction projects and changes in responsibility for ownership, operations, or maintenance, among other things. The "Green" category includes regular maintenance and repair work, exterior changes to a facility within its existing footprint, systems changes (e.g., HVAC, electrical), and changes made at the request or direction of the State Department, among other changes. DOE regulations provide limited express guidance as to when an electric transmission facility modification is significant enough to trigger a requirement that a new or amended Presidential Permit be obtained. For example, DOE regulations note that a new permit application is required when the border crossing facility changes ownership. Recent permitting decisions, however, suggest that any modification that goes beyond regular maintenance and may have reliability impacts would likely require the party to obtain a new or amended Presidential Permit. For example, a new Presidential Permit issued to Energia Sierra Juarez by DOE in August 2012 provided in part that the permit should be amended if/when subsequent phases of a related wind generation project necessitate changes to the facility, including higher capacity transmission lines or other changes that could impact the reliability of the U.S. power grid. Six months earlier, DOE issued a new Presidential Permit to ITC Transmission to account for transformer upgrades at an existing facility. The source of the executive branch's permitting authorities in the Executive Orders described above is not explicitly stated in all cases. 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. " 27 3 U.S.C. § 301 simply provides that the President is empowered to delegate authority to the head of any department or agency of the executive branch. Executive Order 10485 cites Section 202(e) of the Federal Power Act as a source of executive branch authority to permit cross-border electricity transmission facilities and Section 3 of the Natural Gas Act as a source of the executive branch authority to permit cross-border natural gas pipelines. It also states that "the proper conduct of the foreign relations of the United States requires that executive permission be obtained for the construction and maintenance at the borders of the United States of facilities for the exportation or importation of electric energy and natural gas." Federal courts have addressed the legitimacy of cross-border permitting authority not explicitly granted by statute. 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 the Alberta Clipper. 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 the aforementioned cases show, courts have analyzed the President's exercise of cross-border infrastructure permitting authority and have held that it is a legitimate exercise of the President's constitutional authority, and that it does not require legislative authorization. However, they have indicated that congressional inaction plays a role in validating this exercise of executive branch authority, suggesting that these roles could be amended through legislation should Congress choose to do so. During the Obama presidency, Congress considered various bills to amend the presidential permitting process generally, or to authorize construction and operation of the Keystone XL border crossing facility. The January 24, 2017, Executive Memorandum issued by President Trump and the subsequent permitting of the Keystone XL pipeline border crossing facility by the State Department in accordance with that Memorandum appear to have obviated the need for the latter in this case. However, many in Congress still seek to overhaul the existing permitting framework, which was created entirely by the executive branch, in favor of a framework established by statute. Accordingly, on July 19, 2017, the House passed the Promoting Cross-Border Energy Infrastructure Act ( H.R. 2883 ). Among other provisions, the act would eliminate the Presidential Permit requirement for cross-border crude oil, petroleum products, natural gas, and electric transmission infrastructure (§ 2(d)). Instead, developers would require "certificates of crossing" from FERC for cross-border oil, petroleum products, and gas pipelines, or from DOE for cross-border electric transmission (§ 2(a)(2)). However, the statute does not appear to apply to other hazardous liquids infrastructure—notably natural gas liquids (e.g., propane) pipelines—so the State Department would retain its traditional Presidential Permit authority for these facilities.
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Controversy over the proposed Keystone XL pipeline project has focused attention on U.S. requirements for authorization to construct and operate pipelines and other energy infrastructure at international borders. For the most part, developers are required to obtain a Presidential Permit for border crossing facilities. The agency responsible for reviewing applications and issuing Presidential Permits varies depending on the type of facility. Oil and other hazardous liquids pipelines that cross borders are authorized by the U.S. Department of State. Natural gas pipeline border crossings are authorized by the Federal Energy Regulatory Commission (FERC). Electricity transmission facilities are authorized by the Department of Energy (DOE). CRS has identified over 100 operating or proposed oil, natural gas, and electric transmission facilities crossing the U.S.-Mexico or U.S.-Canada border. The authority for federal agencies to review applications and issue Presidential Permits for oil pipelines comes from a series of executive orders. These executive orders have been upheld by the courts as legitimate exercises of the President's constitutional authority over foreign affairs as well as his authority as Commander in Chief. It is worth noting, however, that Congress has enacted statutes applying to cross-border natural gas and electric transmission facilities that require developers of such projects to apply for authorization from executive branch agencies. In recent years, in the context of the Presidential Permit application for the proposed Keystone XL crude oil pipeline project, Congress has attempted to modify the permitting process for border crossing energy facilities. An Executive Memorandum issued on January 24, 2017, by President Trump inviting TransCanada Corp. to resubmit its Presidential Permit application for the Keystone XL border crossing facility, and the Administration's subsequent issuance of the Presidential Permit, reduced any need for legislative action in order to authorize the border crossing for that particular project. However, Congress remains interested in overhauling the existing permitting framework, which was created exclusively by the executive branch, in favor of a framework which would be established by statute. Accordingly, on July 19, 2017, the House passed the Promoting Cross-Border Energy Infrastructure Act (H.R. 2883), which would eliminate the Presidential Permit requirement for cross-border crude oil, petroleum products, natural gas, and electric transmission infrastructure. Instead, developers would require "certificates of crossing" from FERC for cross-border oil, petroleum products, and gas pipelines, or from DOE for cross-border electric transmission. The statute does not appear to apply to other hazardous liquids infrastructure—notably natural gas liquids (e.g., propane) pipelines—so the State Department would retain its traditional Presidential Permit authority for these facilities.
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